Aramark drive-by, Station Casinos price to cap $6.3 billion week; Ashland up, Goodyear busy

By Paul Deckelman and Paul A. Harris

New York, Feb. 22 - Aramark Corp., a provider of uniforms and food service to business, came to market on Friday with a quickly shopped $1 billion offering of seven-year notes, which firmed smartly when it was freed for secondary market dealings.

Also pricing Friday, in this case after a brief roadshow, was a $500 million eight-year offering from gaming concern Station Casinos LLC; those bonds were heard by traders to have only moved a little from their issue price.

The two deals closed out a week, shortened by Monday's Presidents Day holiday break, which saw $6.3 billion of new dollar-denominated, fully junk-rated paper come to market in 10 tranches, according to data compiled by Prospect News - up from the $5.3 billion which had priced in 12 tranches the week before, ended Feb. 15.

On a year-to-date basis, the $63.2 billion of new junk which has come to market so far this year in 135 tranches was running about 26% ahead of comparable year-ago levels, according to the data.

Among bonds which priced earlier in the week, traders saw all four tranches of chemical maker Ashland Inc.'s new $2.3 billion deal having moved up from the levels they had held after Thursday's pricing.

Media company Clear Channel Communications, Inc.'s eight-year offering had also moved up from its issue price. Meanwhile, the company's existing bonds were busy.

But those established Clear Channel bonds took a back seat to the new Goodyear Tire & Rubber Co. issue, which was seen dominating the Junkbondland most-actives list for a third straight session.

Statistical indicators of market performance were better on the session, rebounding from Thursday's across the board losses, and were up versus a week ago as well.

Aramark prices tight, trades up

The Friday session saw a pair of issuers bring single-tranche deals, raising a total of $1.5 billion.

Aramark priced a $1 billion issue of seven-year senior notes (B3/B-) at par to yield 5¾%.

The yield printed at the tight end of price talk that had been set in the 5 7/8% area.

Initial guidance came out Friday morning in the high 5% range, to perhaps as high as 6%, according to a trader.

In the secondary market, the new Aramark 5¾% notes due 2020 were trading at 101 7/8 bid, 102¾ offered, according to a market source.

Goldman Sachs & Co. was the left lead bookrunner for the quick-to-market debt refinancing deal. J.P. Morgan Securities LC, Barclays, BofA Merrill Lynch and Wells Fargo Securities LLC were the joint bookrunners.

Station Casinos wide of talk

Also on Friday, Station Casinos priced a $500 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7½%.

The yield printed 12.5 basis points beyond the wide end of yield talk that had been set in the 7¼% area.

Deutsche Bank Securities Inc., BofA Merrill Lynch, J.P. Morgan Securities LLC and Goldman Sachs & Co. were the joint bookrunners for the debt refinancing deal.

Sparse calendar

Apart from the above-mentioned deals that priced on Friday afternoon, the final session of the four-day post-Presidents Day week came and went in quiet fashion.

In a deal some high-yield players were watching, China's CIFI Holdings Group Co. Ltd. canceled plans for a dollar-denominated offering of notes due to market conditions.

The five-year non-call-three deal (Ba1/BB) had been discussed in the 11% to 11½% yield range, according to a market source.

Looking to the U.S. primary market, deal volume should pick up in the February-March crossover week, sources said on Friday.

Part of the reason that the Feb. 18 week was so quiet had to do with the fact that schools in Massachusetts and New York were on break during the week, and numerous market participants with families coordinated vacations accordingly.

In any case, the Feb. 25 week gets underway with just one deal parked on the active forward calendar.

Associated Asphalt Partners LLC is marketing a $175 million offering of five-year senior secured notes (Caa1/B) on a roadshow scheduled to wrap up on Wednesday.

Goldman Sachs & Co., KeyBanc Capital Markets and SunTrust Robinson Humphrey Inc. are the joint bookrunners for the debt refinancing deal.

Aramark up on break

In the secondary market, Aramark's new 5¾% notes were seen to have notched handsome gains after having priced at par.

The Philadelphia-based company's megadeal was seen by a trader having gotten as high as 102 bid.

Two other traders saw those bonds at 101½ bid, 102 offered late in the session.

Station Casinos edges up

The day's other new deal -from Las Vegas-based gaming company Station Casinos - did not see that kind of aftermarket appreciation.

A trader saw the 7½% notes having inched up to about 100 1/8 bid, 100 3/8 offered after their par pricing.

Ashland shows improvement

Thursday's big deal from Covington, Ky.-based specialty chemicals manufacturer Ashland saw some big gains in the aftermarket on Friday.

The company had brought a total of $2.3 billion of new paper to market in four tranches in a quickly shopped offering - the biggest deal in the junk space so far this year.

On Friday, its $600 million of 3% notes due 2016 were seen by a trader having opened at 101½ bid - up from the 100¾ bid, 101¼ offered level at which those bonds had closed Thursday after pricing at par. A trader saw them going out on Friday trading between 101½ and 102 on the bid side.

Its $700 million of 3 7/8% notes due 2018 had closed out on Thursday at 100½ bid, 101 offered, after having priced at par; on Friday, they too started the day at 101½ bid, and had moved as high as 101 5/8 bid, 102 1/8 offered by the end of the day.

Ashland's $350 million of 6 7/8% notes due 2043 proved particularly popular with investors; those bonds had priced at par and had gone home Thursday at 101¼ bid, 102¼ offered, but a trader saw them having jumped to above the 103 bid level by Friday morning. Another trader pegged them as high as 104½ bid, 105 offered going home on Friday.

The company's $650 million add-on to its existing $500 million of 4¾% notes due 2022 that it sold last summer had priced at 99.059 on Thursday to yield 4 7/8% initially meandered around about ¼ point higher and then closed on Thursday at 100¼ bid, 100¾ offered. In the early going on Friday, they improved to 101½ bid, and then finished the day at 101 5/8 bid, 102 1/8 offered.

However, a trader pointed out that even though the Ashland bonds all carry a nominal high-yield rating in the BB area, Thursday's deal priced off the investment-grade desks at the various underwriters, and at least some of the activity in the bonds Thursday and Friday came from high-grade accounts reaching down for yield rather than from ordinary junk-focused accounts.

Clear Channel comes up

Thursday's 11¼% priority guarantee notes due 2021 from Clear Channel Communications were quoted by a trader on Friday "just under" 101 bid. Those bonds started the session around the par level where that quick-to-market $575 million offering had priced after upsizing on Thursday.

A second trader meantime saw a fair amount of activity going on in the company's existing bonds, "with all of the Clear Channel in the news" - between the San Antonio, Texas-based diversified media company's new deal and its announcement of 2012 fourth-quarter and full-year results earlier in the week.

He said that "one of the ones that traded a lot today" was the company's 9% notes due 2021."We kept seeing that come across."

He saw more than $20 million of those bonds trading, making them one of the busier junk issues on the day, but saw them about unchanged at 92 bid. "I kept seeing that name all day."

Among the company's other existing bonds, a market source saw its 4.90% notes due 2015 up 1¾ points on the day, also at the 92 bid level.

But the company's 6 5/8% notes due 2019 lost nearly 2 points to end just above the 104 bid mark.

Goodyear rolls through secondary

Wednesday's $900 million drive-by offering from Goodyear Tire & Rubber was seen on Friday having been the most active purely junk issue on the day - the third consecutive session that it dominated the list of the busiest names, leading one market source to quip that investors "certainly did not tire of Goodyear."

The Akron, Ohio-based tire giant's 6½% notes due 2021 had priced at par after the transaction was upsized from an originally announced $750 million.

When the bonds were freed to trade after pricing, they racked up over $44 million just in round-lot trades alone, as the bonds rose 1/8 point from their issue price.

That was only the warm-up for Thursday, as over $131 million changed hands. The bonds stayed right around that same context, trading at or just above their par issue price, with the final round-lot print going out right at par.

There was no let-up on Friday, with over $37 million of the bonds having traded in round-lots, making Goodyear once again the most active junk issue. The bonds were seen to have gotten a little better, trading in a 100½ to 101 bid context.

"They came down on the break [Wednesday], slightly below par," a trader said, but now they're trading back up." He saw them trade between 100¾ and 101 bid.

A market source said that very late in the session Friday, there had been one round-lot trade in the deal at the 103 bid level. There subsequently were a few smaller trades back around 101.

Market indicators get better

Statistical junk market performance indicators turned higher on the session on Friday, after having been lower across the board on Thursday. They also moved up from the levels they had held at the end of the previous week.

The Markit Series 19 CDX North American High Yield Index gained 15/32 point on Friday to close at 102 19/32 bid, 102 23/32 offered, after having fallen by ¼ point on Thursday, its second straight decline.

The index was also up from the 102 17/32 bid, 102 19/32 offered level at which it had closed out the previous week on Feb. 15.

The KDP High Yield Daily Index moved up by 6 basis points Friday to end at 75.26, after having dropped by 14 bps on Thursday, its first loss after 5 straight sessions of gains.

Its yield meantime came in by 2 bps on Friday to 5.68% after having risen 5 bps on Thursday -the first such widening seen after having come in over the previous four sessions.

Friday's readings were marginally better than the 75.25 index reading and 5.70% yield recorded the previous Friday.

And the widely followed Merrill Lynch High Yield Master II index got back on the right track on Friday as it rose by 0.068%, bouncing back from Thursday's 0.106% loss, which had snapped an eight-session winning streak.

The gain raised the index's year-to-date return to 1.499% from Thursday's 1.43%, although it still remained well down from its peak level for 2013 so far of 1.991%, set on Jan. 28.

The index posted a one-week gain of 0.129%, its second consecutive weekly rise. In the week ended Feb. 15, it had gained 0.331%, its first weekly advance after two straight weekly losses, raising its year-to-date return at that point to 1.369%.

© 2015 Prospect News.
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