Penn Virginia, Sappi, Liz Claiborne price; SugarHouse slates; Chesapeake busy at lower levels

By Paul Deckelman and Paul A. Harris

New York, April 5 - Penn Virginia Corp. came to market on Tuesday with an upsized $300 million drive-by offering of eight-year notes. The energy company's deal - the only significantly sized offering pricing in the domestic dollar-denominated junk sector - appeared too late in the day for any kind of secondary dealings.

There were some aftermarket dealings, even among domestic junk accounts, in South African paper company Sappi Papier Holding GmbH's new dollar-denominated 10-year bonds, which priced alongside a euro-denominated tranche of seven-year paper.

Late in the session, Liz Claiborne, Inc., which priced a well-received $205 million issue of senior secured eight-year notes just on Friday, came back for more, doing a $15 million add-on deal.

The forward calendar meantime continued to grow, with gaming operator SugarHouse Casino heard getting ready to price a five-year secured paper deal in the week ahead. Canada's Taseko Mines Ltd. and European issuers CMA CGM SA and Freenet AG were also seen shopping deals around.

Price talk emerged on pending dollar deals for Oppenheimer Holdings, Inc., Navios South American Logistics Inc. and Mirabela Nickel Ltd. as well as on U.K. retailer Matalan plc's sterling-denominated secured notes.

Away from the new deals, secondary market indicators were mixed. There was some activity at mostly lower levels in Chesapeake Energy Corp.'s bonds on the heels of Monday's late announcement of a $1 billion bond buyback effort.

Penn Virginia upsizes

The primary market pace remained intense on Tuesday. Three issuers, each bringing a single dollar-denominated tranche of notes, raised a combined $665 million.

Penn Virginia priced an upsized $300 million issue of eight-year senior notes (B2/BB-) at par to yield 7¼%.

The yield printed at the tight end of the 7¼% to 7 3/8% price talk.

J.P. Morgan Securities LLC, Merrill Lynch, RBC Capital Markets LLC, Wells Fargo Securities LLC and Barclays Capital Inc. were the joint bookrunners for the quick-to-market debt-refinancing deal, which was upsized from $250 million.

In addition to the upsizing and the execution that brought the yield at the tight end of talk, the par-pricing bonds traded to 100½ bid, 101 offered in the secondary market, according to a syndicate source.

Sappi two-parter

Elsewhere, Sappi Papier priced $705 million equivalent of senior notes (Ba2/BB/) at par to yield 6 5/8%.

The deal included $350 million of 10-year notes and €250 million of seven-year notes.

Both tranches priced at the tight end of price talk that had been set in the 6¾% area.

Citigroup, Credit Agricole, JPMorgan, KBC Bank, RBS and UniCredit were the bookrunners for the debt-refinancing deal.

The issuer is a European subsidiary of Sappi Ltd., a Johannesburg-based coated paper producer.

The deal played predominantly to high-yield accounts, according to a debt capital markets banker in Europe who added that some emerging markets investors did participate.

Liz Claiborne adds $15 million

Liz Claiborne priced a $15 million add-on to its 10½% senior notes due April 15, 2019 (B2/B-) at 100.625.

The issue premium results in a 10.357% yield to worst.

Merrill Lynch, JPMorgan, SunTrust Robinson Humphrey Inc. and Wells Fargo were the joint bookrunners for the quick-to-market deal.

The New York-based designer and marketer of apparel and accessories priced the original $205 million issue at par on Friday.

Proceeds from that deal were used to fund the tender offer for the company's 5% euro-denominated notes due 2013. Proceeds from the add-on will fund the repurchase of an additional $10.6 million of those notes, which were tendered after the tender offer deadline.

Priory Group taps 7% notes

Also tapping a recently completed issue was England's Priory Group Ltd. The company priced a £206 million add-on to its 7% senior secured notes due Feb. 15, 2018 (B1/BB) at 101.

The reoffer price came on top of the price talk.

Deutsche Bank, Royal Bank of Scotland and Credit Suisse Group managed the add-on.

The mental health-care facilities and services provider plans to use the proceeds to refinance debt related to its acquisition of Craegmoor Healthcare.

The original £425 million issue priced at par on Jan. 27, part of an overall £600 million equivalent two-part deal that also featured a £175 million issue of 8 7/8% senior unsecured notes due Feb. 15, 2019.

Talking the deals

Issuers and dealers set the stage for a busy mid-week session.

Australia's Mirabela Nickel talked its $375 million offering of seven-year senior notes (B2/B-) with a 9% to 9¼% yield on Tuesday.

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

JPMorgan and Barclays Capital are the joint bookrunners.

Elsewhere, Oppenheimer Holdings talked its $200 million offering of seven-senior senior secured notes (B2/B+) with an 8¾% to 9% all in yield.

Morgan Stanley & Co. Inc. has the books.

In another deal being jointly marketed to high-yield and emerging markets accounts, Navios South American Logistics talked its $185 million offering of eight-year senior notes (B3/B+) with a yield in the 9¼% area on Tuesday.

Merrill Lynch and JPMorgan are the joint bookrunners.

And from the sterling-denominated high-yield market, British clothing and house wares retailer Matalan talked its £250 million offering of five-year senior secured notes (Ba1/BB) with a 9% to 9¼% yield.

Goldman Sachs International has the books.

CMA CGM roadshow ahead

The new deal calendar continued to fatten on Tuesday.

French maritime shipping firm CMA CGM plans to start a roadshow on Wednesday in Paris for its $800 million equivalent offering of senior notes.

The deal features six-year dollar-denominated notes and eight-year euro-denominated notes.

The roadshow runs in Europe through the remainder of the present week and then moves to the United States in the week ahead.

Deutsche Bank Securities Inc., BNP Paribas, SG CIB, Citigroup and Natixis Bleichroeder are the joint bookrunners for the debt-refinancing and general corporate purposes deal.

Deutsche Bank will bill and deliver for the dollar-denominated tranche. BNP Paribas will bill and deliver for the euro-denominated tranche.

Builders FirstSource begins

Elsewhere, Builders FirstSource, Inc. began a roadshow on Tuesday for its $250 million offering of eight-year senior secured first-priority notes.

UBS Investment Bank is the lead left bookrunner. Goldman Sachs & Co. and Wells Fargo are the joint bookrunners.

The Dallas-based building products company intends to use the proceeds to redeem its second-priority senior secured floating-rate notes due 2016 and its outstanding floating-rate notes due 2012, to repay its revolver, for working capital and for general corporate purposes.

Sugarhouse Casino plans deal

Sugarhouse Casino plans to price a $235 million offering of five-year senior secured second-lien notes during the week ahead.

Credit Suisse Securities and Goldman Sachs are the joint bookrunners.

Proceeds will be used to refinance bank debt and vendor financing and for general corporate purposes.

Taseko Mines' $200 million

From Canada, Taseko Mines will begin a roadshow on Wednesday for a $200 million offering of eight-year senior notes.

Barclays Capital is running the books.

The Vancouver, B.C., mineral and metals exploration and production company plans to use the proceeds to fund the expansion of Gibraltar Mine and for general corporate purposes.

Freenet starts Wednesday

Finally, German telecommunications firm Freenet mandated Commerzbank AG, Deutsche Bank and UniCredit SpA for a possible offering of high-yield notes, pending market conditions.

The company and its dealers will begin making presentations to fixed-income investors in Europe on Wednesday.

Penn, Claiborne too late

Unlike the situation on Monday, when some $2.1 billion of new dollar paper priced and there was a fair amount of aftermarket activity, domestic issuers Penn Virginia and Liz Claiborne came to market too late for any kind of meaningful secondary dealings.

Sappi seen trading around

However, in the words of one trader, "today was Sappi day." The company's new dollar-denominated 10-year notes saw some interest from domestic junk accounts as well as market participants in Europe and emerging-markets-oriented buyers.

He saw the $350 million of dollar notes having moved up to 101½ bid from their par pricing level.

Despite the company's South African pedigree, he opined, "I would say there's a lot of mainstream junk interest" in the company. "It seems like [Sappi] trades regularly in the high-yield market, as opposed to just Europe. It trades like a world credit."

A second trader saw those dollar bonds at 101 5/8 bid and the other half of the deal - the euro-denominated seven-year notes - at 1011/2.

Yet another trader also saw junk marketers playing in the Sappi bonds at levels as high as 101¾ bid, 102 offered.

New Aramarks move up

Among the deals that came to market on Monday, a trader said that Aramark Holdings Corp.'s 8 5/8% payment-in-kind toggle notes due 2016 were active in the morning trading in a 101-to-101¼ context.

A second trader said late in the afternoon that the Aramark notes were going home at 101¼ bid, 101¾ offered.

That was up solidly from the 99 level at which the Philadelphia-based food- and uniform-service provider had priced its $600 million drive-by offering on Monday. Those bonds priced too late in the day for any aftermarket trading on Monday.

Stewart stays higher

A trader saw Stewart Enterprises, Inc.'s new 6½% notes due 2019 trading Tuesday at 100 7/8 bid, 101¼ offered.

A second trader pegged those bonds at 101 5/8 bid, 101 1/8 offered.

That was off a little from the 101 bid, 101½ peak level at which the Jefferson, La.-based funeral home and cemetery operator's $200 million issue had been quoted late in the day on Monday, but it was still up solidly from the par level at which that quickly shopped deal had priced earlier that session.

DJO all locked up

A trader saw DJO Finance LLC/DJO Finance Corp.'s 7¾% notes due 2018 on Tuesday at a 100¾ lock price, meaning the bid and offered levels were the same.

Earlier, he had seen the bonds at 100½ bid, 100¾ offered.

At another desk, though, the bonds were being quoted late in the day at 100¾ bid, 101¼ offered.

The issuers - units of San Diego-based medical products company DJO Global, Inc. - had priced the quickly shopped $300 million offering of those bonds on Monday at par; while a trader heard the new bonds initially get as good as a 102 bid level, they came off that peak to end the session more in a 1001/2-100¾ context.

Secondary indicators mixed

Away from the new-issue realm, a trader saw the series 16 Markit CDX North American High Yield index off by 1/16 point on Tuesday to end at 102¾ bid, 102 7/8 offered after having gained 3/8 point on Monday.

The KDP High Yield Daily index meantime eased by 1 basis point on Tuesday to close at 75.88 after having risen by 7 bps in each of the previous two sessions. Its yield was unchanged at 6.60% after having come in by 2 bps in two straight sessions.

The Merrill Lynch High Yield Master II index rose by 0.042% on top of Monday's 0.183%. It was the fifth consecutive session-over-session rise. That lifted its year-to-date return to 4.301% - a new peak for 2011, up from Monday's 4.258% level, the previous high for the year.

Advancing issues also held their lead over decliners for a fifth straight session on Tuesday, by a not-quite seven-to-six margin, versus the roughly six-to-five edge they had enjoyed over the previous four sessions.

Overall market activity, as measured by dollar-volume levels, rose by 27% on Tuesday after having fallen by 5% on Monday from the prior session's levels.

A trader said he thought that activity levels in the market "were a little better than they've been" the previous few sessions, although he added that he "didn't see anything jumping out at us price-wise."

Chesapeake chopped down

A trader said that he "didn't see an overabundance of activity" in Chesapeake Energy paper, although its 9½% notes due 2015 and 7 5/8% notes due 2013 were in fact among the more busily traded high-yield credits on Tuesday.

But he did see the 9½% notes going out traded at 121¼ bid - their high point for the day, after having started out around a 120-ish context, but well down from the levels around 124-125 at which those bonds were trading until late in the afternoon on Monday.

That was when Oklahoma City-based natural gas exploration and production operator Chesapeake announced plans to buy back up to $1 billion of its various series of senior notes via a tender offer.

He noted that the price that Chesapeake is offering for the 9½% notes - $1,190 per $1,000 principal amount, plus a $20 early tender bonus for those holders tendering their notes by the early tender deadline of 5 p.m. ET on April 15 - is well under where the bonds were trading pre-news.

"People were expecting higher prices" for the tender offer, he said, and the bonds dropped from around that 124 level in limited very late trading on Monday and then opened at that lower 121-area price on Tuesday and stayed there.

He also noted the 7 5/8% notes due 2013 trading around the 111 level, down from levels seen on Friday around 112 3/8 bid; the total consideration, including the early-tender bonus, is $1,102.50 per $1,000 principal amount.

Another trader said that pretty much across the board, trading levels on the bonds "dropped to within 1/8 of the total consideration with the early tender premium."

At another desk, a market source saw the 9½% notes going out at 120½ bid and called that a loss of about 5/8 point on the day and nearly four points over the last two days.

But he saw the Chesapeake 6½% notes due 2017 actually up 1¼ point on the day at 1101/2, just under the bonds' total consideration of $1,110 per $1,000 principal amount.

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