Susser, Aspect price to complete busy week; Gulf oil rig disaster hurts junk energy names

By Paul Deckelman and Paul A. Harris

New York, April 30 - The high yield market saw another rousing week in the primary arena - as well as a very busy month - come to a close on Friday with the pricing of new deals from Susser Holdings LLC/Susser Finance Corp., and from Aspect Software Inc. The latter company, a Chelmsford, Mass.-based software and information technology services firm, had been expected to price its $300 million offering of seven-year notes early in the upcoming week, but high yield syndicate sources heard the deal had been moved up. Susser, a Houston-based independent convenience store operator and motor fuels distributor in the U.S. Southwest, sold $425 million of six-year notes at a discount to par, while Aspect priced at par.

Susser's new bonds were heard by traders to have done quite well, rising 2 points or more in the aftermarket, while Aspect's paper was up more modestly.

Pan American Energy LLC, Argentina Branch priced a $500 million 11-year deal, although this was seen as being primarily of interest to emerging markets-oriented accounts, and did not show up in the high yield aftermarket.

The deals were the culmination of a busy week which saw a $1 billion offering from Reynolds Group Issuer LLC as well as smaller deals from such familiar junk issuers Levi Strauss & Co., AK Steel Corp., Amkor Technology Inc. and Pinnacle Entertainment, Inc. Traders saw most of the week's new issues that were moving around in the market as having pretty much held their own.

Away from the issues which priced, syndicate sources heard price talk on Americold Warehouse Investment Portfolio LLC, whose offering of 10-year secured notes is expected to price early in the upcoming week. U.K. insurance broker Towergate Finance plc began shopping around a dollar- and euro-denominated bond offering.

Away from the new-deal arena, traders noted a fall in some high yield energy names in the wake of worsening news about the Gulf of Mexico oil rig disaster, including Mariner Energy Inc. and ATP Oil & Gas Corp.

Susser prices at tight end

Two U.S. based high-yield issuers raised about $845 million during Friday's moderately quiet primary market session.

Susser Holdings, LLC and Susser Finance Corp. priced a $425 million issue of 8½% six-year senior notes (B2/B+) at 98.845 to yield 8¾%.

The yield printed at the tight end of the 8¾% to 9% price talk.

Bank of America Merrill Lynch, BMO Nesbitt Burns and Wells Fargo Securities were the joint bookrunners. RBC Capital Markets Corp. was the lead manager.

The Houston-based independent convenience store operator and motor fuel distributor plans to use the proceeds to redeem its 10 5/8% notes due 2013 and to repay term loan debt.

Demand was strong and the deal went well, according to an informed source.

Investors being taken out of the old 10 5/8% notes were keen to roll into the new 8½% notes due 2016, making it difficult for investors new to Susser debt to get much of an allocation.

However allocations are generally difficult right now, as investors need to put cash to work.

Aspect Software moves up timing

Meanwhile, Aspect Software priced a $300 million issue of seven-year senior second-lien notes (Caa1/B-) at par to yield 10 5/8%, at the wide end of the 10½% area price talk.

Timing of the deal was moved ahead; the transaction had been expected to price early in the May 3 week.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. were the joint bookrunners.

Proceeds will be used to refinance the Chelmsford, Mass.-based software and internet technology services firm's existing credit facilities.

High yield/EM crossovers

In addition to the U.S. issuers, above, a trio of deals came on Friday from the emerging markets, with issuers raising about $1.14 billion.

Indonesia's PT Bakrie Telecom priced a $250 million issue of five-year notes at par to yield 11½%.

Argentina's Pan American Energy priced a $500 million issue of 7 7/8% 11-year notes at 98.204 to yield 8%.

And Brazil's Braskem came with a $400 million issue of 10-year notes that priced at par to yield 7%.

Braskem initially came with the intention of raising $750 million, according to a market source.

$9.24 billion week

With Friday's business into the mix, the last week of April came to close having seen about $9.24 billion of proceeds raised in 24 junk-rated, dollar-denominated tranches.

Pressed for a "theme" for the final week of April, one debt capital markets banker mentioned "price sensitivity.

"Everyone is chasing yield right now," the sell-sider said. "But people want to see the new deals run a little."

As an example of price sensitivity, the banker pointed to Thursday's Cequel Communications Holdings I, LLC and Cequel Capital Corp. $600 million add-on to its 8 5/8% senior unsecured notes due Nov. 15, 2017 (B3/B-), which priced at 102.0, resulting in an 8.167% yield.

The deal had been talked to yield 8¼%, the banker recounted.

"When they decided to price it at the tight end of price talk, a lot of blue chip names dropped out entirely."

Americold sets price talk

"Everything is coming tight," said the banker, who also mentioned Americold Warehouse Investment Portfolio.

On Friday the controlled warehouse real estate investment trust talked its $300 million offering of 10-year senior secured notes to yield in the 7 5/8% area.

However when the deal first came in the market it was being whispered in the low 8% range, the banker said.

Books for the Americold deal close at 11 a.m. ET on Monday. The deal is set to price on Tuesday.

Goldman Sachs & Co., Deutsche Bank Securities Inc. and RBC Capital markets Corp. are bookrunners.

Proceeds, in addition to proceeds from a concurrent initial public offering of common shares, will be used to fund the acquisition of assets from Versacold and for general corporate purposes.

Towergate starts roadshow Monday

Towergate Finance plc will conduct roadshow meetings in the United States, during the week ahead, for its £665 million equivalent of high-yield notes in multiple tranches.

The roadshow will get underway on Monday.

The United Kingdom-based independent insurance broker intends to sell £365 million equivalent of seven-year senior secured notes (B1//BB) and £300 million equivalent of eight-year senior notes (B3//B-), split between dollar- and euro-denominated tranches.

JP Morgan and Credit Suisse have the books for the notes, which are coming to market as Rule 144A and Regulation S for life.

Proceeds will be used to refinance bank debt and a portion of the company's preferred shares, and to fund an acquisition.

The prospective issuer is a financing unit of Towergate Group, which is headquartered in Maidstone, Kent.

Susser shines in secondary

When the new Susser Holdings 8½% notes due 2016 were freed for secondary dealings, a trader said that the new bond "did really well" in the aftermarket. "We traded a ton of the paper. ' He saw the bonds going home "wrapped around '1003/4" -- about a 2 point gain from the 98.845 level at which the issue had priced

A second trader quoted the bonds around a 101 to 102 \level.

Aspects offering shows improvement'

A trader said that Aspects Software's new 10 5/8% second-lien secured notes due 2017 traded up as much as 1 to 1½ points on the break, after the $300 million deal had priced at par during the afternoon,.

However, another trader saw the Aspect bonds at 100½ bid, 101½ offered.

At another desk, a trader saw the issue in a 1001/2-100¾ context.

Week's deals hold their ground

A trader said that most of the deals which had priced earlier in the week "held their gains" in Friday's action, and were pretty much unchanged on the day.

"The things that did well, stayed well, and the things that didn't go anywhere, still didn't go anywhere."

For instance, he said that Pinnacle Entertainment's $350 million of 8¾% senior subordinated notes due 2020 "really went nowhere." He said that at his shop, "we traded a bunch" of the bonds right at the par level, the same place where Las Vegas-based gaming company's deal - upsized from the originally announced $250 million -- had traded after pricing on Thursday.

"They really went nowhere on that one," he reiterated. "Those [deals] that come and do well go up 2 to 3 [points], and those that don't sit right around issue. It's sort of in one camp or the other."

However, a second trader disagreed, characterizing Pinnacle's paper as having risen to a 1003/4-101 range.

A trader said that Cooper Standard Automotive Inc.'s 8½% notes due 2018, which priced on Thursday at par and which then moved up beyond the 102 level - some traders saw it get as good as 103 - "hung in there very well," trading around 103 on Friday as well.

Another trader, though, said that the Novi, Mich.-based automotive components manufacturer's $450 million issue "came in a little" from Thursday's highs, to trade within a 102 1/8-102¾ range. "They were very active around the 103 level [Thursday] night," he said.

A trader said that AK Steel Corp.'s new 7 5/8% notes due 2020 "are doing fabulous," quoting the West Chester, Ohio-based steel maker's $400 million deal around a 1011/2-102 range. They're doing very well - and that wasn't that high a coupon," he added. The bonds were actually off a little from highs as good as 103 which they had been seen at following their pricing last Tuesday, though they remained well above their par issue price.

Another trader saw the AK bonds on Friday at 102½ bid.

A trader saw Reynolds Group's 8½% notes due 2018 at 100¾ bid, 101 offered, "earlier in the day, before stuff got a little softer." The consumer packaging materials company's $1 billion issue had priced on Wednesday at par, eventually moving up to 100¾ bid, 101¼ offered.

Market indicators turn south

Among bonds not connected with the new-deal market,, a trader saw the CDX Series 14 index lose ½ point on Friday to end at 99 7/8 bid, 100 3/8 offered, after having risen by ½ point in each of the previous two sessions.

The KDP High Yield Daily Index was meantime off by 5 basis points on Friday to 73.10, after having risen by 14 bps on Thursday. Its yield widened by 2 bps to 7.81%.

Advancing issues stayed ahead of decliners for a second consecutive session on Friday - but their margin of victory dwindled to just a handful of issues out of the more than 1,300 tracked, versus the previous session's better-than seven-to-six edge.

Overall market activity, represented by dollar-volume levels, fell by 20% on Friday from the levels seen the previous session.

A trader said that most of the market's focus has been on "digesting the new issues" that have come in recent days and weeks.

Another trader said that apart from dealings in the new names - which he said "held up very well, across the board" - secondary market activity Friday was "extremely lackluster."

Another trader said that he "wouldn't say everything [was easier], but a lot of stuff came in a little," whether recently priced bonds or more established issues. Among the factors contributing to the overall lazy, easier tone, he suggested were that "it's the end of the month," as well as stunningly warm and sunny weather in New York and other business centers in the northeast. The trader - who is not based in New York - said that "after about 11:30 [a.m.] Eastern Time, we saw things really quieting out, and got messages from a lot of people who said they were going to cut out of the office early."

Gulf woes wallop junk energy space

One sector which did see considerable activity during the session - virtually all of it to the downside - was energy, with the bonds, and the shares, of oil and gas exploration and production companies and oil service providers like well drillers getting hit amid the worsening cascade of bad news coming out of the April 20 explosion and subsequent capsizing or a semi-submersible exploratory offshore drilling rig in the Gulf of Mexico, the Deepwater Horizon.

Eleven people were killed in the initial accident, which has produced an estimated 5,000-barrel per day oil leak into the Gulf, with the spreading oil slick now thought to be at least five times worse than originally feared, raising a nightmare vision of extensive environmental damage along the coastal regions of Louisiana especially, as well as neighboring Mississippi, Alabama and Florida.

One of the issues affected was ATP Oil and Gas Corp.'s recently priced 11 7/8% second-lien senior secured notes due 2015 , which "got hit pretty good," a trader said; he saw the bonds falling back down to par after having been up above 103 bid.

The Houston-based E&P company's $1.5 billion of new notes had priced on April 19 -- just the day before the drilling rig explosion - coming to market at 99.531, to yield 12%, and then moving up steadily even amid the news in the first days after the accident. However, with the now-more dire forecasts of environmental damage and the disruption of the whole Gulf oil industry, ATP - which has about two-thirds of its estimated net proved reserves of 135.2 million barrels of crude oil or other liquid hydrocarbons equivalent in the Gulf of Mexico, "is one of the names that's obviously under pressure, because of what's going on down there in the Gulf," the trader said.

ATP "is the most recent deal to come" out of the energy patch, "so it's probably the most visible one to talk about," he said. "It rallied up to 103, but it's back down to par today."

A second trader said that at the close "a 99 bid [on the new ATP bonds] got hit. So you can imagine that there was a lot of focus on the oil drillers." He speculated that "there were a lot of meetings going on" at investment houses regarding the sector. "But that one [ATP] really got swamped," with the last trade that he saw at 99.

A market source at an energy-oriented hedge fund said that the Deepwater Horizon disaster had pushed down a number of high yield companies having exposure to the suddenly dicey Gulf of Mexico portion of the energy business, including ATP and such other E&P operators as McMoRan Exploration Co., Energy XXI (Bermuda) Ltd., Stone Energy Corp. and Mariner Energy, Inc.

Another trader saw Houston-based Mariner - whose bonds had shot up around mid-April on the news that it is to be acquired by Apache Corp. - as having softened up in response to the Gulf of Mexico news. For instance, its 7½% notes due2013, which are currently callable, had eased to a 1033/4-104 context from prior levels at 1041/4-10141/2. He saw the mariner 8% notes due 2017 having come in to around 111-111½ from last week's levels at 113-1131/2, while its 11¾% notes due 2016 have dipped to 128 bid, 128½ offered from their recent peak around 130 bid.

"So it's all come in a little, as people have second thoughts on the whole space, with what's going on in the Gulf - especially when every five minutes, there's a shot on TV of wildlife dying."

U.S. Concrete holds steady

Away from the energy arena, a trader said that U.S. Concrete Corp. "hung in there," with the Houston-based cement manufacturer's 8 3/8% senior subordinated notes due 2014 "actually trading up" after its Chapter 11 filing on Thursday in Wilmington, Del., in a 623/4-64 range," probably out of a sense of investor relief that the much-awaited other show had dropped," with the long-expected bankruptcy case.

Under the pre-arranged bankruptcy's terms, already agreed to by major creditor groups and other stakeholders, the 8 3/8% notes will be converted into equity in the reorganized company, while existing shareholders will get warrants to buy up to 15% of the reorganized company's stock.

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