Frontier, Ryman price, Navistar sells add-on; Lyondell gains on S&P upgrade; J.C. Penney mixed

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, March 27 - Frontier Communications Corp. led high-yield primary activity on Wednesday with an upsized $750 million issue.

The offering was one of three single-tranche sales by U.S.-based issuers during the section. Combined, the companies raised $1.4 billion.

In the secondary, a high-yield bond trader said much of Wednesday's activity was focused on the smallest of the day's new offerings, a $300 million add-on priced by Navistar International Corp. The other new paper came from Ryman Hospitality Properties, Inc., which brought $350 million.

The trader added that the other highlight of the day's secondary was LyondellBasell Industries NV following an upgrade by Standard & Poor's that moved the company to investment-grade status.

"We won't be talking about that one much longer," a high-yield trader said.

On the news, "paper was better," the trader added.

Frontier prices $750 million

Frontier Communications priced an upsized $750 million issue of non-callable 11-year senior notes (Ba2/BB-) at par to yield 7 5/8%.

The deal was increased from $500 million.

The yield printed in the middle of the 7½% to 7¾% yield talk.

J.P. Morgan Securities LLC and Barclays were the joint bookrunners.

The wireline telecommunications provider plans to use the proceeds to tender for its notes maturing in 2015 at their make-whole price.

Ryman comes inside talk

Ryman Hospitality Properties launched and priced an upsized $350 million issue of eight-year senior notes (B1/BB) at par to yield 5%.

The yield printed 12.5 basis points inside of price talk that was set in the 5¼% area. The amount was increased from an original $300 million.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Wells Fargo Securities LLC, US Bancorp and Credit Agricole CIB were joint bookrunners.

The Nashville-based real estate investment trust plans to use the proceeds to repay down its revolver.

Ryman Hospitality specializes in group-oriented, destination hotel assets in urban and resort markets.

Navistar taps 8¼% notes

Navistar priced a $300 million add-on to its 8¼% senior notes due Nov. 1, 2021 (B3/CCC+) at 101.25 on Wednesday, according to a market source.

The reoffer price, which came on top of price talk, resulted in a 7.916% yield to worst.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and Goldman, Sachs & Co. were the joint bookrunners for the quick-to-market deal.

The Warrensville, Ill.-based truck maker plans to use the proceeds to repay a portion of its senior secured term loan facility in connection with its proposed amendment of that facility.

American Apparel sets talk

American Apparel, Inc. set talk on its $200 million offering of senior secured notes (Caa1/B-) at a yield of 13%, according to market sources.

The deal could price before the end of the week, according to one of the sources.

Cowen & Co. and Seaport Group are the joint bookrunners for the Rule 144A and Regulation S offering.

The Los Angeles-based clothing manufacturer plans to use the proceeds to refinance debt and for general corporate purposes.

Market takes a dip

Back in the secondary, the overall market slipped in midweek trading, according to market indexes.

The KDP High Yield index fell to 75.6, with a 5.51% yield. That compared to Tuesday's level of 75.64, with a 5.5% yield.

As for the CDX North American High Yield index, the reading was off ½ point at 102 25/32 bid,

102 31/32 offered.

Navistar's add-on gains

Navistar's $300 million add on to its 8¼% notes moved higher in trading. After coming to market at 101¼ - a level better than where the original issue priced at 96.328 back in October 2009 - the new bonds pushed up a little bit, a trader said, pegging the issue at 101¾ bid, 102 offered.

Pricing of the bond deal came one day after the company priced a new $700 million term loan at Libor plus 450 basis points.

The new loan came at par.

Proceeds from both offerings will be used to pay down a $1 billion term loan B due July 16, 2014, in connection with a recent amendment done on that facility.

Navistar is a Lisle, Ill.-based manufacturer and seller of commercial and military trucks, buses and diesel engines and a provider of service parts for trucks and trailers.

Lyondell rises on upgrade

LyondellBasell received an upgrade from S&P on Wednesday, which placed the company at the low end of the investment grade spectrum.

The corporate credit rating was pushed to BBB from BBB-.

A trader saw the company's debt rising on the news, calling the bonds about a point better.

He pegged the 5% notes due 2019 at 112½ and the 6% notes due 2021 at 1181/4.

"During the next several years, we expect de-bottlenecking and capacity expansions at existing operations to generate additional earnings and cash flow, helping to offset the impact of more competitive global market conditions when substantial announced North American capacity additions come online toward the end of this decade," said credit analyst Cynthia Werneth in a statement.

S&P noted that the ratings could be reversed under certain circumstances - "for example, if shareholder returns become more aggressive than we expect or the company pursues very large debt-funded acquisitions or capital investments, even if they are financed off balance sheet."

Lyondell is a chemical company based in Rotterdam, the Netherlands.

J.C. Penney mixed

J.C. Penney finished the day in mixed fashion amid reports its revised pricing format rollout was nearing completion.

One market source called the 5.65% notes due 2020 off slightly at 81½ bid. But another trader saw the 7 1/8% notes due 2023 inching up a touch to 95 bid, 95¼ offered.

The Plano, Texas-based retailer is in process of reintroducing sales discounts to its pricing format, after an unsuccessful attempt to offer "everyday low prices" without coupons or sales. Instead, price tags will indicate higher prices that have been "marked down" to what would have previously been deemed the "everyday low price."

On Tuesday, an equity analyst dropped his rating on the company, speculating that there were currently four avenues available for the struggling business to take. One scenario was very bullish, while another was only slightly so. The other two scenarios involved bankruptcy filings, either voluntary or otherwise.

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