Fiat, Continental lead European pricing parade; Quiksilver shops two-part dollar deal

By Paul Deckelman and Paul A. Harris

New York, July 9 - European issuers, three of them automotive-themed, were in the driver's seat in Junkbondland on Tuesday, pricing a quartet of deals totaling some €2.1 billion.

Meanwhile, the dollar-denominated segment took a back seat, with no deals having priced for a seventh consecutive session - and just one emerging on the horizon. California-based surfing gear and beachwear manufacturer Quiksilver Inc. is planning a $500 million two-part offering of senior secured and unsecured paper.

Otherwise, Tuesday was an all-euro affair.

Italian carmaker Fiat SpA and German tire manufacturer Continental AG each did a drive-by offering. Fiat's was an €850 million issue of six-year notes done via a financing subsidiary, while Continental brought €750 million of five-year paper to market.

The third automotive-sector company pricing a deal on Tuesday was German clutch manufacturer FTE Automotive GmbH with the day's sole scheduled forward-calendar deal that priced after having been shopped around via a roadshow. The issuer did €240 million of seven-year secured paper.

Away from the autos, Italian hearing-aid company Amplifon SpA was heard by syndicate sources to have priced €275 million of five-year notes.

And British movie theater operator VUE Entertainment raised the curtain on a planned offering of euro- and sterling-denominated notes that is expected to price later in the week, the sources said.

Back among the domestic issues, traders said the market continued to have a firmer tone, which pushed up the recently issued bonds from Hercules Offshore, Inc. and Valeant Pharmaceuticals International, Inc., among other names.

Familiar non-new deal names, like Community Health Systems Inc., were also seen improving.

And statistical market performance indicators turned higher across the board after four straight sessions of having been mixed.

Fiat atop talk

Tuesday's primary market action took place mainly in Europe.

Fiat Finance & Trade Ltd. SA priced an €850 million issue of six-year notes (B1/BB-/BB-) at par to yield 6¾%.

The yield printed on top of yield talk.

BNP Paribas, Citigroup, Commerzbank, Goldman Sachs, Natixis, SG CIB and UniCredit were the bookrunners.

Continental five-year notes

Continental priced a €750 million issue of 3% five-year senior notes (Ba2/BB) at 98.95 to yield in the 3¼%.

The yield printed on top of yield talk and came tighter than initial guidance, which was in the mid-3% context.

The expected deal size had been €500 million minimum.

BNP Paribas, Citigroup, Deutsche Bank, ING and UniCredit were the bookrunners for the debt refinancing deal.

Deutsche Bank will bill and deliver.

Amplifon at a discount

Amplifon priced €275 million of 4 7/8% five-year senior notes on Tuesday at 99.459 to yield 5%.

The yield printed on top of yield talk.

Banca IMI will bill and deliver and is joined by BNP Paribas, Deutsche Bank and UniCredit as the joint bookrunners.

FTE at the wide end

FTE Automotive priced a €240 million issue of seven-year notes (confirmed B1/expected B) at par to yield 9% on Tuesday, according to a market source.

The yield printed at the wide end of the 8¾% to 9% yield talk.

Morgan Stanley ran the books.

Proceeds will be used to refinance debt incurred in Bain Capital's acquisition of FTE from PAI Partners. Proceeds will also be used to refinance FTE's existing debt and for general corporate purposes.

Quiksilver sets investor call

Outdoor sports lifestyle company Quiksilver has an investor conference call planned for 12:30 p.m. ET on Wednesday to discuss a $500 million two-part offering of high yield notes.

The deal is expected to price late in the present week.

It includes a $250 million tranche of five-year senior secured notes and a $250 million tranche of senior unsecured notes.

BofA Merrill Lynch is the left bookrunner for the debt refinancing. Morgan Stanley and Wells Fargo are the joint bookrunners.

VUE sterling/euro deal

London-based VUE Entertainment expects to price a £550 million-equivalent two-part offering of seven-year senior secured notes as early as Thursday.

The deal is coming in tranches of sterling-denominated fixed-rate notes and euro-denominated floating-rate notes.

Tranche sizes remain to be determined.

Goldman Sachs has the books for the LBO deal.

Credit ratings in the single B range are anticipated.

Secondary shows strength

In the secondary arena, a trader said that the market "was firmer - it had a decent tone to it."

He said, "There were a lot of 'offer-wanted' lists out there in the morning. It looks like someone had a big buy program. It seemed like the market was more one-sided today, with better buyers out there."

He said that while it seemed "pretty quiet" overall, "some guys seemed to be doing stuff."

He observed: "It seems like there was some selling by the traditional accounts, while some of the [exchange-traded funds] were in buying."

Community Health, Charter churn

The trader said that "the top kind of more active bonds of the day" included Community Health's 8% notes due 2019 and Charter Communications, Inc.'s 5¼% notes due 2022

He called Franklin, Tenn.-based hospital giant Community Health's bonds, issued by its CHS/Community Health Systems, Inc. subsidiary, "pretty active," seeing them having closed in a 105 to 105½ context.

At another desk, a market source pegged those bonds as going out at 106½ bid, calling them up ¾ of a point on the day, while another source saw them get as good as 107, on brisk mid-afternoon volume of around $8 million. That put the issue among the more active junk bond credits on the day.

The hospital company's 7 1/8% notes due 2020 were even busier, with about $9 million of volume having been racked up and the bonds trading around 103½ bid. But another source said that at the end of the day, the bonds were off by 1½ points, trading around 101½ bid.

The first trader noted that "there were headlines out there" during the day depicting Community Health as a potential suitor for Naples, Fla.-based industry rival Health Management Associates, Inc.

Magnum Hunter moves up

The trader further said that "one other name that I would mention to you is Magnum Hunter Resources Corp.," which released financial results for the 2013 first quarter ended March 31, as well as some operational results of its second quarter, recently ended on June 30.

He noted that the Houston-based oil and natural gas exploration and production operator's production results came in below expectations - but the bonds are up."

He saw the company's $600 million of 9¾% notes due 2020 finishing the day at a 102 to 103 bid level, after having opened the session at 101 to 1012 ¾ bid.

On its Tuesday conference call, the company's chief executive officer outlined how Magnum Hunter had "dramatically" improved its balance sheet and liquidity outlook using the proceeds from a big April asset sale.

He also said the company has a pipeline of other non-core assets, approaching $200 million, that it hopes to monetize and then use the proceeds for de-levering.

Recent deals firmer

A trader indicated that in line with the overall better tone seen in junk, some of the recently priced deals were trading up on Tuesday, after having fallen on Monday from where they had been the previous week.

For instance, he saw both halves of Valeant Pharmaceuticals' giant-sized new offering having firmed, in contrast to coming in a little on Monday versus last week's trading levels. Its 7½% notes due 2021 were up by 1 point, at 104¾ bid, 105¼ offered, while its 6¾% notes due 2018 were 1¼ point better, at 104 bid, 104½ offered.

Valeant, a Canadian specialty drug manufacturer, came to market on June 27 with a $3.225 billion two-part offering, which was both the first megadeal seen in the junk market in over a month and the biggest since late March.

The company priced $1.625 billion of the 7½% notes and $1.6 billion of the 6¾% notes, both at par, and both of those tranches were seen to have traded strongly higher when the new issue was freed for secondary market dealings later that same session.

Houston-based Hercules Offshore's 8¾% notes due 2021 gained a half-point on the session on Tuesday, tO 102 bid, 103 offered, after having lost about 3/8 of a point on Monday from the levels seen last week.

The provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry had priced $400 million of those notes on June 28 at par. The notes quickly moved above the 101 level in initial aftermarket dealings and then proceeded to hold onto those gains over the next few sessions.

Market indicators higher

Statistical junk market performance indicators improved across the board on Tuesday, after four straight sessions of having turned in mixed results.

The Markit Series 20 CDX North American High Yield index rose by 3/8 of a point, its second straight gain, closing at 104 1/32 bid, 104 9/32 offered. On Monday, the index had gained 5/16 of a point.

The KDP High Yield Daily index snapped a three-session losing streak on Tuesday, rising by 10 basis points to finish at 72.90, a solid turnaround from, Monday's 21-bps slide. Its yield was 4 bps lower, at 6.40%, after having risen by 8 bps on Monday.

And the widely followed Merrill Lynch High Yield Master II index also got back in the black on Tuesday after two straight losses, gaining 0.275%. On Monday, it had lost 0.036%.

That gain raised the index's year-to-date return to 1.697% from Monday's finish at 1.418%. The cumulative return also remained well up from its recently established low point for the year of 0.384%, set on June 25, though well below its 2013 peak level of 5.835% recorded on May 9.

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