Severstal Columbus, NFR, ITC slate deals; new Appletons continue slide; Blockbuster down more

By Paul Deckelman and Paul A. Harris

New York, Feb. 1 - The high-yield market began a new week - as well as the second month of the year - on Monday on a relatively quiet note. There were no new-deal pricings seen, although several new issues climbed aboard the forward calendar.

Mississippi-based steel mill operator Severstal Columbus, LLC was heard by syndicate sources to have begun shopping a $525 million offering of eight-year senior secured notes around to investors with a domestic roadshow this week and marketing in London early next week, aiming for a pricing at that time.

Also heard hitting the road for marketing ahead of an anticipated pricing early next week was Houston-based oil and gas exploration and production company NFR EnergyLLC/NFR Energy Finance Corp., which will sell $250 million of seven-year notes.

ITC^DeltaCom, a Huntsville, Ala.-based broadband services provider, unveiled plans for an offering of six-year senior secured notes, although there are no immediate information available on the timing or other details.

Primaryside players were meantime anticipating possible pricings over the next day or so from such issuers as Manitowoc Co., and Crosstex Energy,LP/Crosstex Energy Finance Corp., with CNG Holdings, Inc., McClatchy Co., Media General, Inc. and Community Education Centers, Inc. - among others -- waiting in the wings.

Among recently priced new deals Appleton Papers, Inc. continued to deteriorate from the level at which the Wisconsin-based coated-paper manufacturer priced its five-year secured issue just this past Friday. Cenveo Inc.'s new bond issue continued to tread water right around where it came to market, on Friday. However, PH Glatfelter Co. and Libbey Glass, Inc. continued to more than hold their own in the aftermarket.

Away from the new-deal world, Blockbuster Inc.'s bonds - which rode a roller-coaster last week, with the 9% notes due 2012 gyrating around all over the 20s - were seen once again on the downward slope of that ride, although the recently strong volume in the name seems to have simmered down.

NFR Energy starts roadshow Tuesday

During Monday's quiet session in the primary market, NFR Energy LLC, along with financing unit NFR Energy Finance Corp., announced it will start a roadshow on Tuesday for a $250 million offering of seven-year senior unsecured notes.

UBS Investment Bank is the left lead bookrunner for the Rule 144A and Regulation S with registration rights deal, which is set to price on Feb. 9. Bank of America Merrill Lynch, JP Morgan and BNP Paribas are joint bookrunners.

The notes come with four years of call protection.

Credit ratings remain to be determined.

Proceeds will be used to the repay the Houston-based oil and gas exploration and development company's revolver and its second-lien term loan.

Severstal Columbus to bring $250 million

Elsewhere, Severstal Columbus, LLC will present its $250 million offering of eight-year first-priority senior secured notes offer to U.S.-based investors on a roadshow this week.

The notes offer will then be presented to investors in London on Feb. 9.

The deal is expected to price on Feb. 9 or 10.

Credit Suisse and Citigroup are joint bookrunners.

Proceeds will be used to repay bank debt and project debt, and for general corporate purposes.

The prospective issuer is a Columbus, Miss.-based steel mill.

ITC^DeltaCom announces $325 million

Meanwhile ITC^DeltaCom announced in a late Monday press release that it intends to place $325 million of senior secured notes due 2016.

Proceeds from the Rule 144A/Regulation S deal will be used to repay bank debt and for general corporate purposes.

The company is a Huntsville, Ala.-based voice, data and internet services provider.

Appletons beaten down

A trader said "talk about having a worm in your apple" - Appleton Papers' new 10½% senior secured notes due 2015 continued to trade well below the levels at which that $305 million deal had priced on Friday.

"Right out of the box, they were hitting bids - 98, then 971/2, then 97, as soon as they appeared."

He said that watching the bonds was like "watching someone play a game of Whack-A-Mole" - the popular amusement arcade game that involves hammering down an animated critter whenever he pops his head up out of the hole.

He said the new bonds had fallen as low as an offered price of 963/4, with no bids, although later, they did come off their lows to finish at 97 bid, 97½ offered. Even so, that was still a point down from 98.035 level at which the bonds had priced to yield 11%.

New Cenveo deal struggles

A trader saw the new Cenveo 8 7/8% senior secured notes due 2018 trading below issue, quoting them left at 98 bid, 99 offered. The Stamford, Conn.-based commercial printing products company priced its $400 million of notes - upsized from the original $375 million - on Friday at 99.301 to yield 9%.

The trader said that "those two [Cenveo and Appleton] seemed the softest."

Libbey hangs in

On the other hand, traders saw Libbey Glass' $400 million offering of 10% senior secured notes due 2015, which priced on Thursday at 98.082 to yield 10½%, continuing to trade well above that level.

Toledo, Ohio-based glass tableware maker Libbey's new notes "were doing OK," a trader said on Monday, quoting them at 101½ bid.

"That was not much different than Friday, maybe up a little," he said, "but nothing dramatic."

However, he noted that the bonds "were up a good three-plus points" from where they had priced on Thursday, "so they're doing OK."

Glatfelter gain remains

A trader said that Glatfelter Co.'s smallish $100 million offering of new notes mirroring its existing $200 million of 7 1/8% notes due 2016 were trading on Monday at 97 bid, 98 offered.

On Friday, the York, Pa.-based paper manufacturer had priced that add-on deal at 95 bid. The new bonds quickly shot up in Friday's aftermarket to 97 bid, 97½ offered, and stayed around that neighborhood during Monday's dealings.

Market measures stay mixed

Back among the established bonds with no new-deal connections, a trader saw the CDX Series 13 index down up 1/8 point on Monday, at 97 1/8 bid, 97 5/8 offered, after having eased by 3/8 point on Friday.

The KDP High Yield Daily Index meanwhile retreated by 4 basis points on Monday to 70.98, after having gained by the same amount on Friday. Its yield widened by 2 bps to 8.25%, after having held steady on Friday.

Advancing issues once again fell behind decliners on Monday - this after having first pulled even with them on Thursday and then nosed ahead on Friday to break a seven-session losing streak. However, the decliners were ahead by only a couple of dozen issues out of some 1,500 tracked.

Overall market activity, as measured by dollar-volume levels, fell by about 20% from Friday's pace.

A trader said that "the big news is that despite the equity market strength" - the bellwether Dow Jones Industrial Average jumped by 118.20 points, or 1.17%, to end at 10,185.53 - "our market was still soft."

Cricket leaps forward on sale speculation

Among specific names, a trader saw Cricket Communications Inc.'s 9 3/8% notes due 2014 trading at 101 bid, 101½ offered, versus the 99¾ bid, par offered levels at which the San Diego-based prepaid wireless company's bonds had traded on Friday. He estimated that the bonds were up between 1 and 1½ points on the day, though on "not a lot of trades," in response to news apparently coming from its parent company, Leap Wireless International Inc.

News reports - attributing their information to anonymous sources said to be close to the situation - said that Leap had hired Goldman Sachs and Morgan Stanley to help the company evaluate a possible sale. The reports said that Leap has recently been in contact with such potential buyers as MetroPCS Communications Inc., which like Leap is a provider of relatively low-cost pre-paid wireless services, as well as mainstream wireless giants AT&T Inc., and Verizon Wireless. Rumors that Leap and MetroPCS may unite have swept the financial markets before on a periodic basis, but have failed to pan out - so far. The latest stories about a possible sale of Leap and Cricket to a competitor remained unconfirmed as of press time Monday night.

Motorola moves around

In crossover trading, a split-rated issue which saw some activity in the high-yield world on Monday was Motorola Inc.'s 6 5/8% bonds due 2037 (Baa3/BB+/BBB-).

A junk trader said that about $15 million of the bonds changed hands on Monday, at anywhere between 88 1/8 and 881/4, which he called down maybe ¼ point from its most recent previous levels, which he said were from the last time that he saw it traded, in mid-January.

"It's something we don't see that often on our desk," he said, "but there were some pretty good-sized trades today" between those 88 1/8-88¼ parameters.

Another junk trader who also saw the 6 5/8s generating about $15 million of trades, including some from nominally high yield accounts, said that "it doesn't look like there was a lot of trading." He explained that "because it has a BBB on one side, they report [to Trace] under the investment-grade rules, so they give you the sizes a little differently."

He said that rather than a lot of round-lot trades of $1 million or over, there really were three trades of $5 million, all in that 88 1/8 area. "Somebody bought them there, somebody sold them there, and then there was a trade between dealers at 88 1/8. So it doesn't look like there was a lot of activity - just that they traded in bigger lots."

There was no fresh news that might explain the activity out on the Schaumburg, Ill.-based electronics company, which is principally involved in making mobile phones, telephone handsets and other communications gear.

Boston Scientific off on big lawsuit settlement

A junk trader saw "a lot of" Boston Scientific Corp.'s split-rated (Ba1/BBB/BB-) bonds trading on Monday, as the Natick, Mass.-based medical devices maker announced a nearly $1.73 billion settlement of some of its ongoing patent litigation with Johnson & Johnson. Boston Scientific will pay J&J $1 billion immediately, with the remaining $725 million due next January. The settlement of three patent disputes over Boston Scientific's drug-coated stents used in vascular and heart surgery, which dated all the way back to 2003, avoids the risks of an even bigger award against the company in jury trials which were scheduled to begin later this month.

He said that the 6% notes due 2020 were mostly trading between 100½ and 101, off from Friday, when round lots of the bonds were trading between 101 and 1011/2.

A market source at another desk estimated that about $12 million of the bonds had changed hands by the close, and saw the 6% issue down about a point on the day at just under 1001/2.

Boston Scientific priced $850 million of those bonds at 99.031 to yield 6.129% on Dec. 10, as part of a $2 billion, split-rated three-tranche offering which also included $850 million of five-year notes and $300 million of 30-year bonds.

Blockbuster retreat resumes

Among the more distressed-type names, a trader said that Blockbuster Inc. "seems to again be active," with the Dallas-based movie-rental company's 9% senior subordinated notes due 2012 ending around a "23ish" level, with "good activity." He called the bonds down a point versus Friday's finish.

He meantime saw Blockbuster's 11¾% senior secured notes due 2014 in a 71-72 context, which he called a point lower as well.

At another desk, a trader said the company's 9% notes were active on the day, mostly in a 221/2-23 range, with the 113/4s trading around a 711/2-72 context most of the day.

He noted that the 9% paper had gyrated last week, from the high 20s - where they had begun the week after having been mercilessly hammered down from the lower 60s the Thursday and Friday before that, Jan. 21-22 -- down to lows around 22, then back up to the highs around 27-28, before retreating Friday and again Monday back to the 22 area. "I won't say the volume has dried up," he said, "it's just not as active as it was that first couple of days [when] you had a lot of paper changing hands."

A market source agreed that turnover in the Blockbuster bonds as of mid-afternoon was around $8 million - well down from recent sessions.

NewPage not much moved

A trader said that NewPage Corp.'s 10% notes due 2012 hung in around the same 66-area level at which they had ended the previous week, seeing a "decent amount of volume" in the credit.

He said that he "did not see much activity" in the Miamisburg, Ohio-based coated-paper company's 12% senior subordinated notes due 2013, which had most recently been around a 40-41 level.

NewPage rival Catalyst Paper Co. -- which said on Monday that it had decided to defer its previously announced proposed offering of equity rights aimed at raising C$100 million, citing market conditions and last week's announced resignation of CEO Richard Garneau - was essentially unchanged after that.

A trader saw the Richmond, B.C.-based coated paper manufacturer's 8 5/8% notes due 2011 - currently the subject of an exchange offer - "pretty much unchanged," with trades taking place in an 86-87 range on "some activity," and the bonds going out around 86¾ bid.

R.H. Donnelly bankruptcy ends

A trader saw R.H. Donnelley Corp.'s newly-issued equity trading in a $31-$32 context, although it finally ended at $33.56 on this, it's first day of trading on the New York Stock Exchange as the Cary, N.C.-based telephone directory publisher - now renamed Dex One Corp. and given a ticker symbol of DEXO - officially emerged from Chapter 11 after a seven-month restructuring.

The new stock will be distributed to the holders of its $6 billion of bond debt, which will be extinguished.

As for the bonds, the trader saw parent Donnelley's 11¾% senior notes due 2015 at 93 bid, 95 offered, with its subordinated 8 7/8% notes due 2016 and 8 7/8% notes due 2017 both at 9 bid, 10 offered.

Donnelley subsidiary Dex Media Inc.'s 8% notes due 2013 and 9% notes due 2013 were at 25 bid, 27 offered, "and it seemed like there were buyers of it around," although he did not know how much activity there actually was in the old Donnelley and Dex bonds. "I've not seen much activity, so it's pretty tough to say where they have been."

Another trader said that he saw the new common moving around in a wide range between 28 and 38 earlier in the day before narrowing in later on to end where the shares did.

He saw the subordinated paper offered at 11, with no bid, versus levels around 9-10 on Friday. He saw the company's 8½% notes due 2010 recently around a 126-130 context, while noting that the 113/4s had been offered last week around 104, but he had seen no dealings in it on Monday.

Autosphere mostly idle

A trader saw General Motors Corp.'s benchmark 8 3/8% notes due 2033 ending about 27½ bid, 28 offered, although he "did not see much activity at all" in the bonds.

He saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 trading in an 87-88 context, which he said was unchanged, on "some volume, but not much."

Another trader saw the GM benchmarks at 28 bid, 29 offered, which he called up as much as 1¾ point on the day, having previously quoted the issue in a 26-bid neighborhood.

He saw the Ford long bonds unchanged at 86 bid, 88 offered.

Also in the autosphere, a trader saw Visteon Corp.'s 7% notes due 2014 right around 45 bid, seeing the Van Buren, Township, Mich.-based automotive parts supplier's issue trading all day in that area, on "very little activity

WaMu bank paper busy

A trader said that several of Washington Mutual's bank issues - such as the floating-rate notes due 2011 issued by Washington Mutual Bank, NA -- "was a little active today," trading a few times around 441/4-441/2. He said that all of the other bank issues - as opposed to the parent corporation's holding company paper - "all kind of trade right in that same context."

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