Still no primary pricings; Norbord details emerge; ATP rise continues; overall market softer

By Paul Deckelman and Paul A. Harris

New York, June 5 - Call it a negative hat trick. The high-yield primary market went for a third consecutive session on Tuesday without any new deals having been priced, putting up a big goose-egg for the month of June so far.

With no actual pricings taking place, Junkbondland new-dealers grasped at whatever straws they could find.

They heard roadshow and structure details emerge on Canadian wood-products company Norbord Inc.'s U.S. dollar-denominated $240 million two-part offering.

And syndicate sources heard price talk on French carmaker Renault SA's $250 million-equivalent offering of Japanese yen-denominated two-year notes.

Boyd Gaming Corp.'s new deal from last week was heard to be up slightly on the day, bucking a generally softer market trend, but remains well below its par issue price. Casino sector peer Rivers Pittsburgh Borrower LP's new issue continued to firm.

Away from the new deals, there was more upside for ATP Oil & Gas Corp., continuing the positive momentum generated by news that the energy company had hired a new chief executive officer and was making progress on completing a well.

News that commercial printer Cenveo Corp. had executed an agreement for new term loan borrowings and an amendment allowing it to repurchase its subordinated bonds due next year pushed those bonds sharply higher Tuesday, though volume was limited.

On the downside, Central European Distribution Corp.'s bonds and shares slid on the wine and spirits distributor's announcement that it will likely have to restate financial results dating to 2010.

Traders said the overall market was softer, in line with mostly weaker statistical performance measures.

Renault talks samurai deal

Renault set spread talk at 275 basis points to 285 bps to the Japanese benchmark for its yen-denominated $250 million-equivalent offering of two-year notes.

The deal is expected to be Wednesday business.

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. and Mizuho Finance are the leads.

Elsewhere syndicate names and structural details surfaced on Tuesday on the Norbord $240 million two-tranche offering of senior notes.

The deal includes $165 million of three-year senior secured notes (Ba2/BB-/DBRS: BB), which are coming to market as a Rule 144A eligible private placement. These notes will rank pari passu with the company's existing senior secured notes due 2017.

Also, a $75 million tranche of senior unsecured notes (B2/B+/DBRS: B) is being privately placed with a single investor.

As reported, CIBC is the left bookrunner.

Credit Suisse and Bank of America Merrill Lynch are the joint bookrunners.

The debt refinancing deal is being marketed on a roadshow through the present week. An investor call is set for Wednesday.

The only other offering on the active calendar is American Casino & Entertainment Properties LLC's $310 million offering of seven-year senior secured notes (B3/B+) via Goldman Sachs, Wells Fargo and Deutsche Bank.

Price talk is expected to surface on Wednesday, according to a market source.

Eyes on Zayo

Looking beyond the June 4 week's business, all eyes are turning to Zayo Group LLC, which is is expected to bring a $1.25 billion offering of high-yield notes that is expected to hit the market during the week ahead.

The bonds, backing the acquisition of AboveNet Inc., are expected to come in two tranches: a $750 million tranche of senior secured notes and a $500 million tranche of senior unsecured notes.

"The buyside is going to be watching that deal closely to see how efficiently these bonds can be priced," said a banker familiar with the transaction.

Morgan Stanley and Barclays are the leads in a syndicate of banks, which includes SunTrust, UBS, RBC and Goldman Sachs.

The financing also includes a $1.75 billion credit facility, which will launch at a Wednesday bank meeting.

Nothing in new deals

In the secondary market, traders noted the third consecutive day of absolutely no pricings.

"It's been quiet there absolutely," one of them said.

He added: "It's not easy to get a deal done right now, the volatility has made it difficult for these guys."

He said that it was "clearly not impossible" that deals might get done in the current market environment, which has seen at least a half-dozen prospective issues pulled from the forward calendar over the past several weeks, "but definitely more difficult."

Gaming names show gains

Although the junk bond secondary generally had a weaker tone to it - one of the traders estimated that "most things were down a half [point], more a generic move than a specific move to credits" - two of the recently priced issues were seen better on Tuesday, including one that had taken its lumps over the past several days.

That was Boyd Gaming's 9% notes due 2020, which a trader saw up by a quarter-point, bringing the Las Vegas-based casino operator's bonds back up to around the 98 bid, 99 offered mark from Tuesday's levels in the high-97s.

But that still left those bonds well below the par issue price at which Boyd priced its quick-to-market offering last Thursday, after upsizing it to $350 million from the originally announced $300 million.

In the words of another trader, Boyd "really never got out of its own way," briefly trading about a quarter-point above its issue price but then giving those gains back, ending Thursday's session slightly below par and continuing to deteriorate further.

Traders speculated that Boyd may have been having trouble, despite being a well-known, familiar junk issuer, because of its exposure to the recently weak gaming markets in Las Vegas, where Boyd has several smaller downtown casinos aimed at local gamblers.

Boyd's existing 9 1/8% notes due 2018 also gained a quarter-point to close at 101½ bid.

The other gaming credit that priced last week - the 9½% senior secured second-lien notes due 2019 from Rivers Pittsburgh Borrower LP, the company which owns that city's sole gaming establishment, the Rivers Casino - continued its upward march on Tuesday.

A trader saw those bonds gain another¾ point, to end at 103¼ bid, 103¾ offered.

Rivers Pittsburgh priced its $275 million forward calendar deal, downsized from an original $300 million, at par last Wednesday, and unlike the Boyd bonds, which struggled pretty much from the start, the new Rivers notes began moving up right from the get-go, ending their initial aftermarket at 101¾ bid, 102¼ offered. They have continued to move up ever since, traders said.

What's going on?

Away from the new issues, a trader said that in the secondary, he was seeing "just selective selling and very selective buying across the curve."

He said that much of what he saw happening at his shop on Tuesday was "a lot of clean-ups - people trying to add to their positions and take advantage of any strength there was."

He estimated that junk "was off about a quarter-point or so across the curve, but no particular sector at all."

Everyone, he said, "is trying to figure out what the next move is here in this marketplace."

He confessed, "I don't know what it is."

Junk indicators mixed

Statistical indicators of market performance turned mixed on Tuesday, after having been on the downside across the board for the previous four consecutive sessions. However, they were still mostly pointing lower.

The exception was the Markit Group CDX North American Series 18 High Yield Index, which a trader saw shooting up by 13/16 point on Tuesday, to end at 92 9/16 bid, 92¾ offered. It had eased by 1/16 point on Monday.

But back in the cash market and away from synthetic products, things were not quite so sanguine.

The KDP High Yield Daily Index posted its fourth consecutive loss Tuesday, dropping by 10 basis points to end at 71.71, on top of Monday's 20-bps slide. Its yield rose by another 5 bps, to 7.32%, on top of the 9-bps increase seen on Monday.

And the widely followed Merrill Lynch U.S. High Yield Master II Index posted its fifth straight loss on Tuesday, falling by 0.236%, on top of Monday's 0.18% decline.

The latest loss left its year-to-date return at 4.013%, down from Monday's 4.26%. It was the lowest level for the year-to-date figure since the 3.967% reading back on Feb. 17. All of those levels remain well down from the peak level for 2012 so far, 6.80%, set on May 7.

ATP improvement continues

Among specific names, a trader said that ATP Oil's 11 7/8% second-lien senior secured notes due 2015 "made a run today - they were one of the active bonds."

He saw the Houston-based offshore energy exploration and production company's bonds finishing in a 57-to57½ bid context, which he called up 1 point, on almost $35 million of trading.

"That's good volume and up a good bit the last couple of days," he said.

A second trader saw the bonds "continue to rally," quoting them up a point at 56 bid, 57 offered.

It was the second straight day the bonds have been up. They were also up by a point or so on Monday on brisk volume of some $16 million, apparently helped by the news late Friday that the company had tapped a new chief executive officer, Matt McCarroll, who previously ran Dynamic Offshore Resources LLC.

McCarroll takes over the CEO position from T. Paul Bulmahn, who founded the company and who remains its chairman.

ATP had a double dose of good news for investors on Friday, as it announced that completion efforts had resumed in one of the company's wells in the Gulf of Mexico's Mississippi Canyon area. Progress on that well had been delayed by a stranded piece of pipe.

"Ever since that news came out," one of the traders said, "there's been follow-through buying in that name."

PDVSA continues to pop

Also in the energy sector, a trader said that the bonds of Petroleos de Venezuela SA (PDVSA) were better in very active dealings.

"Those are always active, they're big names," he said of the South American county's state-run oil monopoly's 9% notes due 20201 and its 8½% notes due 2017.

The 9% notes moved up to 72-73 bid, which he called "up a couple of points on really good volume of some $74 million."

"That's a pretty big deal," he stated.

The 81/2s firmed to 81 bid, 82 offered on volume of between $20 million and $30 million.

There was no fresh news out on the company, whose bonds trade in both the high-yield space and the emerging markets space.

Cenveo better on loan news

Away from energy, Cenveo Corp.'s 7 7/8% subordinated notes due 2013 were seen by market participants having moved up sharply on the news that the Stamford, Conn.-based commercial printing company is moving ahead with its financing plans.

Those bonds jumped to above the 97 level at the close from a 92ish context on Monday

And throwing out the smallish odd-lot trades and just looking at round-lot transactions, the bonds gained some 6 1/8 points, to finish at 96 7/8 bid. Volume was around $4 million.

The bonds gained after the company's parent, Cenveo Inc., announced on Tuesday that Cenveo Corp. had executed an agreement that provides for an additional $65 million term loan under its senior secured credit agreement. The new loan is identical to the existing term loan under the credit agreement and is expected to close this week.

Cenveo said that its wholly owned unit also executed an amendment to the credit agreement, which also is expected to close this week, to allow the company to repurchase up to $135 million of the 2013 bonds, subject to maintaining certain liquidity thresholds and other customary conditions.

It further said that the amendment also delays a step-down in the maximum first-lien leverage ratio covenant to 2.25 times from 2.50 times until the first quarter of 2013.

Cenveo said that proceeds from the new loan tranche will initially be used to repay outstanding revolving credit borrowings, which will, in turn, free up revolver capacity to refinance the 2013 paper.

It said that this amendment, plus previous credit agreement amendments, will allow for all of those notes to be refinanced.

The company's chairman and chief executive officer, Robert G. Burton, said in a statement that Cenveo was pleased to be able to enter into the new financing "amid strong demand and despite recent volatility in the capital markets. The completion of this financing and amendment along with our anticipated cash flow will allow us to take out all of our remaining 2013 senior subordinated notes and eliminate significant maturities until 2016."

Bon-Ton rises

A trader saw Bon-Ton Department Stores Inc.'s 10¼% notes due 2014 edge up by around a half-point Tuesday to a 74-to-74½ context.

"A small amount traded," he said, in contrast to Monday, when at least $16 million to $17 million of the bonds traded, jumping as high as a 751/2-76 range before coming off those highs to end around 73½ bid. This was still seen up at least 4 or 5 points from prior levels in the upper 60s.

"Its hanging about where it was yesterday [Monday]," he said. "Up 4 points in the last two days, but not much today from yesterday."

The York, Pa.-based department store operator's bonds had bounced on Monday on the announcement that it is offering to exchange new 10 5/8% senior secured second-lien notes due 2017 for the existing bonds on a one-for-one basis for those holders who tender their notes by the June 15 early deadline. Those tendering after that deadline but before the July 3 expiration deadline will get $970 principal amount of the new bonds per $1,000 principal amount of the old bonds tendered.

CEDC gets clobbered

From the distressed-debt precincts, a trader said that Central European Distribution's 9 1/8% notes due 2016 were trading in the 50s, which he called 'down a bunch,"

A market source at another desk saw the bonds going home at 61 bid, well down from previous levels around 69 bid, with about $3 million having traded.

The slide followed Monday's announcement that the Mt. Laurel, N.J.-based company, which produces and sells alcoholic beverages in Poland, Hungary and Russia and also imports various brands of whiskeys, wines and beers, would likely have to restate its financial results for all reporting periods from and after Jan. 1, 2010 and, possibly, some periods before that.

That warning followed a shake-up, which took place in April, in its senior management at its main operating subsidiary in Russia, the Russian Alcohol Group, and the subsequent careful review of the unit's books.

Senior CEDC management determined that CEDC's reported net sales in the years ended Dec. 31, 2010 and 2011 failed to reflect the timely reporting of the full amount of retroactive trade rebates provided to the Russian unit's customers in that country.

CEDC's Nasdaq-traded shares swooned by 38 cents, or 10.70%, at $3.17 per share. Volume of 3.2 million shares was almost four times the norm.

MEMC moves up

Elsewhere, a trader said that MEMC Electronic Materials Inc.'s 7 7/8% notes due 2019 moved up to a 65-66 context, which he called "up a couple of points" from Monday's levels between 63 and 65, although he said that "the more sizable trades" were around 64, which he called up 1 point.

There was no fresh news seen out on the St. Peters, Mo.-based company, which makes silicon wafers used in semiconductors and other electronic components.

Xerium gets zapped

A trader said he heard that Xerium Technologies Inc.'s 8 7/8% notes due 2018 were "down a couple of points," although he did not have a level on the bonds.

Another trader had not seen any dealings in the Raleigh, N.C.-based company's bonds, which had last traded on a round-lot basis about a week ago at the 76 bid level.

There was no fresh news out on the company, which makes consumable products used in the production of paper clothing and roll covers.

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