No deals price, but several hit road; Chester, Post bonds strong; ONO, PBF deals grind

By Paul Deckelman and Paul A. Harris

New York, Jan. 30 - The high-yield primary market took a day to regroup on Monday after Friday's frantic session, which at $3 billion was the busiest new-issue day so far this year in Junkbondland.

While no offerings were heard to have priced, several joined the forward calendar or were heard in the process of being shopped around to potential investors.

Privately-held oil and gas exploration and production operator Samson Investment Co. was heard by syndicate sources to be marketing its $2.25 billion eight-year offering, aiming for an end-of-week pricing.

British chemical company INEOS Finance plc's $850 million equivalent dollar- and euro-denominated secured transaction was shown to buyers in Europe on Monday, and will be pitched to U.S. investors starting Tuesday.

Other pending transactions that buyers are eyeballing include lawn care provider ServiceMaster Co.'s $400 million eight-year deal; Spanish Broadcasting System Inc.'s $275 million five-year secured issue and ambulance operator Rural/Metro Corp.'s $95 million add-on to its 2019 bonds.

Apart from those upcoming deals, traders saw activity in some of the many tranches of new paper that priced last week, the busiest weekly period so far this year.

They said breakfast cereal maker Post Holdings, Inc. continued to trade well, just as it did on Friday. Another deal that came to market that session, gaming operator Chester Downs and Marina LLC, firmed smartly once it was freed for aftermarket action on Monday.

On the other hand, they said new deals from CEVA Group plc, Grupo Corporative ONO SA, PBF Holding Co. LLC and Welltec A/S were under pressure.

Away from the new-deal secondary market, news of the buyout deal for Pep Boys - Manny, Moe & Jack sent the automotive services provider's stock sharply higher, but did little to move its bonds.

Samson launches $2.25 billion

No issues priced during the Monday session as the dealers set the stage for what promises to be a busy week in the primary.

Samson Investment began a roadshow for its $2.25 billion two-part offering of senior notes (expected ratings B1/B), which is slated to price on Friday.

It features eight-year notes with four years of call protection and 10-year notes with five years of call protection.

Tranche sizes remain to be determined.

J.P. Morgan, which will bill and deliver, is a joint bookrunner for the acquisition-related deal. Bank of America Merrill Lynch, Wells Fargo, BMO, Barclays, Citigroup, Credit Suisse, Mizuho, RBC and Jefferies are joint bookrunners.

Preliminary guidance on the eight-year notes has them coming in at mid-8% context, while the 10-year notes are whispered in the high-8% range, according to a trader from a high-yield mutual fund.

The bond deal is expected to see a significant amount of participation from accounts that participated in the bridge loan, which was syndicated a month ago, the trader added.

INEOS brings euros and dollars

INEOS Finance held a roadshow in Europe on Monday for its $850 million two-part offering of seven-year senior secured notes (expected ratings Ba3/B).

The debt refinancing deal is coming in the form of a euro-denominated tranche of floating rate notes and a dollar-denominated tranche of fixed rate.

A roadshow kicks off in the United States on Tuesday and wraps up on Thursday.

Barclays, which will bill and deliver the euro-denominated tranche, is a global coordinator and joint bookrunner. J.P. Morgan, which will bill and deliver the dollar-denominated tranche, also is a global coordinator and joint bookrunner.

Rural/Metro for Tuesday

Rural/Metro's plans to host an investor call at 10 a.m. ET on Tuesday for a $95 million non-fungible add-on to its 10 1/8% senior notes due 2019 (existing Caa1/confirmed CCC+).

Citigroup, Credit Suisse and RBC Capital Markets are the joint bookrunners for the acquisition-related deal.

The original $200 million issue priced at par on June 24, 2011.

ServiceMaster starts Tuesday

ServiceMaster will begin a roadshow on Tuesday for its $400 million offering of eight-year senior notes (existing ratings B3/B-), which are expected to price on Friday.

J.P. Morgan, Credit Suisse, Morgan Stanley, Barclays, Deutsche Bank, Goldman Sachs, Citigroup and Natixis are the joint bookrunners for the debt refinancing deal.

Spanish Broadcasting brings five-year deal

Spanish Broadcasting System began marketing a $275 million offering of five-year first-priority senior secured notes (Caa1//), which are expected to price on Tuesday or Wednesday vai Goldman Sachs.

The Coconut Grove, Fla.-based Spanish language broadcaster plans to use the proceeds to refinance existing first lien credit agreement due June 10, 2012.

A big week

Aside from Monday's announcements, there was chatter in the market about the rest of the $4.5 billion calendar of deals expected to price before the end of the January-February crossover week.

As of the Monday close, official talk had not yet surfaced on the Aurora USA Oil & Gas Inc. $200 million offering of 51/4-year senior notes (Caa1/CCC+), but discussions have taken place in the 9½% area, according to a buy-side source who added that the deal is expected to price on Tuesday.

Credit Suisse and UBS are the joint bookrunners.

Meanwhile the $250 million offering of seven-year senior notes (B2//) from Spanish gaming firm Grupo Codere is expected to price on Wednesday.

The whisper is 9% to 9½%, the buy-sider said.

Joint bookrunner Credit Suisse will bill and deliver. Barclays and Banco Itau also are joint bookrunners.

Later in the week, Germany's Schaeffler AG plans to price a €1 billion equivalent four-part offering of senior secured notes.

The deal features non-callable five-year notes and seven-year notes, which come with four years of call protection.

Notes in both tranches are being offered in euro and dollar denominations.

The dollar-denominated five-year notes are being discussed in a yield context of 8 3/8%, the buy-side source said.

The dollar-denominated seven-year notes are being whispered at 8¾%, the buy-sider added.

J.P. Morgan, Deutsche Bank, BNP and HSBC are the joint bookrunners.

New deals hold the spotlight

As was the case last week when some $9 billion of new junk paper came clattering out of the chute, trading in the new bonds was the dominant feature in the secondary market.

One deal that priced late in the day on Friday and did not trade until Monday was Chester Downs & Marina's $$330 million offering of 9¼% senior secured notes due 2020.

The Chester, Pa. casino and racetrack operator's deal - upsized from $315 million originally - priced at par off the forward calendar.

In Monday dealings, a trader said the new bonds did very well, quoting them at 101¾ bid, 102¼ offered, while a second trader placed them at 101 7/8 bid, 102 1/8 offered.

Another late-comer on Friday was AutoNation, Inc.'s $350 million drive-by offering of 5½% notes due 2020.

The Fort Lauderdale, Fla., vehicle retailer's transaction, upsized from the originally announced $250 million, came to market at par.

When the bonds were freed to trade on Monday, a trader saw them trading in a par- to 100 3/8 range, which he said was down about three-eighths point from its early highs.

A second trader saw them trading between 100 3/8 and 1003/4, while yet another trader had them a little higher, at 100½ bid, 101 offered.

The new deal was one of the busiest junk bonds of the day with more than $12 million having traded by mid-afternoon.

Genesis Energy LP's 7 7/8% notes due 2018 gained a point to 102¼ bid on a round-lot basis, although smallish odd-lot trades later lifted its closing price to almost the 104 level, with about $5 million changing hands.

The Houston-based energy pipeline and refining company priced a $100 million add-on to its existing $250 million of the bonds on Friday. That transaction priced at 101.

Post is still the most

Among the deals that priced earlier in the day on Friday and saw some aftermarket activity at that time, traders said there was still plenty of snap, crackle and pop left in St. Louis-based breakfast cereal maker Post Holdings' 7 3/8% notes due 2022, with a trader seeing those bonds at 103 7/8 bid, 104 1/8 offered.

"Post held all of their gains and then some," said a second trader, who located the new deal at 104 bid.

That deal, from the manufacturer of such popular breakfast cereals as Post Shredded Wheat, Cocoa Pebbles, Grape Nuts and Golden Crisp, priced at par and then proceeded to firm solidly when they were freed for aftermarket action, moving up to 103¾ bid, 104 offered.

Not so with CEVA Group's 12¾% notes due 2020.

A trader said that the Dutch supply-chain company's new bonds "went out on their lows," which he put somewhere in a 97- to 98-context.

"They continue to be very weak," he declared.

That $475 million issue of bonds, down from the originally planned $525 million, priced on Friday at 98.681 to yield 13% and then finished out that session between 98 and 98¼ bid.

The other half of that deal, its $325 million issue of add-on 8 3/8% senior secured notes due 2017, also priced well below par, at 98.874 to yield 8 5/8%.

Like the 123/4s, the 8 3/8s, which had been upsized from $300 million originally, also initially traded below their issue price at 98¼ bid, 98½ offered late Friday. That tranche of bonds was not quoted on Monday.

A trader said that Parsippany, N.J., energy refiner PBF Holding's 8¼% senior secured notes due 2020 remained under pressure on Monday, trading down to about the 98 bid level.

A second trader saw the bonds even worse, falling all the day down to 97½ bid in early dealings, before coming off those lows to settle in around 98.

That 98 level was well off from the 98.565 level at which the $650 million issue - downsized from $675 million originally - had priced.

In late Friday dealings, the bonds centered around 98½ bid, 98¾ offered.

JBS still up, ONO down

Among the bonds which priced earlier last week, a trader saw JBS USA LLC's 8¼% notes due 2020 at 100¾ bid, 101 offered.

That's about where the Greeley, Colo., meat processor's $700 million issue, upsized from the original $400 million, had been trading last week after it priced on Wednesday at 98.569, to yield 8½%.

But other issues continued to trade only slightly above issue, such as Lamar Media Corp.'s 5 7/8% senior subordinated notes due 2022.

A trader saw them on Monday at 100¼ bid, 100 3/8 offered, not far off the par level at which the Baton Rouge, La., outdoor advertising company's $500 million drive-by offering - upsized from the originally announced $400 million - had priced on Thursday.

The trader suggested that interest in the new issue was very weak because "it has such a small coupon."

Spanish cable operator Grupo Corporativo ONO's $1 billion add-on to its existing 8 7/8% notes due 2018 traded all the way down to 931/2, a trader said, before they bounced back up to about the 95 level, still down more than a point on the day.

That add-on priced on Thursday at 96.934 to yield 9 5/8% and then traded not far from there on Friday at 96¼ bid, 96½ offered.

But last week's worst-performing new deal - the $325 million 8% senior secured notes due 2019 from Danish oilwell drilling operator Welltec - continued to hold that unwanted honor on Monday, with a trader seeing the bonds at 91 bid, 92 offered.

That deal priced on Wednesday at 97.402 to yield 8½% and then fell from the get-go, declining to about 96 bid, 97 offered by Thursday and then down to 96 offered on Friday.

Traders could not immediately explain why that issue was doing poorly in the aftermarket while other bonds were doing well.

Market turns south

Away from the new-deal realm, a trader said that "the overall market was softer, although most of the new deals hung in."

Statistical measures of junk-market performance, which were mixed on Friday, moved to the downside on Monday.

A trader saw the CDX North American Series 17 High Yield index off by a half-point on Monday to end at 97 bid, 97¼ offered, after having been essentially unchanged on Thursday and Friday.

The KDP High Yield Daily Index eased by 2 basis points Monday to 73.78, after it lost 5 bps on Friday, while its yield was slightly lower Monday at 6.85% after having been unchanged Friday.

And the Merrill Lynch High Yield Master II Index - which rose for 10 straight sessions - finally booked a loss on Monday, easing by 0.095%. On Friday, it rose by 0.943%.

That loss dropped the index's year-to-date return to 2.778%, versus 2.876% for the year on Friday, its 2012 peak level.

Little pep in Pep Boys' paper

The news that Philadelphia-based automotive service center operator Pep Boys - Manny, Moe & Jack had agreed to be bought out by private equity firm The Gores Group LLC pushed the company's New York Stock Exchange-traded shares up by more than 23 % on Monday in heavy trading, to about the $15 price Gores is offering.

But bond traders just yawned, noting that there was no sizable trading in its 7½% notes due 2014.

While there was some busy odd-lot dealings, a trader said they were all in a narrow range between 100½ and 101, the anticipated change-of-control takeout level.

American equipment paper flies

From deep in the distressed-debt world, a trader said that American Airlines Inc.'s 2001-1 Enhanced Equipment Trust Certificates "was a big, big story today."

He said that the Fort Worth, Tex., airline - which, with its corporate parent AMR Corp. slid into bankruptcy at the end of November - "affirmed this deal [as part of the bankruptcy process] it was expected to be rejected since it's all MD collateral." That means its notes are secured by its older McDonnell-Douglas aircraft.

He said that the "A" tranche in the deal, its 8.61977% certificates, moved up to 78-80, while the "B" tranche 7.377% paper, "traded up to 60 at one point, before fading a little bit."

Even so, he said that tranche went home at 56-58, which he said was up 35 points on the session.

Hawker Beechcraft hovers

A market source saw another aeronautical name, Wichita, Kan.-based aircraft manufacturer Hawker Beechcraft's 9¾% notes due 2017 among the more active junk bonds traded, with round-lot turnover of more than $10 million.

Those bonds went out at 13 bid, up about 2 points on the session and three points from the last previous sizable trading, around mid-month.

A trader said its 8½% notes due 2015 and 8 7/8% notes due 2015 were both trading at 27 bid, "but it was only $1 million each."

He saw the 93/4s at 13.

He called that "no big change on any of them and the volume wasn't huge."

The first market source said there was only limited volume in the two 2015 issues, although the 81/2s were quoted up by several points at 27; however, there had been no recent large-size trading those quotes could be compared to.

The company, which makes business jets, is trying to cope with a sales slowdown due to the still-sluggish economy.

Its military division, meanwhile, recently sued the Pentagon over the Air Force's decision to exclude Hawker from bidding on a contract for light-attack aircraft. Instead, it awarded the billion-dollar job to the only other eligible company, Brazilian plane-maker Embraer.

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