Chemtura, Mariner price deals; Nordic Telephone bringing €2.031 billion; Movie Gallery roller-coasters

By Paul A. Harris

St. Louis, April 19 - Two issuers combined to price two upsized tranches totaling $800 million during the Wednesday session.

Elsewhere Nordic Telephone Co. Holdings ApS will start a roadshow on Thursday for its €2.031 billion equivalent multi-tranche offering.

Traders marked the broad high-yield market higher despite a sell-off in Treasuries, although higher quality "richer" paper that is more sensitive to Treasuries fared less well.

The existing bonds of Movie Gallery, Inc. rose smartly but then fell just as far and ended flat on the day - the moves coming on news that the company plans to restructure its leases.

"It was a strange day," a trader commented at the Wednesday close.

"Government paper opened stronger then flopped after the CPI number came out.

"High yield tightened, but the richer, the MGM Grand-type of stuff that trades pretty tight to Treasuries, flopped.

"Where there was yield, names were better," the trader added.

Chemtura, Mariner price deals

Two issuers priced a tranche of bonds apiece - both of them upsized - for a combined $800 million of issuance on Wednesday.

Chemtura Corp. priced an upsized $500 million issue of 6 7/8% 10-year senior notes (Ba1/BB+) at 99.452 to yield 6.95%, tight to the 7% area price talk. The deal was increased from $400 million.

Credit Suisse and Citigroup were joint bookrunners for the debt refinancing from the Middlebury, Conn., manufacturer and marketer of specialty chemicals.

Speaking in the morning shortly after details about the drive-by transaction surfaced, a buy-side source said that Chemtura figured to be a "very well-received high double B," and added that there is an expectation that Chemtura could be an investment-grade credit in another year or two.

Elsewhere Mariner Energy, Inc. priced an upsized $300 million issue of 7½% seven-year senior notes at 98.676 to yield 7¾%, on the wide end of the 7½%-7¾% price talk. The deal was raised from $250 million.

Lehman Brothers and JP Morgan were joint bookrunners for the debt refinancing deal from the Houston-based independent oil and gas exploration, development and production company.

Nordic Telephone comes with €2.031 billion

Elsewhere the forward calendar took on a chunk of euro-denominated business during the mid-week session.

Nordic Telephone will start a roadshow on Thursday for its €2.031 billion equivalent multi-tranche offering of senior notes (B2/B/B+).

The deal will be comprised of dollar- and euro-denominated 10-year fixed-notes, and euro-denominated 10-year floating-rate notes. Tranche sizes remain to be determined.

Deutsche Bank Securities, JP Morgan, Barclays Capital, Credit Suisse and Royal Bank of Scotland are the underwriters.

Proceeds will be used to repay a bridge loan obtained as part of the €12 billion buyout of TDC A/S by Apax Partners, Permira, The Blackstone Group, Providence Equity Partners and Kohlberg Kravis Roberts & Co.

iPayment $280 million next week

Also climbing aboard the forward calendar was credit and debit card payment processing services provider iPayment Inc.

The Nashville, Tenn.-based company will start a roadshow early next week for its $280 million offering of eight-year senior subordinated notes (Caa1/CCC+).

Banc of America Securities has the books for the acquisition financing.

Sensata talks $750 million

With regard to deals traveling the roadshow circuit, Sensata Technologies BV issued price talk Wednesday on its downsized $750 million equivalent offering of notes.

The Attleboro, Mass., supplier of engineered sensors and controls talked a $450 million tranche of eight-year senior notes (B2/B-) at 8% to 8¼%.

Meanwhile a $300 million equivalent tranche of euro-denominated 10-year senior subordinated notes (B2/B-) are talked at 9% to 9¼%.

Morgan Stanley, Banc of America Securities and Goldman Sachs & Co. are joint bookrunners for the acquisition deal.

The bond financing was decreased to $750 million from $900 million, with $150 million shifted to the company's credit facility.

Nevertheless a source close to the bond deal said Wednesday that it is going very well despite being downsized. The downsizing, the source added, can be attributed to the robust demand for the company's credit facility in spite of much more favorable pricing from Sensata's point of view.

Roller-coaster for Movie Gallery

In the secondary, the existing paper of Dothan, Ala.-based Movie Gallery, Inc. initially firmed on Wednesday on news that the company has entered into a management agreement with Hilco Real Estate, LLC. Under the agreement Movie Gallery and Hilco will initiate a program to restructure leases at more than 1,100 existing Movie Gallery and Hollywood Video stores.

The list of stores, which will not be published, does not include stores that are associated with the company's previously announced subleasing and downsizing program.

The news, traders said, propelled the troubled company's 11% bonds due May 1, 2012 (Caa3/CCC-) to as high as 50 bid, although they did not sustain the altitude.

"When the news came out in the morning the bonds went up three points," a trader said, adding that they settled in at 50 bid, 52 offered, "up three points on the bid after a couple of guys got picked off and then figured out where the market was."

Another trader, speaking late in the morning, said that the 11% paper was at 47 bid, 48 offered, and added that Tuesday morning it was at 45.50 bid, 47 offered.

However at the close, another trader said that the bonds "gave up everything and maybe finished the day off a little from where they started."

This source spotted Movie Gallery's 11% notes trading in the 46.50 bid, 48.50 offered area, and added that they had given up the three points that they had gained in the morning.

"The news was positive and the bonds got a little pop but then flattened out through the course of the day," the trader remarked.

Another trader seemed to concur that this roller-coaster ride had taken place.

"I don't know how much money they will get out of restructuring their leases," the trader commented, adding that the 11% bonds, which had opened the session at 49 bid, 50 offered, traded down to 47 bid at the close.

GM, Ford drift down ahead of earnings

With earnings reports due Thursday from General Motors Corp. and Friday from Ford Motor Co., junk bond traders said that there did not appear to be a lot of pre-earnings positioning taking place during the Wednesday session.

"It seems like when we see autos better early in the day we tend to see a slight rally, but there has been a disconnect over the past week or so," one trader said, adding that Treasuries were off Wednesday but the high-yield market seemed "fairly resilient."

However, the trader added, the automotive sector was a mixed bag.

Ford definitely lagged, the trader said.

Meanwhile the General Motors bonds maturing in 2033 started the day better, but came in around lunch, finishing at 72.50 bid, 73.25 offered, after having gotten as low as 71.25 bid, 71.75 offered.

The trader added that GM's credit default swaps were five basis points tighter from lunch time, but five wider from Wednesday morning.

This trader was looking for more volatility in the sector as the earnings reports come in.

Some auto names strong

However another trader, noting that high-yield has "seen a bias toward a better bid," and marking the broad market a quarter to a half better on Wednesday, said that there were pockets of strength in the automotive sector.

"There have been better bids for some names," the trader said, adding that the paper of Lear Corp. was up Tuesday after the news that the company had restructured its planned new bank loan and would obtain better rates than the market had anticipated.

"They moved up to the 96 bid level on Wednesday after being 94 bid last week," the trader said, adding that there had been "a fair amount of trading" around the 95.75 bid, 96.25 offered level.

The trader said that the existing bonds of American Axle & Manufacturing were up about a point, while those of Goodyear Tire & Rubber Co. were slightly better on Wednesday.

Meanwhile, the trader added, the existing bonds of parts supplier Delphi Corp. were unchanged.

Prospect News quizzed another trader as to whether investors appeared to be positioning themselves with respect to the Thursday-Friday regime of earnings reports.

The trader did not seem to think that they were.

"People seem to be staying pretty much neutral," the source said, adding that the market is trading more or less flat across all of the different tranches.

"There's not a tremendous amount of volatility in one tranche compared to another," the trader asserted.

Dresser-Rand weakens

Traders also reported on Wednesday that the existing bonds of Dresser-Rand Group Inc., a supplier of rotating equipment, weakened on news that the company announced that it has commenced a secondary offering of up to 20 million shares to be sold by its direct parent, D-R Interholding, LLC.

Dresser-Rand Group Inc. will not receive any proceeds from the sale of shares in the offering. Instead proceeds will go to affiliates of First Reserve Corp. and members of Dresser-Rand management.

Early in the day a trader said that the company's 7 5/8% notes were "slightly weaker" at 102 bid, 103 offered.

At the end of the day another trader gave the exact same levels, and added that the paper had been at 102.50 bid, 103.50 offered a couple of days ago, and marked it off half a point on the day.

Upside for imaging

Elsewhere a trader asserted that investors appear to be sensing some upside from the lately besieged health care imaging sector - "at least for the short term."

The source reported recent improvement in the dollar prices of the bonds of Radiologix Inc., MedQuest Inc. and Alliance Imaging Inc.

The source said that the MedQuest 11 7/8% notes, "which were languishing right around the 71 bid, 73 offered area not long ago," traded at 83.50 bid, 84.50 offered on Wednesday.

"And there are some buyers," the trader asserted.

Radiologix paper, meanwhile, was at 80 bid, 82 offered on Wednesday, up from 78 bid, 79 offered area a week ago.

"And there are people looking," the trader maintained, recalling that prior to the sell off, sparked by the anticipated negative impacts on the imaging companies of the Medicare reimbursement cuts mandated by the Deficit Reduction Act of 2005, Radiologix paper was at 103.50 bid, 104.50 offered.

"All of these bonds are about 10 points off of their lows," the trader said, adding that investors appear to presently be focusing on the levels of free cash being maintained by these companies.

Retail steady as Treasuries slip

Elsewhere Wednesday a trader, spotting the 10-year U.S. Treasury going out at yielding 5.02%, said that the broad market appeared to be holding up in spite of the sell off in Treasuries.

However, the source said, higher-quality, and therefore more Treasury-sensitive credits, such as those from the gaming sector, were adversely impacted by the sell-off in government paper.

The source did mention specific rays of light, one of them being the retail sector, which had been a little weak in the morning, but held in.

"It was range-bound," the source said, "up and down a half, depending upon where you catch it.

"With oil around $72 per barrel you would think that the retail sector would slow down but apart from the fact that the Treasury market has been backing off, the bonds themselves have continued to stay pretty tight, spread-wise.

"The only price fluctuations seem related to Treasury moves."

This source marked the broad high-yield market up a quarter of a point.

"You still have people who are kind of worried about the market buying yield-to-call type paper or short-term paper to stay ahead of the market," the source said.

"But the higher yielding paper is getting a better look than it deserves because the better credit names are so tight."

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