Sonic drives by, moves up; four deals hit road; Chang, Choice stay strong; market easier

By Paul Deckelman and Paul A. Harris

New York, June 25 - Sonic Automotive Inc. was heard by high-yield syndicate sources to have motored into Junkbondland on Monday.

When it was all over, the automotive retailer drove off with a trunk full of fresh cash to the tune of $200 million. Those bonds were quoted higher in the aftermarket.

The syndicate sources meantime heard that four other prospective issuers began roadshows to market their planned bond deals to would-be investors.

Those issuers included energy operator Halcon Resources Corp. with a $500 million eight-year issue; precious metals miner Coeur D'Alene Mines Corp. with a $350 million eight-year transaction; another eight-year offering from plastic bottle maker Consolidated Container Co. LLC, doing a $250 million deal; and business services provider Ceridan Corp., which is shopping a $720 million seven-year senior secured issue. All of those deals are expected to price at or near the end of this week.

Junk traders heard that Friday's deals from Choice Hotels International, Inc. and P.F. Chang's China Bistro Inc. were holding onto the gains that they notched when they were freed for secondary dealings.

Away from trading in the new deals, traders saw a largely easier overall market, as junk followed the lead of equities, which slid badly on new investor fears about the European debt situation.

Statistical indicators of secondary market performance were lower across the board.

Among specific names, ATP Oil & Gas Corp.'s bonds were being quoted lower, giving up the gains of several points which the offshore energy operator had notched last week on news that it had done a $35 million convertibles deal.

Chesapeake Energy Corp.'s bonds were lower, in line with its stock, on the latest bad news to surface about the embattled natural gas producer. Reports said the company allegedly conspired with a rival bidder to keep prices low during land auctions that the two companies participated in some years ago.

Sonic prices $200 million

Sonic Automotive priced Monday's only deal, a $200 million issue of 7% 10-year senior subordinated notes (B3/B+), which priced at 99.11 to yield 7 1/8%.

It generated $198 million of proceeds.

The yield printed at the tight end of yield talk, which was set in the 7¼% area.

Bank of America Merrill Lynch, J.P. Morgan and Wells Fargo were the joint bookrunners.

The Charlotte, N.C.-based automotive retailer plans to use the proceeds to repurchase some or all of the outstanding 5% convertible senior notes due 2029 and for general corporate purposes.

Ceridian starts roadshow

The active forward calendar saw a robust buildup Monday and that took some market-watchers by surprise.

Ceridian began a roadshow Monday for a $720 million offering of seven-year senior secured notes (expected ratings B1/B-).

Deutsche Bank, Credit Suisse and Bank of America Merrill Lynch are the leads for the debt refinancing.

Halcon starts eight-year deal

Halcon Resources began a roadshow Monday in New York City for its $500 million offering of eight-year senior notes.

Barclays, Goldman Sachs, J.P. Morgan, Wells Fargo, BMO and RBC Capital Markets are the joint bookrunners.

The proceeds also will be used to acquire other potential properties and for general corporate purposes.

Coeur d'Alene Mines kicks off

Coeur d'Alene Mines began a roadshow Monday in Boston for its $350 million offering of eight-year senior notes (expected ratings B3/BB-/).

Barclays is the lead left bookrunner. Wells Fargo is the joint bookrunner.

The notes come with four years of call protection.

The Idaho-based silver and gold producer plans to use the proceeds to fund internal and external growth initiatives, and for general corporate purposes.

Consolidated begins roadshow

Consolidated Container and Consolidated Finance Inc. began a roadshow on Monday for their $250 million offering of eight-year senior notes.

Citigroup is the lead left bookrunner for the acquisition deal. Bank of America Merrill Lynch, RBC and Credit Suisse are the joint bookrunners.

Moody's Investors Service assigned a Caa1 rating to the notes and a B2 corporate credit rating to the issuer. Standard & Poor's rated the notes at CCC+ and assigned a B corporate credit rating to the issuer.

Monday's robust buildup to the forward calendar took a debt capital markets banker by surprise.

Volatility in equities, which saw the major stock indexes in the United States fall between 1% and 2%, really does not lend much support to an active new-issue market, the source said.

None of the deals announced Monday took the dealer community by surprise, the banker said, and added that of the four deals announced only the Consolidated Container deal is a committed financing.

The other three are best-efforts transactions, the sellsider said.

Sonic shows strength

When the new Sonic Automotive's 7% notes due 2022 were freed for secondary dealings, a trader quoted the new bonds at 101½ bid, well up from the 99.11 level at which the Charlotte, N.C.-based automotive retailer's paper priced earlier in the afternoon.

A second trader, though, said he did not see any trace of the new issue yet.

Investors choose Choice, Chang

Among the bonds that priced Friday, a trader saw Choice Hotels International's 5¾% notes due 2022 at 103½ bid, 103¾ offered.

A second trader also saw the bonds there, which was well above the par price at which the company issued its $400 million of new bonds.

That split-rated (Baa3/BB) issue moved above 102 bid Friday after their pricing and added to their gains Monday, a market source said.

One of the traders also saw the Silver Spring, Md.-based global lodging industry franchisor company's existing 5.70% notes due 2020 at that same level.

He saw the new P.F. Chang's China Bistro 10¼% notes due 2020 at 102½ bid. "Pretty good performance in a lousy market today," he said.

The Scottsdale, Ariz.-based Asian-themed restaurant chain operator priced its $300 million of bonds at 99.30 on Friday, to yield 10 3/8%. The bonds firmed in Friday's aftermarket to about the 102 bid level, and continued to hold those gains Monday.

Calumet climbs a little

Among other issues that priced last week, a trader saw Calumet Specialty Products Partners LP's 9 5/8% notes due 2020 at 100¼ bid, 100½ offered.

The Indianapolis-based manufacturer of motor fuels and lubricating oils priced last Thursday a quickly shopped $275 million bond issue, upsized from an originally announced $250 million.

The bonds priced at 98.25, to yield 9.941% and firmed a little to 99 in initial aftermarket dealings. On Friday, they got as good as par bid, before ending at 99½ bid, 100¼ offered.

Ally around issue

A trader saw both halves of Ally Financial Inc.'s $1.5 billion two-part deal trading at or a little below the tranches' respective issue prices.

He saw the Detroit-based automotive and residential lender's $1 billion of 4 5/8% senior guaranteed notes due 2015 trading at 99¼ bid, 99 3/8 offered. The bonds priced at 99.31 on Thursday afternoon to yield 4 7/8%.

He also saw Ally's $500 million issue of 5½% notes due 2017 at 101¼ bid, 101½ offered.

Those bonds priced Thursday at 101½ to yield 5.131%.

Market seen lower

Apart from the new deals, traders saw a generally quiet, easier market.

One called the day's session "a typical summer Monday."

Another quoted junk off by a half-point to 1 full point.

"The market started to pick up a little in the afternoon, but the morning was deadly," the trader said.

Junk stayed on the downside as investors took their cues from equities, which moved sharply lower Monday; the bellwether Dow Jones Industrial Average sank by 138.12 points, or 1.09%, to close at 12,502.66; the broader Standard & Poor's 500 index and the Nasdaq composite index lost 1.60% and 1.94% on the day, respectively.

Market indicators lower

Back in the junk realm, statistical market performance measures showed a clear downside bias Monday.

A trader saw the Markit Group CDX North American Series 18 High Yield Index off by 5/8 points on Monday to end at 94 7/8 bid, 95 offered, after jumping by 13/16 point on Friday.

The KDP High Yield Daily Index fell by 12 basis points, to 72.89, after ending up 3 bps Friday. Its yield Monday widened to 6.81%, after coming in by 5 bps on Friday.

And the widely followed Merrill Lynch U.S. High Yield Master II Index posted its second consecutive loss Monday, easing by -0.076%, on top of the 0.051% retreat Friday, which broke a string of seven consecutive gains.

The easing left its year-to-date return at 6.348%, down from 6.429% on Friday and below its peak level for 2012 so far, 6.80%, set May 7.

Bids wanted

A market source said that an institutional investor was circulating a sizable bids-wanted list Monday, which included a few junk issues among the mostly bank loans and asset-backed issues.

Among the familiar credits on the list were such junk names as Avis Budget Car Rental, LLC, Cenveo Corp., International Lease Finance Corp. and United Airlines Inc.

Bids were due Wednesday morning, the source said.

ATP off on day

A trader said that ATP Oil & Gas' 11 7/8% second-lien senior secured notes due 2015 were down in sizable trading of $15 million to $16 million.

He saw the Houston-based offshore energy exploration and production company's bonds down about 1 point at the 45 bid, 46 offered level, on what he called "decent volume."

A second trader saw the bonds at 46 bid, which he said were a little lower on the day. "There was some trading, but it was not superactive."

He said the bonds earlier hit a low point of 451/2.

Yet another trader pegged the bonds at 45¾ bid versus going-home levels of 46¾ bid, 47 offered Friday.

And earlier last week, ATP bonds moved as high as a 49-50 context, up by several points after news that the company raised $35 million through the sale of 8% convertible notes due 2013 and a warrant to buy 3.9 million shares of the company's stock in a private sale involving one institutional client.

But observers said that even though this was good news for the company, investor worries about how the slowing global economy is weighing on shares of energy names in general.

Chesapeake churns on bad news

Another energy name, Chesapeake Energy, moved lower in line with a fall in the Oklahoma City-based natural gas producer's shares, on published reports that Chesapeake and a rival energy concern, EnCana Corp., allegedly discussed bidding strategies for potential oil and gas properties being auctioned off several years ago so the two companies would not bid against each other and send those prices up.

Michigan officials said they are investigating the matter.

Chesapeake's New York Stock Exchange shares dropped by $1.58, or 8.49%, to end at $17.03, on slightly less than normal value.

A bond trader said the company's 9½% notes due 2015 was one of its more active issues. He said the notes retreated to about 1061/2, down from previous levels around 107½ bid, 108 offered.

The company's 6 5/8% notes due 2020 were down a point at 99¼ bid, while its 6.775% notes due 2019 eased to 98 7/8 bid.

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