No pricings, though Radiation Therapy deal slates; new ACCO trades up; secondary softer

By Paul Deckelman and Paul A. Harris

New York, April 23 - Whether dampened by a relatively rare late-April Nor'easter in New York or spooked by a falling stock market in the wake of European political upheaval, high-yield primary market participants sat on their hands Monday, with no new deals pricing by the close.

One new prospective issue joined the forward calendar. Radiation Therapy Services, Inc. was heard to be shopping a $335 million five-year secured deal around with pricing scheduled for later this week. Further details are expected to emerge following a Tuesday investor call.

There also was market chatter bouncing around with no concrete details about some of the other deals already on the forward calendar that may come to market this week from the likes of American Gaming Systems, Inc., Viasystems Group, Inc., MBI Energy Services, Inc. and Ineos Finance plc.

In the euro-denominated market, Talk emerged on SAF Holland GmbH's five-year issue, which could price Tuesday.

Among the deals that priced Friday, traders saw strength in the new ACCO Brands Corp. eight-year deal, as well as Carmike Cinemas, Inc.'s seven-year secured notes. Nationstar Mortgage LLC hung on to the impressive gains it notched in Friday's aftermarket.

Traders saw a generally softer market for most names, taking a cue from stocks. One notable loser on the day was Colt Defense LLC, although that paper likely fell on some bad news about a government contract rather than just on generalized market angst.

But there was plenty of angst to go around and statistical measures of market performance headed south.

SAF Holland sets talk

The new issue market put up a goose egg on a quiet Monday, as volatility rocked the global markets.

In Europe, SAF Holland talked its €150 million offering of unrated five-year senior notes with a yield in the 7¼% area on Monday, market sources say.

That price talk is higher than initial guidance in the 7% area, according to a debt capital markets banker in London.

Pricing is expected on Tuesday.

UniCredit SpA and Commerzbank are the joint bookrunners.

Radiation Therapy plans show

There was one roadshow announcement.

Radiation Therapy plans to price a $335 million offering of five-year senior secured second-lien notes later in the week, according to a syndicate source.

Wells Fargo is the left bookrunner. Morgan Stanley, SunTrust and Barclays are the joint bookrunners.

The Fort Myers, Fla.-based provider of radiation therapy services plans to use the proceeds to repay debt and for general corporate purposes.

A look ahead

A substantial active calendar carried over from last week.

American Gaming Systems is in the market with a $150 million offering of five-year senior secured notes via sole bookrunner Credit Suisse.

No official price talk ad circulated as of Monday's close. However, the unofficial talk has the notes pricing with a coupon that is 12% cash, 2% PIK, according to a trader from a high-yield mutual fund.

Viasystems Group is marketing a $550 million offering of seven-year senior secured notes (B2/BB-) via Goldman Sachs, Wells Fargo and Stifel Nicolaus.

Although there is no official price talk, the deal is expected to come with a yield in the mid- to high-7% range, the trader said, adding that it could price Tuesday.

MBI Energy Services has been roadshowing a $250 million offering of eight-year senior notes (confirmed Caa1/B) via left bookrunner RBC and joint bookrunner Wells Fargo.

Again, there is no official price talk. However, yield conversations took place in the context of the high 8%- to low 9%-range and the deal is expected to price Wednesday or Thursday.

The biggest deal parked on the active calendar is from England's Ineos Finance's $2.2 billion equivalent offering of eight-year senior secured notes (B1//), set to come in dollar- and euro-denominated tranches.

People were told to expect about a 50-50 split, skeptical market-watchers said Monday; a two-thirds/one-third split with the majority coming in dollars is more likely, they said.

The dollar tranche was discussed in the mid- to high-7% range with the euro-denominated tranche expected to come 50 basis points behind the dollar tranche.

The books are expected to close Wednesday and the deal is expected to price Thursday.

Should the 50-50 split between the currencies actually materialize, there is certainly enough cash in the euro-denominated high-yield market to take down that amount of bonds, a London-based debt capital markets banker said Monday.

However, it's an open question as to whether the will to take down that much euro-denominated issuance from Ineos exists, the banker added.

Joint bookrunner J.P. Morgan will bill and deliver for the Ineos deal. Barclays also is a joint bookrunner.

New ACCO bonds trade up

With no new deals pricing Monday, traders said much of the market's focus was in trading the issues that priced during Friday's session.

The most notable among these was ACCO Brands' $500 million of eight-year notes, which priced fairly late in the session Friday via a special-purpose entity named Monaco Spinco Corp. - but which moved up after pricing.

Those 6¾% notes due 2020 priced at par and then were heard to have initially broken not far from there, at 100¼ bid.

After that, however, traders said that the Lincolnshire, Ill.-based office products company's bonds firmed smartly in their initial dealings, with one trader quoting them as moving up to 102½ bid, 103½ offered. He saw the bonds Monday having tightened up a little at higher levels to 102¾ bid, 103¼ offered.

ACCO's bonds did well, a second trader said. "They got up to 103 bid, so that one continues to do better," he said.

He noted that the bonds were up Friday. "But they definitely added some more today," the trader said.

Carmike climbs

A trader said that Columbus, Ga., movie theater operator Carmike Cinemas' 7 3/8% senior secured notes due 2019 traded as high as 102 bid in Monday morning dealings.

On Friday, the company priced its $210 million tranche at par and the new bonds were initially quoted around later Friday at par bid, 100½ offered.

A second trader on Monday saw the new bonds coming in a little from their peak levels, but still holding most of their gains, at 101½ bid, 102½ offered.

Nationstar not active

A trader said Monday that he had not seen any dealings in Lewisville, Texas-based mortgage services provider Nationstar Mortgage's new 9 5/8% notes due 2019.

A second agreed. "They didn't really trade much today, but I think they're still right up there," he said.

That deal priced at par fairly early in Friday's session and then got as good as 102¼ bid, 102¾ offered in initial aftermarket dealings, traders said.

On Monday, a trader estimated the bonds might have moved up a little to 102½ bid, 103 offered. But he added, "I didn't see much in them, to be honest."

Milacron settles in

Several traders Monday saw Cincinnati-based industrial machinery manufacturer Milacron LLC's upsized 8 3/8% senior secured notes due 2019 trading around 101 bid, 102 offered - about the levels that were initially seen on Friday after that upsized $275 million issue priced at par.

Later Friday, the bonds issued by the company's Mcron Finance Sub LLC and Mcron Finance Corp. subsidiaries, were slightly upsized from an original $265 million and were seen tightening to about 101¼ bid, 101¾ offered.

And later Monday, a trader saw the bonds tightening as well to 101 bid, 101½ offered.

Resolute off, but above issue

Friday's other deal, Resolute Energy Corp.'s $250 million of eight-year notes, were heard by traders to have come in a little from the peak levels they hit Friday after pricing at par.

When the Denver-based independent oil and gas company's 8½% notes due 2020 moved into the aftermarket, they were seen having firmed by more than a point to 101¼ bid, 101½ offered.

However in Monday dealings, a trader pegged the bonds at 100½ bid, 101 offered.

A second trader saw them a little easier than that at 100¼ bid, 100½ offered.

Secondary is softer

Away from the new deals, traders said the secondary market seemed mostly softer.

Junk seemed to be following the lead of equities, which slid across the board largely in response to the latest round of bad news coming from Europe. The news included the fall of the Dutch government and France's inconclusive weekend presidential election. In the election, nobody gained a clear majority, so the two top finishers will face off in a May 6 runoff with incumbent Nicholas Sarkozy seen vulnerable to toppling by his Socialist challenger Francois Hollande. There also was new negative data released.

Against that somber backdrop, U.S. stocks followed the European bourses down, with the bellwether Dow Jones Industrial Average falling 102.09 points, or 0.78%, to dip back below the psychologically important 13,000 mark, finishing at 12,927.17. The broader Standard & Poor's 500 index dropped by 0.84% on the day and the still broader Nasdaq composite index lost an even 1%.

Market measures move lower

Back in Junkbondland, statistical measures of junk-market performance fell Monday across the board, after having been higher on Friday.

A trader saw the Markit Group CDX North American Series 18 High Yield Index down by 1/8 point Monday to end at 94 11/16 bid, 94 13/16 offered, after having gained 3/16 point on Friday.

The KDP High Yield Daily Index lost 11 basis points Monday to end at 73.50, after having gained 2 bps on Friday. Its yield rose by 3 bps Monday to 6.72%, after having been unchanged Friday.

And even the previously strong Merrill Lynch High Yield Master II Index, which rose for seven straight sessions, finally fell into the loss column on Monday, declining 0.032%, versus Friday's 0.053% gain.

That left the index's year-to-date return at 5.503%, down from 5.337% on Friday and down from its peak 2012 level of 5.361%, recorded on March 2.

High-beta gets hit

One trader declared that "high-beta stuff seemed to be down."

"Higher quality sectors held in," he said, naming hospitals and other health care names. He said, for instance, that Nashville-based hospitals giant HCA Inc.'s paper was pretty much unchanged.

But, he added, "We saw some high-beta names get hit."

One such name, he said, was Colt Defense's 8¾% notes due 2017, which "traded all the way down to 64, late in the day - that's definitely down a couple of points." He said the bonds previously traded in a 67-69 context.

At another desk, a market source said the Colt bonds finished at 64 3/8 bid, down from Friday's close at 64 and down further from the bonds' most recent previous round-lot level at 68½ on Thursday. About $3 million of the notes changed hands.

The West Hartford, Conn.-based company supplies firearms and ammunition to law enforcement agencies and the U.S. military; its bonds fell in apparent response to an article in Military Times, a defense contracting industry trade publication. The article reported that the Pentagon, which up until now has been exclusively buying its widely used M4 carbine from Colt, decided to diversify its source of supply for the weapon, placing an order for thousands of the guns with Colt rival Remington Arms, part of Madison, N.C.-based Freedom Group Inc. The story was not confirmed by either of those companies or by the Pentagon.

However, there was no fresh trading seen in the latter company's bonds, even including the $250 million of 7 7.8% senior secured notes due 2020, which priced at par back on April 12, which moved up to around the 102- to 1021/2-level in subsequent aftermarket trading and then faded from view.

Chesapeake calms down

Last week's busiest non-new deal name, Oklahoma City-based Chesapeake Energy Corp., continued to trade around Monday, but at much-reduced levels versus last week.

"They clearly quieted down," a trader said. "We didn't hear much about them today."

A second trader said the busiest issue was the 6.775% notes due 2019 - and even that, he estimated, was somewhere around $10 million to $15 million in volume. "Not even in the Top 10 actives," the second trader said.

In contrast, one day last week, more than $100 million of those bonds traded, with more than $75 million the next day and more than $40 million the day after that.

He saw the Chesapeake paper, which gyrated around at lower levels last week, actually up a quarter point, at 96½ bid.

A third trader, who said that about $17 million traded, even saw the paper get as good as 99 at one point.

That was about where those bonds traded before falling after a Reuters "special report" news story at mid-week said that CEO Aubrey McClendon, whose compensation includes the right to buy as much as a 2.5% stake in all of the company's wells, took out more than $1 billion in personal loans over the past few years in order to do so, secured by that stake.

Chesapeake issued a statement Wednesday insisting that there is nothing improper about the loans, saying they are McClendon's own personal business and do not impact the company.

However, critics suggest they indicate questionable business judgment on McClendon's part and could lead to a possible conflict of interest.

Analysts were split. Some saw the whole thing as much ado about nothing, saying McClendon borrowing the money to buy into company wells shows his confidence in Chesapeake.

Others said it doesn't look good and is scaring some investors away.

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