Upsized Elan, Windstream, split-rated Gannett pace busy primary, new Windstream bonds move up

By Paul Deckelman and Paul A. Harris

New York, Sept. 29 - The activity level in Junkbondland picked up on Tuesday, with a slew of new deals either pricing or climbing onto the forward calendar, in contrast to Monday, when just one offering, a split-rated deal for Weyerhaeuser Co., was heard to have priced.

Tuesday also saw the pricing of a split-rated (Baa3/BB+) deal which attracted considerable junk interest, for Gannett Co. Inc., which was heard by syndicate sources to have actually priced off the junk-bond desks of the involved banks, rather than off the high-grade desks, the customary route for most split-rated credits.

Back among the purely high-yield names, Elan Corp. PLC brought the biggest dollar-denominated offering to market, at an upsized $625 million.

Another notable deal came from Windstream Corp.; the Little Rock, Ark.-based telecommunications provider's offering - a quickly marketed drive-by deal, just like the Gannett and Elan transactions - was seen by traders to have firmed solidly in aftermarket action.

Rounding out the day's dollar-denominated offerings was a smallish scheduled calendar deal from Stream Global Services Inc., while French automaker Renault SA drove away with the equivalent of over $1 billion as it priced a quickly shopped benchmark-sized issue of euro-denominated bonds.

There was also a fair amount of activity in the junk-rated subordinated bonds of L-3 Communications Corp., even as the New York-based defense contractor priced a solidly upsized offering of investment grade (Baa/BBB-/BBB-) senior notes.

Elan upsizes

The primary market say $1.225 billion and €750 million of issuance on Tuesday.

Elan Finance plc/Elan Finance Corp. priced an upsized $625 million issue of 8¾% eight-year senior notes (B2/B) at 98.71 to yield 9%.

The yield printed tight to the 9% to 9¼% price talk. The offering was increased from $600 million.

Morgan Stanley and Citigroup were joint bookrunners for the quick-to-market debt refinancing and general corporate purposes deal.

Windstream brings $400 million

Elsewhere Windstream priced a $400 million issue of 7 7/8% eight-year senior notes (Ba3/BB) at 98.531 to yield 8 1/8%, in the middle of the 8% to 8¼% price talk.

JPMorgan, Bank of America Merrill Lynch, Citigroup and Wells Fargo Securities were joint bookrunners for the quick-to-market sale.

Proceeds, together with cash on hand, will be used to finance the cash component of the purchase price of the acquisitions of D&E Communications, Inc. and Lexcom, Inc.

Stream comes atop revised talk

Meanwhile Stream Global Services priced a $200 million issue of 11¼% five-year senior secured notes (B1/B+) at 95.454 to yield 12½%.

The yield printed on top of the revised 12½% area price talk, which was increased from 11% to 11¼%.

Goldman Sachs & Co. was the left lead bookrunner. Wells Fargo Securities, RBC Capital Markets Corp. and Morgan Stanley & Co. Inc. were joint bookrunners.

Renault sees €5 billion of demand

Renault priced a €750 million issue of 6% five-year fixed-rate notes (Ba1/BB) at 99.475 to yield 6 1/8% on Tuesday, according to an informed source.

Calyon Securities, Citigroup and RBS Securities were the lead managers for the issue from the French auto maker.

The deal played to a book containing €5 billion of orders, an informed source said.

Gannett sells split-rated $500 million

In the crossover sector Gannett priced an upsized $500 million of split-rated senior notes (Baa3/BB/) in two tranches.

A $250 million tranche of 8¾% five-year notes priced at 98.465 to yield 9 1/8, at the tight end of the 9¼% area price talk.

Meanwhile a $250 million tranche of 9 3/8% eight-year notes priced at 98.582 to yield 9 5/8%, atop price talk that had the eight-year notes coming 50 bps behind the five-year notes.

The deal, which was upsized from $400 million, priced off the high-yield syndicate desk.

Bank of America Merrill Lynch, J.P. Morgan Securities Inc., Barclays Capital Inc. and Citigroup Global Markets Inc. were joint bookrunners.

CEVA for Wednesday

Meanwhile back in the land of true junk, Netherlands-based CEVA Group plans to price $200 million of seven-year senior secured notes (Caa1) on Wednesday, according to market sources.

Credit Suisse has the books for the general corporate purposes deal from Hoofddorp, Netherlands-based logistics and supply chain management company.

Windstream a winner

A trader saw "an onslaught of new issues" as the dominant feature in Tuesday's junk bond market, with new or recently priced paper monopolizing much of the attention of secondary-side players.

For instance, he saw the new Windstream 7 7/8% senior notes due 2017 trading higher when the bonds were freed for secondary dealings.

He quoted those notes at 99¼ bid, 99¾ offered - up from the 98.531 level at which the $400 million offering had priced earlier in the session to yield 8 1/8%.

Stream Global bonds move up

A trader said he had not seen the new Stream Global Services 11¼% senior secured notes due 2014 trading around, and "with it being a $200 million issue," he suggested, aftermarket levels might be hard to come by, allowing the possibility that the deal might get put away, as small-sized deals often are. It's one to "keep on the radar - but I have not seen or heard anybody mention it."

At another desk, a trader later did quote the new bonds as high as 97 bid, and saw them left at 96½ bid, 97¼ offered, versus the issue's 95.454 pricing level.

Weyerhaeuser holds steady

A trader said there had been "a little bit" of interest in the new Weyerhaeuser Co. 7 3/8% notes due 2019, which priced on Monday at 99.145 to yield 7.498%, or a spread of 420 bps over comparable Treasury issues.

However, at another shop, a trader said the new bonds "didn't do much today," quoting them at 99¼ bid, 99¾ offered.

He noted that "most guys were trading them off Treasuries," quoting a spread of 417 bps bid, 411 bps offered, versus the 420 bps over spread at which the bonds had priced on Monday.

A market source at another desk saw the Federal Way, Wash.-based paper and pulp company's existing 6¾% notes due 2012 having edged up to about the 104 bid mark, while its 8½% bonds due 2025 gained 2 points on the session to 96 bid.

Recent MGM bonds slip lower

Among some of the other recently priced offerings now trading in the secondary market, a trader said there had been some activity Tuesday in the MGM Mirage 11 3/8% notes due 2018, which was one of those names where "we did see a lot of trading and a lot of inquiry in the last couple of days."

He saw the Las Vegas-based casino giant's paper continuing to trade well under the 97.396 level at which the $475 million issue, upsized from the originally announced $350 million, had priced on Sept. 17, to yield 11 7/8%.

"Those bonds seemed to be getting a little bit on the soft end" he said, "slowly coming in the last couple of days." He quoted closing Monday levels at 941/2-95, with the bonds getting as tight as 94¾ bid, 95 1/8 offered earlier in that session. At the beginning of Tuesday's trading, he saw them at 94 5/8 bid, 95¼ offered, and then "someone came in and hit the 94 5/8 bid." He suggested that "some more would have gone into that bid at the time.

"So, at least in the new-issue territory, that seems to be one of them [i.e. recent new bond issues] that's been a little heavy - especially with most [other] names trading at a premium."

NewPage, ACCO deals stay strong

The trader saw NewPage Corp.'s new 11 3/8% senior secured notes due 2014 "continuing to hover right under par," holding the gains which it has notched since pricing.

The Miamisburg, Ohio-based coated paper producer priced $1.7 billion of those bonds - up from the $1.2 billion expected and well up from the $595 million originally talked around the market - on Sept. 17 at 93.996 to yield 13%.

Another recent deal more than holding its own is ACCO Brands Corp.'s 10 5/8% senior secured notes due 2015. The trader saw those bonds in a 1041/2-104¾ context, "so that one's had a nice move up."

The Lincolnshire, Ill-based distributor of traditional and computer-related office products priced $460 million of those bonds, up from the originally planned $425 million, at 98.052 on Sept. 21, to yield 11%. The new bonds were seen having quickly zoomed past the par level, and have held those early gains, and have added to them, since then.

Recent Delta deal remains quietly split

The trader also saw last week's Delta Air Lines Inc.'s 11¾% second-lien notes due 2015 "as good as a 94 bid, earlier this morning," followed by a 94-94¾ market - up a little bit from levels around 93¾ the previous session - although the $600 million issue, upsized from $500 million previously, remained well below the 95.288 level at which the bonds had priced a week ago to yield 13%.

However, he characterized the Delta bonds as "one of those names [where] we just haven't seen much talk about it."

The trader meantime quoted the other half of the Atlanta-based air carrier's $1.35 billion two-part mega-deal, its $750 million of 9½% first-lien senior secured notes due 2014, as having "some small pieces offered north of par," although he had not seen any actual bid levels.

The first-lien bonds - upsized from the originally planned $500 million - priced last Wednesday at 98.563 to yield 9 7/8%, and proceeded to gain some altitude almost as soon as they were freed for aftermarket action.

L-3 deal spurs existing bonds

The news that L-3 Communications was doing a new deal, the proceeds of which will go to redeem its $750 million of outstanding 7 5/8% senior subordinated notes due 2012, was seen helping those bonds and the other subordinated bonds in the company's capital structure.

A market source saw its 5 7/8% notes due 2015 as the most actively traded sub bond, with over $10 million having changed hands at mid-afternoon. Those bonds were quoted trading at par, up more than 2 points on the session.

Another source saw the bonds up nearly 3 points at 100½ bid.

The 6 1/8% notes due 2013, 6 1/8s due 2014 and 6 3/8% notes due 2015 were all seen up by at least a point or more, around the 101 level.

Market indicators mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the newly rolled CDX series 13 index down by ½ point on Tuesday to 92¼ bid, 92¾ offered.

He also heard the old Series 12 index down ½ point at 94 1/8 bid, 94 5/8 offered, after having risen ½ point on Monday.

The KDP High Yield Daily Index rose by 6 basis points on Tuesday to 69.20, after having gained 9 bps on Monday, while its yield narrowed by 1 bp to 8.32%, after having come in by 3 bps the session before that.

In the broader market, advancing issues managed to lead decliners for a 19th straight session on Tuesday, increasing their advantage to seven-to-six, versus the relatively small lead of a couple dozen issues, out of more than 1,000 tracked, seen on Monday.

Overall market activity, as measured by dollar-volume levels, jumped over 72% Tuesday from Monday's pace, which had slowed markedly with many market participants out for the Yom Kippur holiday.

Pilgrim's Pride pop continues...

A trader saw "some activity" in Pilgrim's Pride Corp.'s 7 5/8% notes due 2015, at the 1083/4-109 bid level, adding that it had been among the names that his shop had been getting some inquiry on.

At another desk, a market source quoted those bonds even better, up ¼ point on the day to levels above 109 bid, in fairly brisk trading.

Since the beginning of the month, those 2015 bonds - as well as the rest of the company's capital structure - have moved up smartly to levels well above par, first on the speculation, and later, on the actual news, that the problem-plagued Pittsburg, Tex.-based chicken producer, now reorganizing under bankruptcy court protection, would be bought by Brazilian meat-packing giant JBS SA, with bondholders and other creditors expected to be made whole.

...as does Park Ohio's

A trader saw Park Ohio Holdings Corp.'s 8 3/8% senior subordinated notes due 2014 at 77¾ bid, 78¾ offered, "the highest I've seen them since before [last year's] crash. People love the credit."

He noted that the bonds had moved up to their current levels from mid-summer levels in the middle 50s.

At another desk, a market source saw the Cleveland-based supply-chain logistics company's bonds doing even better than that, trading around the 80 level, although noting that this came on a number of smallish odd-lot trades. The last round-lot trade in the credit, seen this past Thursday, left the bonds around the 77½ level.

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