ACCO deal prices, moves up, existing bonds pop also; Sprit Aero, Nebraska Book slate deals

By Paul Deckelman and Paul A. Harris

New York, Sept. 21 - ACCO Brands Corp. successfully priced an upsized offering of senior secured notes on Monday, high yield syndicate sources said. The new bonds - which priced at a discount to par - were seen by traders to have punched upward by several points when they were freed for secondary dealings. At the same time, the Lincolnshire, Ill.-based office products company's existing bonds were seen by traders having also moved up.

Also on the new-deal scene, upcoming sales surfaced for Spirit Aerosystems Holdings Inc. and Nebraska Book Co. Inc., with both deals to be marketed to investors for several says before pricing. Pricings are meantime expected on Tuesday for the deals being brought by Delta Air Lines, Inc. and the split-rated QVC Inc. Price talk emerged on both of those deals on Monday.

Another split-rated name, Seacor Holdings Inc., was heard to have priced off the investment-grade desks of the participating underwriters. The level of high yield interest in the new deal was unclear, although it should be noted that junk accounts have recently played in some split-rated offerings, such as Watson Pharmaceuticals Inc.

Back among the purely high yield new credits, traders saw higher levels in the new Dole Food Co. Inc. bonds which had priced late Friday, and said another Friday deal, Continental Resources Inc.'s 10-years, were also trading up.

And the new Blockbuster Inc. deal - which initially had traded sharply higher, even reaching the par mark after pricing last week n the mid-90s - continued to pull back from that lofty peak on Monday, while the video-rental company's existing 2012 bonds - which had firmed smartly in anticipation of the new deal - likewise headed south.

ACCO upsizes

One deal priced during Monday's primary market session.

ACCO Brands priced an upsized $460 million issue of 10 5/8% senior secured notes (B2//) at 98.502 to yield 11% on Monday, according to market sources.

The yield printed at the tight end of the 11% to 11¼% price talk.

The issue was increased from $425 million.

Credit Suisse, Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and BMO Nesbitt Burns were joint bookrunners for the Rule 144A offering.

Proceeds, along with funds from a new $175 million asset-based credit facility, will be used to repay all borrowings outstanding under the company's existing credit and securitization facilities.

The issuer is a Lincolnshire, Ill.-based provider of traditional and computer-related office products and supplies.

Talking the deals

Delta Air Lines set price talk for a $500 million to $750 million offering of five-year senior secured notes (expected ratings Ba2/BB-) on Monday.

The deal could possibly be upsized from the $500 million amount initially announced.

The books close at 2 p.m. ET on Tuesday, with pricing of the notes expected after that.

J.P. Morgan Securities Inc., Barclays Capital Inc. and UBS Investment Bank are joint bookrunners for the Rule 144A for life notes.

Proceeds, together with borrowings on from new credit facilities, will be used to repay all existing senior corporate credit facilities, with any remaining proceeds to be used for general corporate purposes.

Elsewhere North American Energy Alliance, LLC & Finance Corp. set price talk for its $205 million offering of seven-year senior secured second-lien notes (Ba3/B+/) at the 11½% area.

The books will close on Tuesday, and the deal will price on Wednesday morning.

Barclays Capital Inc. and Bank of America Merrill Lynch are joint bookrunners.

Proceeds will be used to refinance the New York-based utility owner-operator's unsecured term loan.

Also QVC, Inc. set price talk for its $500 million offering of 10-year senior secured notes (Ba1/BB+/BBB) at 7¾% on Monday.

The notes are expected to price on Tuesday.

Wells Fargo Securities and Barclays Capital Inc. are joint bookrunners.

Proceeds will be used to repay existing term loans.

QVC is an Englewood, Colo.-based television and multimedia retailing company.

The calendar builds

The Monday session also came with deal announcements.

Nebraska Book Co. will start a roadshow on Tuesday for its $200 million offering of senior secured notes (mid single-B ratings expected).

The roadshow is set to wrap up on Friday.

JP Morgan, Bank of America Merrill Lynch and Wells Fargo Securities are joint bookrunners for the Rule 144A/Regulation S with registration rights notes offer.

Proceeds will be used to repay term bank debt.

Meanwhile Spirit Aerosystems plans to price $300 million of eight-year senior notes later this week.

Bank of America Merrill Lynch, Credit Suisse, Morgan Stanley and Barclays Capital are joint bookrunners for the debt refinancing and general corporate purposes deal.

ACCO bonds better

A trader said that the ACCO Brands 10 5/8% senior secured notes due 2015 "did real well today," moving up from the 98½ level at which the $460 million offering priced.

He saw the bonds "trade up right away" as soon as they were freed for secondary market activity. "They were 102-103 right out of the box," he said. "Two minutes after they priced, it was a 102-103 market out there."

By the end of the day, he said the issue had firmed further, to 102 7/8 bid, 103 1/8 offered, "so that one did really well."

Another trader saw the new bonds having settled in at 102 bid, 103 offered, still well up from their issue price.

ACCO's existing 7 7/8% notes due 2015, meantime, were seen having moved up to around an 80-81 context, where "a lot of bonds traded," a market source said. "They were pretty active. That was the high print," up from 781/2, "where it traded most of last week."

New Dole bonds bounce a little

The trader also saw better levels in Dole Food's new 8% senior secured notes due 2016. The Westlake Village, Calif.-based fruit and vegetable processor's new bonds opened at 99 bid, par offered, and had gone home Thursday having traded at 99¾ bid, 100¼ offered.

The company had priced that $315 million issue of the notes at 98.035 to yield 8 3/8%.

Continental 'did OK.'

A trader saw Continental Resources' new $300 million of 8¼% notes due 2019 trading at 102¼ bid, 102¾ offered.

That was well up from the 99.16 level at which the bonds had priced Friday afternoon to yield 8 3/8%. While traders had quoted the bonds above par on Friday afternoon, they'd seen no real trading, so its upside movement Monday was a sign, the trader said, that the Enid, Okla.-based energy operator's bonds "did OK."

Frontier's new bonds steady at higher levels

A trader saw Frontier Communications Corp.'s recently issued 8 1/8% notes due 2018 at 99¼ bid on the first day that those new bonds were included in the Trace bond-tracking system.

He saw the Stamford, Conn.-based telecommunications company's bonds "basically unchanged" around their late Friday levels, on $37 million traded.

"It seems like one of the more active new issues," he declared.

On Thursday the company priced a $600 million offering of 8 1/8% notes due 2018 - upsized from $450 million originally - at 98.441 to yield 8 3/8%.

New Blockbuster sheds gains, again

Blockbuster's 11¾% senior secured notes due 2019 continued to retreat from the peak levels which those bonds hit shortly after pricing last Thursday.

A trader saw that paper at 95 bid, 96 offered early in the day, and then late in the day, it was just offered at 96 bid.

Those levels were down from where the bonds ended on Friday, when they traded into a 96¾ bid.

Another trader Monday also pegged the new issue around 96, calling that "a little lower from Friday."

Blockbuster had priced $675 million of bonds, upsized from the original $340 million, on Thursday at 94 to produce a 15.21% yield. The bonds were seen quoted as high as par, "coming out of the box," a trader said, although subsequently, they "backed off," and had fallen to around the 98ish level on Thursday and had fallen further still by Friday to around 97¼ bid, 97¾ offered.

Traders said the initial bonds rallied on investor optimism that Blockbuster would be able to use the proceeds to improve its balance sheet, combined with enthusiasm about the features of the bond, including a "sinking fund" provision requiring the company to redeem 3.333% of the original principal amount at a price of 106 each quarter starting with the coming Jan. 1. There was also some plain old "flipping" seen going on, particularly since several traders voiced the opinion that the bonds had priced too cheaply to begin with.

Blockbuster existing bonds erode

A trader saw Blockbuster Inc.'s 9% notes due 2012 "move pretty nicely" - he said there was "a lot of volume" on the notes as they moved down to around a 68-71 context, going out around 69 bid, down from the levels as high as the mid 70s which the notes had moved up to last week in anticipation of the new deal and in that offering's immediate aftermath."

"Around 68-71 is where they've been all day," he said, which he called "down a point or two" from prior levels. "It depends what side of the market they ended on."

A second trader saw the 9s "trade into a 68 bid at one point," well down from the levels as high as 76 which the bonds had hit on Friday. "Somebody hit a 71 bid in the morning, and the last trade today [Monday], somebody hit a 68 bid."

There was no immediate news out about the Dallas-based DVD, Blu-Ray and videogame rental company that might explain the sudden loss of favor in the bonds, especially after last week's run up, although one market source did suggest that perhaps holders of the 9s "were getting out of those bonds to get into the new ones," especially since the latter bond is a senior secured piece of paper that is pari passu with the company's bank debt, carrying a much fatter coupon and having the sinking fund buyback, all combining to make it "a much more investor-friendly piece of paper," as one trader put it.

At another desk, a market source saw the bonds going out at 71½ bid - but called that down as much as 4 points from previous levels.

Market indicators stay mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 12 index down by ¼ point on Monday, to 93½ bid, 94 offered, after having eased by ½ point in each of the previous two sessions, last Thursday and Friday.

The KDP High Yield Daily Index was little changed on Monday at 68.70 - a gain of 1 basis point from Friday's level - while its yield was likewise essentially steady, at 8.48%, versus 8.49% on Friday, when the index had risen by 8 bps and the yield had tightened by 4 bps.

In the broader market, advancing issues managed to lead decliners for a 13th straight session on Monday, although by only a relative handful of issues.

Junk market activity, reflected in dollar-volume totals, fell about 30% from Friday's level.

A trader characterized Monday's market as "a little blah."

On the other hands, while a second trader opined that "it didn't seem like a very active day," he added the caveat that "when we get to the volume, the numbers were these. The combination of the new issues - which are not on Trace - in conjunction with the issues that are on Trace, I would consider it a decent day's volume."

That having been said, the big, liquid and usually well-traded junk bond "barometer" issues continued to see just limited dealings, with Franklin, Tenn.-based hospital operator Community Health Systems Inc.'s 8 7/8% notes due 2015 down ¼ point at 1021/2, on $10 million traded, while Greenwood Village, Colo. financial transaction processor First Data Corp. eased by 3/8 point to 93, though on only $2 million traded.

"Both of them seemed a little bit easier," he said, "probably in response to the equity market," which saw the bellwether Dow Jones Industrial Average fall by 41.34 points, or 0.42%, to 9,778.86.

Philadelphia-based food service operator and uniform provider Aramark Corp.'s 8½% notes due 2015 traded at 1011/4, down ½ point, on $1 million traded.

Freeport-McMoRan still golden

In contrast, Freeport-McMoRan Copper & Gold Inc.'s two bond issues were the most actively traded junk credits, continuing to firm slightly in very heavy trading, on no company-specific news, but no doubt helped by the continued strength in gold prices, which remained above $1,000 an ounce Monday in the New York Mercantile Exchange's Comex division's dealings.

The Phoenix-based metals mining company's 8¼% notes due 2015 moved up to 107¼ bid from 106 7/8 on Friday, on volume of $52 million, while its 8 7/8% notes due 2017 were also at 1071/4, up ¼ point, on turnover of $39 million.

Another trader agreed that Freeport-McMoRan "was the big one today," seeing some $108 million in trading in the two issues, and seeing them both go out around 107 bid.

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