Sprint, QEP, Claire's drive by; Friday deals hold most gains; conferences thin market

By Paul Deckelman and Paul A. Harris

New York, Feb. 27- The high-yield market saw a trio of quickly shopped drive-by deals totaling $2.6 billion price on Monday, as the new-deal sphere carried over some of the momentum from Friday's busy session, the most active in more than two weeks.

The big deal of the day came from Sprint Nextel Corp., which brought in a $2 billion two-part deal, evenly split between five-year and eight-year notes. The wireless service provider's transaction priced too late for aftermarket, but news that the company was adding on leverage helped push its existing bonds lower.

Energy operator QEP Resources Inc. priced $500 million 10-year notes at par; traders saw the new bonds firm inside of a point in the aftermarket.

And specialty retailer Claire's Stores, Inc., which visited the junk market two weeks ago to sell seven-year secured paper, was back with a $100 million add-on to that issue. It did not trade around.

Offshore marine services provider GulfMark Offshore, Inc., oil and gas company Linn Energy, LLC and media giant Clear Channel announced plans for new deals.

And credit reporting agency TransUnion LLC was heard by syndicate sources to be hitting the road with an offering that will provide some of the funding for its $3 billion leveraged buyout deal announced on Friday.

Friday's new issues from United Rentals, Inc., Ball Corp. and Range Resources Corp. were seen by traders has hanging on to the solid gains they notched in initial aftermarket dealings.

Traders said that new-deal activity continued to dominate the secondary side, although there was brisk activity in ATP Oil & Gas Corp.'s bonds after the energy operator announced an oil discovery in the Gulf of Mexico.

That aside, traders said activity slowed with many people away at the well-attended J.P. Morgan high-yield and leveraged-finance conferences in Florida, along with several other conferences staged by major investment banks.

Statistical measures of market performance were little changed, though with a slightly positive bias.

Sprint prices $2 billion

A Monday primary market session, bristling with drive-by activity, saw three issuers price $2.6 billion of bonds in a combined four tranches.

Sprint Nextel priced $2 billion of high-yield notes in two tranches.

The deal included a $1 billion tranche of eight-year junior guaranty unsecured notes (Ba3/BB-) that priced at par to yield 7%. The yield printed at the tight end of 7% to 7 1/8% price talk.

In addition, the company priced a $1 billion tranche of five-year senior notes (B3/B+) at par to yield 9 1/8%, also at the tight end of price talk that was set in the 9¼% area.

Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank Securities, Goldman, Sachs & Co. and J.P. Morgan were the joint bookrunners for the quick-to-market deal.

The company plans to use the proceeds for general corporate purposes, which may include redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire.

QEP Resources, at tight end

QEP Resources, Inc. priced a $500 million issue of 10.5-year senior notes (Ba1/BB+) at par to yield 5 3/8%.

The yield printed at the tight end of price talk that had been set in the 5½% area.

Wells Fargo Securities, LLC was the left bookrunner for the quick-to-market deal.

BMO Capital Markets Corp., Deutsche Bank Securities Inc. and J. P. Morgan Securities LLC were the joint bookrunners.

The Denver-based natural gas and oil exploration and production company plans to use the proceeds to pay down its revolver.

Claire's Stores taps 9% notes

Claire's Stores, Inc. priced a $100 million add-on to its 9% senior secured first-lien notes due March 15, 2019 (B3/B) at 101.50 to yield 8.671%.

The reoffer price came at the cheap end of the 101.50 to 102 price talk.

JP Morgan ran the books for the quick-to-market deal.

The Pembroke Pines, Fla.-based specialty retailer plans to use the proceeds to repay bank debt.

The original $400 million issue priced at par on Feb. 13, 2012.

Gulfmark starts roadshow

Gulfmark Offshore, Inc. began a roadshow on Monday for its $300 million offering of 10-year senior notes.

The deal is set to price later in the present week.

Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC and RBS Securities Inc. are the joint bookrunners.

The Houston-based provider of offshore marine services plans to use the proceeds to fund the tender for its 7¾% senior notes due 2014 and to refinance bank debt.

TransUnion marketing PIK deal

TransUnion LLC plans to price a $600 million offering of 6.25-year PIK toggle notes (Caa1/B-) late in the present week.

Goldman Sachs & Co. has the books.

The proceeds will be used to help fund the buyout of the company by Advent International and GS Capital Partners VI Fund LP from Madison Dearborn Partners and the Pritzker family for about $1.685 billion.

TransUnion is a Chicago-based provider of information management and risk management services.

New QEP issue higher

When QEP Resources' $500 million issue of 10-year notes was freed for aftermarket dealings, a trader quoted the company's issue at 100½ bid, 101 offered versus the bonds' par issue price.

He later saw the new notes having tightened to 100 7/8 bid, 101 offered.

He also saw the company's 6 7/8% notes due 2021 at 109¼ bid in the morning, which wasn't much changed from where they had been.

He saw its 6.80% notes due 2020 at 106 bid, calling that up ¼ point from last week's levels.

Sprint comes too late

Sprint Nextel's big two-part deal came to market too late in the session for any kind of aftermarket dealings.

However, traders said the company's existing issues mostly backed up in anticipation of the already heavily levered company adding another $2 billion of new debt.

"Sprint paper was kind of active today, with this deal being priced," a trader said, quoting the company's 7 3/8% notes due 2015 down about ½ point at 99 bid.

He saw its 6 7/8% notes due 2028 down ¾ point at 78¼ bid, while its 8¾% bonds due 2032 were off by 1/8 point at 89½ bid.

Another trader said that the various issues from parent Sprint Nextel and its Sprint Capital Corp. subsidiary "were the top movers and groovers."

He said the 6 7/8s were off by ½ point, trading between 78 and 78½ bid.

"The shorter paper is not down that much," he said. "I would say it would be the most representative of the bunch."

He said that more than $20 million of the 6 7/8s changed hands "so there was a lot of activity in that."

He added that the ½ point decline was "not that big a move for $2 billion [in additional debt]."

The trader said the shorter issues were more unchanged. While there was a lot of activity in the 7 3/8% notes, he said it was "a pretty short issue." They ended at 98¾ bid, 99¼ offered.

That's "pretty much unchanged," he said, "So they're holding their own."

Another market source saw the Sprint 8 3/8% notes due 2017 off as much as 1¼ points on the session, at 98 bid. Just under $10 million of the bonds changed hands, he said.

The source saw more than $20 million of the 6 7/8s trading, around at 78½ bid context.

He also saw about $9 million of the 8¾% bonds up around 90 and $7 million of the 6% notes due 2016 finishing at 93½ bid.

Friday deals hold their own

The traders saw the deals that had come to market during Friday's more than $4 billion session pretty much holding their own and hanging on to most of the gains they notched in initial aftermarket trading.

United Rentals' big $2.825 billion three-part offering was a case in point.

A trader saw the Greenwich, Conn.-based construction and industrial equipment rental and leasing company's 7 3/8% notes due 2020 at 102¼ bid, 102½ offered, while its 7 5/8% notes due 2022 were at 102½ bid, 102 7/8 offered.

He described them as "just a skosh" below the 102¾ to 103 context those bonds and the new 5¾% senior secured notes due 2018 had traded in on Friday.

The bonds had shot up to that level after the $750 million of 2018 notes, the $750 million of 2020 notes and the $1.325 billion of 2022 notes had all priced at par.

Another trader quoted the 53/4s in a 102 to 102¾ bid context. The 7 3/8s were 102¼ to 102½ and the 7 5/8s were trading between 102 5/8 and 102 7/8s.

Among the company's outstanding bonds, he saw its 10 7/8% notes due 2016 up around a 114-115 bid range, while its 8 3/8% senior subordinated notes due 2020 traded between 103¼ and 104.

Broomfield, Colo.-based packaging concern Ball Corp.'s $750 million of 5% notes due 2022 traded very tight, a trader said, at 102¼ bid, 102 3/8 offered.

Another trader saw that issue, which was upsized from an originally announced $500 million before pricing at par, trading at 102 bid, 102½ offered.

He expressed some surprise that such a relatively low-coupon bond even made it out of the chute.

"Holy moly! "he exclaimed.

"It's interesting," he continued. "Who are all of these extra buyers coming in the market and reaching for yield?"

Those buyers enabled deals like Ball's or Friday's upsized $600 million offering from Range Resources, which also priced an issue of 10-year paper with a 5% coupon, to fly, the trader said.

"Junk is tending not to have a junk-type yield. Maybe still a junk-type spread, but the yield is ridiculously low," the trader said.

"If this market turns any time soon, people may be saying 'Why were we buying Ball Corp. through a 5% coupon?' " he said.

"Wait till they're all running for the exits," he added.

The trader also quoted Range Resources' 5% notes at 102 bid, 102¼ offered.

However, another trader said that while the Fort Worth, Tex.-based natural gas and oil company's deal traded as high as 102 bid, about the level they reached late Friday after their par pricing, there was some selling pressure up there as Monday wore on.

He finally saw the bonds going out around 101¼ bid, 101½ offered.

Another market source saw heavy activity in both the new Ball bonds and the new Range Resources deal, seeing the former trading around 102 3/8 bid with more than $37 million changing hands, while more than $25 million of the Range Resources bonds moved around at about 101¾ bid.

Good trading in Goodyear

There also was some brisk trading going on in the new Goodyear Tire & Rubber Co.'s 7% notes due 2022, some $700 million of which were priced at par in a quickly shopped deal on Thursday. The bonds then traded up to a 101¼ bid, 101½ offered level after that.

On Monday, more than $32 million of the Akron, Ohio-based tire-making giant's new bonds were seen trading around that same 101½ bid level.

"Think about it, it's Goodyear Tire," a trader said, explaining the market's appetite for the bonds.

"Everyone knows the name and it's a good name to know. It's more or less a core position," he said.

ATP is active

Away from the new deals, which continued to largely dominate the secondary market, the most notable issue was ATP Oil & Gas's 11 7/8% second-lien senior secured notes due 2015.

More than $51 million of the Houston-based energy operator's bonds traded and a market source quoted them as high as 67¼ bid.

Another trader said the bonds started the day in a 63 to 64 context, but "were all over the lot" at higher levels.

He finally saw them going home at 66 bid, 66½ offered, calling that up more than 2 points from where they finished last Friday.

News that the company had its first oil production at a Mississippi Canyon block in the Gulf of Mexico led to a surge in the bonds and its New York Stock Exchange-traded shares.

The good news shot the shares up as high as 25% intra-day, before they finally went out up $1.35, or 18.96%, to end at $8.47 on volume of 11.9 million shares, about seven times the norm.

Conferences take toll

But aside from unusual cases like ATP and trading in the new issues, the secondary was seen fairly quiet.

"I'd love to say that it was ripping and roaring," a trader said, "but the volume was not there. It was strictly situational."

He also noted that "many bodies were missing."

While some might be on vacation, he noted that a lot of portfolio managers and other key decision makers were down in Miami at the annual J.P. Morgan High Yield and Leveraged Finance Conference, which opened on Monday.

The conference always is well-attended and typically, not much goes on in Junkbondland when so many people are in the sun and fun capital of the world.

On top of that, several other conferences were going on, presumably further thinning the junk-market ranks.

The Deutsche Bank media and telecommunications conference is being held in Palm Beach, Fla.; Morgan Stanley's own media, telecom and tech sector conference is going on in San Francisco and Citigroup's health care conference is taking place in New York.

Indicators steady to positive

Statistical measures of junk-market performance, which were positive on Friday, were little changed Monday, but still with a positive shading.

A market source said the CDX North American Series 17 High Yield index was unchanged for a second consecutive session on Monday, finishing at 98 bid, 98¼ offered. That followed a 1 1/8-point surge on Thursday.

The KDP High Yield Daily Index meantime ended unchanged at 74.43 on Monday, after having risen for the five previous sessions, including Friday when it was up by 12 basis points.

Its yield came in by 1 bp to 6.49% after having narrowed by 8 bps on Friday.

But while those indexes were little changed, the widely-followed Merrill Lynch High Yield Master II Index notched its seventh consecutive daily advance on Monday, gaining 0.116% on top of Friday's 0.279% rise.

The latest gain lifted the index's year-to-date return to 4.914% on Monday, a new peak level for 2012. That eclipsed the previous high of 4.792%, which was recorded on Friday.

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