Oppenheimer, Navios deals price, trade up; International Wire pulled; market awaits AEP notes

By Paul Deckelman and Paul A. Harris

New York, April 6 - Oppenheimer Holdings, Inc. was heard by high-yield syndicate sources to have priced a $200 million issue of seven-year secured notes on Wednesday. When the financial services company's transaction was freed for secondary dealings, the paper firmed smartly from its par issue price.

That was also the case with Navios South American Logistics, Inc./Navios Logistics Finance (US) Inc.'s eight-year deal, which was upsized to $200 million and then moved higher in the aftermarket, catching interest from both junk bond and emerging markets investors.

Also heard trading higher were the new eight-year bonds of energy operator Penn Virginia Corp., which had priced fairly late in the session on Tuesday.

Apart from the deals that actually came to market, price talk appeared on plastic packaging manufacturer AEP Industries Inc.'s $200 million tranche of eight-year notes, which is expected to price after the books close at midday on Thursday.

Australian metals producer Mirabela Nickel Ltd.'s offering of seven-year notes was heard by sources to have been upsized to $395 million, and new, tighter price talk circulated.

But International Wire Group, Inc. withdrew its $110 million offering of four-year senior secured notes, as well as the accompanying solicitation of noteholder consents to paying shareholders a special distribution.

Away from the new-issue arena, traders reported a generally firm market, with statistical indicators pointing higher. However, several of them said that no specific secondary names stood out.

Fufeng at the tight end

Trailing the feverish primary market sessions which took place on Monday and Tuesday, the new issue bazaar took a bit of a breather on Wednesday.

Three issuers, each one bringing a single tranche of junk, raised a combined total of $700 million.

Half of the session's primary market news featured emerging markets aspects.

Hong Kong's Fufeng Group Ltd. priced a $300 million issue of five-year senior notes (/BB/BB) at par to yield 7 5/8%, at the tight end of price talk which had been set in the 7¾% area.

Citigroup and Deutsche Bank were the bookrunners.

The monosodium glutamate manufacturer plans to use the proceeds to fund construction of its Northeastern plant, phases one and two, and for general corporate purposes.

Navios slightly upsized

Meanwhile, Navios South American Logistics priced an upsized $200 million issue of eight-year senior notes (B3/B+) at par to yield 9¼%, on top of the price talk.

Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners.

Proceeds will be used to purchase barges and pushboats and for general corporate purposes

The deal was marketed to high yield and emerging markets accounts.

The issuer is a barge and upriver port logistics concern with operations in South America. It was formed when Navios Maritime Holdings, Inc. acquired the operations from Horamar Group in early 2008.

Oppenheimer at rich end

Oppenheimer priced a $200 million issue of seven-year senior secured notes (B2/B+) at par to yield 8¾%, at the tight end of the 8¾% to 9% price talk.

Morgan Stanley & Co. Inc. ran the books for the debt refinancing deal.

Matalan brings £250 million

In the sterling-denominated high-yield market, Matalan plc priced a £250 million issue of 8 7/8% five-year senior secured notes at 99 (Ba1/BB) at 99 to yield 9.124% on Wednesday.

The yield printed in the middle of the 9% to 9¼% price talk.

Goldman Sachs International ran the books.

The Skelmersdale, England-based clothing and housewares retailer plans to use the proceeds to repay bank debt.

Mirabela upsizes, trims talk

Australia's Mirabela Nickel upsized its bond deal to $395 million from $375 million, and cut the price talk on Wednesday, according to an informed source.

The talk on the seven-year senior notes (B2/B-) was decreased to a range of 8¾% to 8 7/8%. Previous talk had been set on Tuesday at 9% to 9¼%.

The deal, which is being marketed to a mix of high-yield and emerging markets accounts, expected to price on Wednesday.

However timing was moved back to Thursday morning, the source said.

J.P. Morgan Securities LLC and Barclays Capital are the joint bookrunners for the Rule 144A and Regulation S for life offering.

Proceeds will be used to provide general working capital and for general corporate purposes.

The deal is playing to a massive order book, market sources say.

AEP sets talk

Finally, AEP Industries talked its $200 million offering of eight-year senior notes (B2/B-) with an 8¼% to 8½% yield.

The books close at noon ET on Thursday, and the deal is set to price after that.

Merrill Lynch is the bookrunner for the Rule 144A with registration rights offer.

Oppenheimer trades up

When the new Oppenheimer Holdings seven-year senior secured notes were freed for secondary dealings, a trader quoted them at 102¾ bid, well up from the deal's par issue price.

A second trader quoted the bonds at 102 bid, 103 offered, but said he didn't know how active trading was.

At another desk, a trader saw the new bonds going home at 102¼ bid, 102¾ offered.

The first trader suggested that "the demand was such that it could have been hedge funds with ex-Oppenheimer guys there" among the buyers for the New York-based financial institution's new issue.

He mentioned that the fairly substantial 8¾% coupon may have also worked in the Oppenheimer deal's favor.

Smooth sailing for Navios

A trader said that Navios South American Logistics' upsized issue of eight-year notes "did pretty well too," seeing those bonds trading around 101 bid, 101½ offered, well up from par at the pricing.

A second trader quoted the new Navios bonds as having gotten as good as 101½ bid, 101 7/8 offered.

However, at yet another shop, a trader said he had not seen the bond at all, since over there, it was being traded off the emerging markets desk.

"The confusion surrounding that deal," the first trader said "was that some people were trying to trade it off the emerging markets desks while the underwriter was trading off the high-yield desk, as were other people," since the parent company is based in Europe, although the entity borrowing the money operates in Latin America.

His understanding was "it predominantly went to high-yield investors, I believe, and we didn't see anybody in the emerging markets group doing any flipping of the bonds whatsoever."

Penn Virginia pops up

Several traders said that Penn Virginia Corp.'s new 7¼% notes due 2019 were trading around at 101 bid, 101½ offered.

The Radnor, Pa.-based oil and natural gas exploration and production company's quickly shopped $300 million offering - upsized from the originally announced $250 million size - priced late in the day on Tuesday at par.

"It traded out of the gate [late Tuesday] at 100 5/8 and then 1003/4," one of the traders said. Then on Wednesday, the new bonds opened in a 101 to 101½ context, "and then it was forgotten about within an hour."

However, a check of the Trace system indicated that what trading took place in the new deal, however early, was substantial, estimated at between $30 million and $60 million changing hands, mostly in a context of 101 to 101 3/8.

Earlier deals little traded

Also among the deals which priced on Tuesday, a trader saw Sappi Papier Holding GmbH's $350 million issue of 6 5/8% notes due 2021 trading Wednesday at 101½ bid, 102 offered.

The company - the European subsidiary of South African coated-paper producer Sappi Ltd. - had priced the issue at par, along with a €250 million tranche of 6 5/8% notes due 2018, which also came at par. In initial aftermarket dealings on Tuesday, the dollar bonds were heard to have gotten as good as 101¾ bid, 102 offered, while the euro notes were pegged at 1011/2.

On Wednesday, a trader said he saw the euro paper still at that 101½ level, although he saw no trading in the dollar notes.

Yet another trader said that he "saw some of the euros for sale but didn't see any of the dollars for sale." He quoted the former bonds as trading a little at 101½ bid, 102 offered, "but then [they] disappeared."

He meantime saw little activity in the bonds which priced on Monday. For instance, he said, he had not seen San Diego-based orthopedics and medical products maker DJO Global, Inc.'s $300 million of 7¾% notes due 2018 "since the 100 5/8 level" at which those bonds had traded later in the day on Monday, following the quick-to-market deal's earlier pricing at par.

He said that Jefferson, La.-based deathcare services provider Stewart Enterprises, Inc.'s $200 million of 6½% notes due 2019 "completely gone - whatever was going to trade has already traded."

Those quickly shopped bonds had priced Monday at par and then were heard to have gotten as good as 101 bid, 101½ offered, before coming down from those peak levels to trade later Monday and on Tuesday around 100 5/8 bid, 101 1/8 offered.

Aramark Holdings Corp.'s new 8 5/8% payment-in-kind senior toggle notes due 2016 were trading "at a premium" to their Monday issue price at 99, but he saw no fresh levels.

The Philadelphia-based food and uniform services provider's $600 million issue, after pricing as a drive-by deal on Monday, was seen on Tuesday having moved as high as 101 bid, 101¼ offered.

"There weren't any bad deals," the trader opined - just that even if deals went up in the aftermarket, investor enthusiasm for those issues did not last more than a session or two, tops.

CNL still suffering

Going back a little further, a trader said that CNL Lifestyle Properties Inc.'s 7¼% notes due 2018 "are still languishing" in the mid-to-upper 90s, having seen "no follow-on buying, and haven't seen anybody say anything in it."

He further said that the deal underwriter "has just vanished."

The Orlando, Fla.-based real estate investment trust - which owns an extensive portfolio of properties ranging from ski resorts, golf courses, marinas and amusement parks, to senior-living facilities - priced its $400 million deal last Thursday at 99.249 to yield 7 3/8%.

But the bonds quickly got hammered down later that same session to lows around 97½ bid, 98½ offered, and only came part of the way back subsequently, settling in around 98 bid, 99 offered.

"That's the only dog of April's [new-issue] litter," the trader quipped.

Indicators turn firmer

Away from the new-issue realm, a trader saw the CDX North American Series 16 HY index up by 3/16 point on Wednesday to close the session at 102 13/16 bid, 102 15/16 offered, after having eased by 1/16 point on Tuesday.

The KDP High Yield Daily Index meantime rose by 6 basis points on Wednesday to end at 75.94, after having eased by 1 bp on Tuesday. Its yield came in by 2 bps to 6.58% after having been unchanged on Tuesday.

The Merrill Lynch High Yield Master II index rose by 0.15% on Wednesday, on top of Tuesday's 0.042% advance. It was the sixth consecutive session-over-session rise. That lifted its year-to-date return to 4.457% - a new peak for 2011, up from Tuesday's 4.301% level, the previous high for the year.

Advancing issues also held their lead over decliners for a sixth straight session on Wednesday, by around a six-to-five margin, versus Tuesday's roughly seven-to-six advantage.

Overall market activity, as measured by dollar-volume levels, declined by 135 on Wednesday, after having risen by 27% on Tuesday from the prior session's levels.

A trader said that the market was "generally better," with a firm tone and most issues up ¼ to ½ point.

However, he said "nothing was standing out - there was nothing to report" on Wednesday, comparable to, say, the movement seen late Monday and on Tuesday in Chesapeake Energy Corp.'s paper on the news that the Oklahoma City-based natural gas company had decided to tender for up to $1 billion of its several series of existing bonds - although the bonds mostly fell as the total consideration being offered by the company for those notes was less than market expectations.

Crossover trading a dominant force

A second trader said that secondary volumes were "relatively light." He estimated Trace volume at about $1.5 billion, "which is normal - normally subdued. We're still running below where we were running a couple of weeks ago."

He said that he had seen a lot of bid-wanteds and a lot of offer-wanteds, "but mostly from the same types of players - ETF guys, mutual fund guys, some money managers and some transition accounts, but no real trends" that could be discerned from that.

As has often been the case recently, he said, "in terms of Trace trading in high yield, we continue to see the [split-rated] five-B credits dominate the volume charts."

On Wednesday, for instance, he said that apart from the active trading in the new Penn Virginia bonds, "if you take that one, CIT, Lyondell and First Data out of the top 25 names that traded in high yield today, everything else was a five-B credit, which tells me that the predominant trading, at least on Trace, is crossover - high yield guys selling to crossover guys [looking to pick up some yield] or high yield guys going up the credit curve and buying the better-quality credits."

The latter, he said "are looking for a little safety, figuring the BBs will widen less than CCCs if the Fed does raise rates."

The trader continued that he didn't think "that anybody out there is having a lot of fun" in what he termed the current "mixed bag" of a market.

He said portfolio managers he had talked to were saying "this is crazy. It's hard enough to know which of the deals are pricing, let alone which are the good ones and which are the bad ones."

Rite Aid flat pre-earnings

Among specific names on Wednesday, a trader said Rite Aid Corp.'s bonds were "dead flat ahead of their numbers," which will come out on Thursday.

He added that trading was "reasonably subdued," with just $25 million to $30 million of the entire structure trading.

He pegged the 9½% notes due 2017 around 91, "up fractionally." The 7½% notes due 2017 were unchanged at par ¼ and the 10 3/8% notes due 2016 were trading with a 108 handle.

"I suspect they will be more active tomorrow," he said.

Another trader also saw the Camp Hill, Pa.-based drugstore chain operator's 9½% notes around 91, calling that up ¼ point. The 7½% notes were seen at par 1/4, also unchanged.

Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.