Nord Anglia, upsized Rexel price, Alliance Data on tap; Solo Cup surges on buyout

By Paul Deckelman and Paul A. Harris

New York, March 21 - The high-yield primary market continued to amble along on Wednesday at the same relaxed pace it has held all week - considerably slower than the very busy last several weeks were.

Only two dollar-denominated offerings came to market, and both were forward calendar deals from European issuers.

Britain's Nord Anglia Education Holdings plc, a provider of international education services, priced $325 million of five-year senior secured notes.

And France's Rexel SA, an electrical equipment company, weighed in with an upsized $400 million of 7.75-year paper.

Traders did not see any immediate activity in Nord Anglia, while Rexel appeared too late in the session for dealings.

The day's only other pricing was also out of Europe, with Fresenius Finance BV, a unit of German kidney dialysis services provider Fresenius Medical Care AG & Co. KGaA, bringing €500 million of seven-year notes to market.

Among recently priced deals, American healthcare operator United Surgical Partners International Inc. continued to trade robustly in the aftermarket - while AK Steel Corp. was still struggling.

Price talk emerged on Alliance Data Systems Corp.'s planned offering of $350 million of eight-year notes, which could come to market on Thursday.

Traders meantime saw some gyrations among the existing bonds of printer Cenveo Corp., which is scheduled to bring a restructured $450 million bond deal to market, at some point. The company announced a $75 million offering of exchangeable notes late on Wednesday.

Away from the new-issue arena, Solo Cup Co.'s bonds climbed on the news that the maker of disposable plastic and paper cups, plates and utensils will be acquired by Dart Container Corp. in a $1 billion deal.

Statistical measures of secondary market performance were mixed on the day.

Rexel upsizes

Wednesday's primary market action took place mainly in Europe.

That's appropriate, according to a London-based senior high-yield capital markets banker who said that European accounts have a lot of cash to put to work.

Of three European deals that priced, two were dollar denominated. Both of those were single-tranche offerings that generated a combined total of $725 million of proceeds.

French electrical equipment and services company Rexel priced an upsized $400 million issue of 7.75-year senior notes (Ba2/BB/BB) at par to yield 6 1/8%, at the tight end of yield talk that had been set in the 6¼% area. The amount was increased from $300 million.

Bank of America Merrill Lynch, Barclays and RBS were the joint global coordinators and joint physical bookrunners.

The Paris-based company plans to use the proceeds for general corporate purposes, including funding of potential future acquisitions.

Nord Anglia at tight end

England's Nord Anglia Education (UK) Holdings plc priced a $325 million issue of five-year senior secured notes (B2/B/) at par to yield 10¼%, at the tight end of the 10¼% to 10½% yield talk.

Barclays and Goldman Sachs were the joint bookrunners. Goldman will bill and deliver.

Proceeds will be used to repay bank debt and shareholder loan notes.

Fresenius prints 4¼% yield

In the euro-denominated market Fresenius Finance BV priced a €500 million issue of seven-year senior notes (Ba1/BB+/) at par to yield 4¼%, on top of yield talk.

Joint bookrunner Deutsche Bank will bill and deliver. BayernLB, Commerzbank, LBBW and Royal Bank of Scotland were also joint bookrunners.

The Bad Homburg, Germany-based provider dialysis services and products plans to use the proceeds for acquisitions, as well as to refinance debt and for general corporate purposes

The deal played to heavy demand, most of which emanated from banks and crossover accounts on the Continent, a London-based sellsider said.

As might be expected with a deal being talked at 4¼%, high-yield accounts mainly skipped the London breakfast on Wednesday, the source added.

Busy ahead in the primary

The European primary market, which turned out notable news volume on Wednesday, figures to remain active during the next 10 days, according to a London syndicate banker.

It's no secret that the accounts have cash to put to work, and people see a pre-Easter issuance window that will be wide open in the week ahead, the banker said.

Dealers there plan to help issuers through that window, which will gradually close during the pre-Easter week as sources begin focusing on the holiday.

An investor breakfast is scheduled for Thursday morning in London for a deal in the industrial/automotive sector, added the source who did not have an issuer name or syndicate members.

The primary market in the United States also figures to be extremely busy during the week ahead, an East Coast syndicate banker asserted after the Wednesday close.

The market is apt to see another $5 billion price before Friday's close, and the week ahead is expected to be huge, the source added.

Alliance Data talks deal

Alliance Data Systems talked its $350 million offering of unrated eight-year senior notes with a yield in the 6½% area, a syndicate source said on Wednesday.

The official talk is in line with earlier guidance on the notes, according to a trader from a high-yield mutual fund.

The deal is set to price on Thursday afternoon.

Bank of America Merrill Lynch, J.P. Morgan, Barclays, RBC and Wells Fargo are the joint bookrunners.

Alliance Data elected to come without credit ratings largely because of the nature of its business, according to a trader from a high-yield mutual fund.

The company has a banking business and a credit card business, and it securitizes its credit card receivables, the trader explained.

As an unrated company it expects to receive high-grade pricing because of the quality of the receivables.

However it is basically a high-yield company, if you look at its metrics.

But because of its business it would rather not publicize high-yield ratings, the source added.

Nord Anglia, Rexel unseen

Traders reported no aftermarket activity in either the Nord Anglia $325 million offering, which priced earlier in the day, or in Rexel's upsized $400 million offering, which appeared pretty late.

"I just spoke to a guy who asked me the same thing [about Nord Anglia], and I have not seen anything at all on that new deal," one of the traders said.

United Surgical surge goes on

The trader saw United Surgical Partners' new 9% notes due 2020 "continuing to move up pretty well."

He saw the bonds trading at the close at 102½ bid, 103 offered.

The Dallas-based surgical facilities operator had priced its $440 million offering on Tuesday at par; when the bonds hit the aftermarket later that same sessions they were seen having firmed to 101½ bid on the break and then, later on, to 102 bid, 102½ offered.

IDQ's improvement

The trader also saw IDQ Holdings, Inc.'s 11½% senior secured notes due 2017 trading at 101½ in the brokers' market on Wednesday morning.

While not having seen a right side to go with that bid level, he estimated that the two-sided market for those bonds would probably shake out to 101½ bid, 102 offered.

The Garland, Texas-based producer of air conditioning maintenance and repair for the automotive aftermarket priced $220 million of those bonds on Tuesday at 98 to yield 12.042% in a quick-to market deal that was upsized from the originally planned $210 million.

The bonds had not been seen trading around on Tuesday.

AK Steel struggle continues

A trader at another shop saw AK Steel Corp.'s new 8 3/8% notes due 2022 at 98 7/8 bid, 99 3/8 offered.

That was well down from the par level at which the West Chester, Ohio-based steel alloy manufacturer's quickly-shopped $300 million transaction had priced on Monday, after having been upsized from an originally announced $250 million.

After pricing, the bonds had initially traded in a par to 100¼ bid contest. But on Tuesday were seen to have retreated to a range between 99 and par.

A second trader quoted the bonds on Wednesday as being "wrapped around 99," after trading in a 99 to 99¼ bid range.

He saw the AK bonds trading in the morning in a wide 98½ to 99½ context, before they "settled in" wrapped around 99 later on in the session.

A market source at another desk saw the new AK bonds get as good as 99¾ bid before retreating later on. Volume in the credit was over $10 million, making it one of the busier issues in Junkbondland on Wednesday.

AK's existing 7 5/8% notes due 2020 - which had been seen under pressure on Tuesday, quoted down some ¾ point - regained a little of that lost ground on Wednesday, moving up by ¼ point to around the 98 level.

Cenveo bonds bouncing around

A trader saw Cenveo's existing bonds "all over the place today."

The Stamford, Conn.-based commercial printing company's 8 7/8% second-lien notes due 2018 were seen by a trader at another shop to have gained 1¾ points on the day to 94½ bid, on volume of more than $7 million.

But its 7 7/8% senior subordinated notes due 2013 were seen down a point overall versus Tuesday's levels, to the 95 bid level - although culling out all of the numerous odd-lot pieces - most of them in the $5,000 to $10,000 range - and just concentrating on the more representative round-lot transactions, the bonds were actually down some 3½ points at 92¼ bid. While there were many small transactions, round-lot volume on the day was only about $2 million.

At another desk, the bonds were quoted down 3¼ points at 93 bid.

Cenveo currently has a $450 million bond deal sitting on the forward calendar, presumably ready to go after having wrapped up its roadshow for that issue last week, but the first trader said "there was talk that the deal wasn't getting done, and that kind of hit [the existing bonds], but now there's talk of the deal getting done."

On Monday, presumably in an effort to mollify would-be investors, Cenveo was heard by syndicate sources to have restructured that deal, changing it from an eight-year issue with four years of call protection, to a five-year offering with just three years of non-call status.

At that time price talk was increased to envision a yield of between 12¼% and 12½%, versus the talk of 11½ % to 11¾% that had circulated after the roadshow ended.

Cenveo is also in the midst of a tender offer for its outstanding $271 million of the 7 7/8% notes, its $23 million of 8 3/8% senior subordinated notes due 2014 and its $165 million of outstanding 10½% senior notes due 2016, which runs through next Tuesday; it recently amended the offer to raise the price it is offering for the 10 ½% notes.

On Wednesday the company further announced that it will cap the amount of the 7 7/8% notes that it will buy at just $45 million, eliminate the consent solicitation and extend the deadlines for those notes - the deadline for receiving total consideration is now 5 p.m. ET on Friday instead of the old March 13 deadline, while the overall offer for those notes will now end at 5 p.m. ET on April 3 instead of on March 27. It kept the terms for the other two classes of notes unchanged.

The trader also pointed out that the company said Wednesday that it is selling $75 million of five-year senior exchangeable notes in the convertibles market, conditioned on also getting the straight bond deal done.

"We're just digesting this Cenveo news that came out," he declared. "I don't even know what the hell is going on with all of this."

Solo soars on acquisition

A trader said that the secondary market away from the new deals was "kinda flat" - but there was a key exception in the bonds of Solo Cup Co., which firmed smartly on the news that the Lake Forest, Ill.-based maker of disposable plastic and paper cups, plates and utensils will be acquired by Dart Container Corp. in a $1 billion deal.

Solo's 8½% notes due 2014 jumped 3 points to end at the par level, on round-lot volume of over $13 million.

Its 10 ½% notes due 2013, on the other hand, were little changed at just under 101 bid, on light volume.

Solo is to be acquired by Dart Container Corp., of Mason Mich., in a deal that is expected to close during the third quarter. Details of the deal between the two privately held companies were not immediately disclosed. The $1 billion figure is believed to include assumption of Solo's debt, including the $300 million of 10½% notes and $325 million of 8½% paper.

Market indicators turn mixed

Statistical measures of junk market performance were turned mixed on Wednesday, after having been uniformly lower on Tuesday.

A market source said that the CDX North American Series 17 High Yield index was about unchanged on Wednesday to close at 98¾ bid, 99 offered, after having eased by 1/8 point on Tuesday.

The KDP High Yield Daily Index meantime eased for a fourth straight session on Wednesday, backtracking by 3 basis points to end at 74.06, after having dropped by 7 bps on Tuesday. Its yield rose by 1 bp, to 6.56%, after having increased by 2 bps on Tuesday.

But the widely-followed Merrill Lynch High Yield Master II Index went up by 0.08% on Wednesday, versus its 0.191% retreat on Tuesday.

The gain lifted the index's year-to-date return to 5.158% on Wednesday, versus Tuesday's 5.074% reading, although that cumulative figure remains down from its peak level for 2012 of 5.361%, recorded on March 2.

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