Associated, Potlatch, Norwegian slate deals, Universal seen Tuesday; new Navistar again busy

By Paul Deckelman and Paul A. Harris

New York, Oct. 26 - Associated Materials LLC, Potlatch Corp. and Norwegian Cruise Line each announced plans for respective junk bond offerings on Monday, high yield syndicate sources said.

Meanwhile, pre-deal market price talk emerged on Universal City Development Partners Ltd.'s planned $625 million two-tranche issue. However, the syndicate sources heard that the deal, which had been expected to price on Monday, has been floated off until Tuesday morning.

Elsewhere in the primary sector, Cequel Communications LLC hit the road on Monday to begin marketing its $400 million offering of eight-year notes, which could price either later this week or at the beginning of November, next week.

Among recently priced new-deal offerings, Navistar International Inc.'s $1 billion issue of 12-year notes - which priced on Thursday and then was the focus of intensely busy trading Friday - was again active on Monday, with traders seeing the Warrenville, Ill.-based truck and bus maker's bonds easier on the session, though still well above its issue price.

Away from new-deal-related credits, CIT Group Inc.'s bonds were seen actively traded across its capital structure, at mostly unchanged to higher levels, after the troubled New York-based commercial lender announced further modifications of its pending tender offer for many of its bonds.

From deep in distressed debt territory, Capmark Financial Group Inc.'s bonds were seen a little better as the company filed for Chapter 11 protection. However, another issuer sliding into bankruptcy, FairPoint Communications Inc., was quoted several points lower on the day.

Busy week expected

The primary market figures to be busy during the run-up to November, market sources say.

One banker noted that some issuers will likely hit the throttle ahead of the deadline for incorporating third quarter numbers in bond prospectuses.

Meanwhile, the Monday session saw the active forward calendar build.

Associated Materials to bring $200 million

Associated Materials will begin a three-day roadshow on Tuesday for its $200 million offering of seven-year senior secured second-lien notes.

The roadshow is scheduled to conclude on Thursday, with the notes expected to price the same day.

JP Morgan, UBS Investment Bank and Wells Fargo Securities are joint bookrunners.

The notes feature a springing maturity to Dec. 1, 2013 in the even the holding company notes are not extended past the maturity of the secured notes.

Credit ratings remain to be determined.

Proceeds will be used to redeem the company's senior subordinated notes (B3/CCC).

Potlatch to price Thursday

Elsewhere Potlatch Corp. is marketing $150 million of 10-year senior notes (Ba1/BB) in a deal that is expected to price on Thursday.

Bank of America Merrill Lynch and Goldman Sachs & Co. are joint bookrunners for the debt refinancing and general corporate purposes from the Spokane, Wash.-based paper company.

Cequel starts roadshow

Cequel Communications Holdings I, LLC started a roadshow on Monday for a $400 million offering of eight-year senior unsecured notes (B3).

Goldman Sachs & Co., Credit Suisse and JP Morgan are joint bookrunners for the Rule 144A for life offer.

The St. Louis-based company will use the proceeds to repay bank debt.

Norwegian Cruise Lines to sell $450 million

Meanwhile Norwegian Cruise Line will roadshow a $450 million offering of seven-year senior secured notes (B3/B+) this week.

Deutsche Bank Securities, Barclays Capital, Citigroup and JP Morgan are joint bookrunners.

The Miami cruise ship line is also putting in place a new $750 million revolver.

Proceeds will be used to retire bank debt and discharge its existing 10 5/8% senior notes.

Universal City is Tuesday business

Finally, Universal City Development Partners Ltd. moved back pricing of its $625 million two-part offering of notes until Tuesday.

The deal, comprised of $400 million of six-year senior notes and $225 million of seven-year senior subordinated notes, had initially been expected to run full roadshow, and price late this week.

However late last week timing was moved up to Monday.

J.P. Morgan Securities Inc., Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and Morgan Stanley & Co. are joint bookrunners for the debt refinancing and general corporate purposes deal.

New Navistars trade around

A trader described Navistar's new 8¼% notes due 2021 - which had been very active in Friday's session - as "somewhat active again today, though a little bit less than on Friday."

Actually, a second trader said, some $41 million of the new bonds had traded on Monday - active enough put Navistar up among the several busiest issues of the day, but still less than half the volume seen Friday, when over $90 million of the bonds were changing hands.

The first trader said that "the bonds did trade down" from where they had been seen Friday. He said the low trade he had seen was a 98 5/8 bid getting hit.

The second meantime said that the first few trades of the day had gone off around a 99-99 5/8 context, but then the bonds came back down to around 981/2-99.

Navistar priced its mega-deal on Thursday at 96.328 to yield 8¾%, and the bonds had risen to 99 3/8 bid, 99½ offered in Friday's dealings, with several traders saying that the fact that much of the new issue was distributed to bank debt holders, who rolled out of that paper and into the new bonds, helped to boost demand and thus, price levels, as bond investors eager to get a piece of what was left of the bonds, bid them up.

Murray Energy moves lower

A trader said that Murray Energy Corp.'s new 10¼% senior secured notes due 2015 were trading Monday at 101¼ bid, 101½ offered - down a little from the 102¼ bid, 102½ offered level at which those bonds had been seen trading on Friday.

The Pepper Pike, Ohio-based coal mining company had priced $500 million of the bonds on Thursday at 98.889 to yield 10½%, and they had risen swiftly later that session to levels above par, and continued to post gains on Friday.

Navios bonds float higher

A trader saw Navios Maritime Holdings Inc./Navios Maritime Finance (US) Inc.'s upsized $400 million offering of 8 7/8% first-priority ship mortgage notes due 2017 having "actually moved up a little bit, to 101¾ bid, 102½ offered.

The Greek commodity cargo shipping company's deal, upsized from $375 million originally announced, priced at 98.603 on Thursday to yield 9 1/8%, and then rose to a par bid in initial aftermarket activity.

The bonds had been seen by a trader on Friday at 101 bid, 101¾ offered at the opening, later tightening to 101½ bid, 101¾ offered.

Market indicators mostly firmer

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ¼ point on Monday at 94.085, after having eased by 1/8 point on Friday.

Meanwhile, the KDP High Yield Daily Index rose by 3 basis points on Monday to end at 70.14, after having also gained 3 bps in Friday's dealings. Its yield rose 4 bps to 8.53%, after having been unchanged the previous session.

In the broader market, advancing broke out of a two-session slump on Monday as they led decliners by a five-to-four margin.

Overall market activity, as measured by dollar-volume levels, rose some 13% from Friday's pace.

A trader said that there was "nothing too exciting to report today."

A second echoed that sentiment, noting that "things were a little softer, not a lot." He said that the big names in Monday's secondary were "the same old [names] - CIT, Freeport-McMoRan Copper & Gold Inc. and Capmark."

Freeport trades frequently

For instance, Phoenix-based precious metals and copper producer Freeport-McMoRan's 8¼% notes due 2015 were among the most actively traded junk issues on the day, with a market source seeing them up about a point from Friday's levels to 109¼ bid, with nearly $30 million having changed hands by mid-afternoon.

There was no fresh news out on the company, which last week reported a surging third-quarter profit that surpassed Wall Street expectations. Freeport earned $925 million, or $2.07 a share, up 76% from $523 million, or $1.31 per share, even though revenues were off 10% to $4.14 billion from $4.6 billion a year ago. The earnings easily topped Wall Street expectations in the $1.30 per share range, although revenues fell short of analysts' predictions of about $4.25 billion.

Its 8 3/8% notes due 2017 were meantime seen little changed at a shade over 109 bid, on less volume than the 8¼% notes experienced.

CIT seen up on exchange offer changes

A trader called CIT Group "the big player today," seeing the company's 7 5/8% notes due 2012 having "moved up a few points." He quoted them 3 points higher at 64-65, on "a lot of volume."

Among the shorter issues, he saw them "right around" a 69-70 context, which he called "pretty much unchanged, but also on good volume."

Among the CIT Group Funding Corp. of Canada bonds - the company boosted the interest rate it will pay on the new bonds it hopes to give noteholders for their debt, and extended the deadline for tendering that category of existing notes by a week to Nov. 5 - the trader saw the 4.65% notes due 2010 "active," and up about 3 points, around 93 bids, 94 offered. He said there was "a lot of volume."

CIT, he summarized, had pretty good volume across the capital structure, but it was the somewhat longer issues, rather than the short-date paper maturing the remainder of this year, that went up.

Another trader didn't see much dealings in most of CIT''s bond - but saw the Canadian unit bonds "up quite a bit," with its 5.20% notes due 2015 having jumped to between 90½ and 94 offered, from prior levels in the upper 80s. "Wow."

Capmark active post-filing

A trader said that besides CIT, "there also was a lot of activity" in Capmark Financial Group Inc. after the latter company went into Chapter 11. He quoted its bonds "right around" 211/2-221/4, and declared that they were "quoted actively all day - probably hundreds of millions [of dollars] of it traded."

He said that all three issues - the 5 7/8% notes due 2012, the floating-rate notes coming due next May, and the 6.30% notes due 2017 were "right in that 211/2-22¼ range, on decent-sized trading. They converged" following the lender's Chapter 11 filing.

Another trader agreed that "a lot of bonds traded," with the main mover of the day being the 5 1/8s. He saw those bonds trade between 20 and 22, which "most of the trades at the end of the day" at that latter, higher level.

That compares with the 191/2-20½ range within which the bonds had traded "for most of last week.

"So they actually did better" - although he qualified that assessment by noting that "I don't know how much accrued [interest] was in it," or whether the bonds were trading flat, as frequently happens after a bankruptcy filing, or with their accrued interest, since trading flat, or without the accrued interest often increases the dollar price by several points.

FairPoint falls on filing

But while Capmark's bonds seemed to be more or less holding their own, the same could not be said for FairPoint Communications, which also sought protection from its bondholders and other creditors.

A trader said the Charlotte, N.C.-based telecommunications company "was another name quoted all day long," following its filing with the U.S. Bankruptcy Court for the Southern District of New York, in Manhattan. He saw its 13 1/8% notes due 2018 "quoted a lot" around 14-15, with "decent trading."

Still, he added, there were "more quotes than trades."

A second trader said that one of the first trades of the day was into an 11½ bid, well down from the 16 bid level at which the bonds had gone home on Friday. "Then they traded all over the lot," he said, ranging at bid levels between 13 and 15.

The trader said the bonds had been moving last week as high as an 18-20 context.

A market source saw nearly $30 million of the bonds having changed hands Monday, quoting the notes at 14¾ bid.

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