Seminole Tribe deal prices, zooms on break, new Jarden firms; paper names jump, GM rebounds

By Paul Deckelman and Paul A. Harris

New York, Nov. 3 - Seminole Tribe of Florida priced a $330 million offering of seven-year first-lien gaming division bonds on Wednesday, the only pricing seen in the domestic high yield market.

When the new bonds moved into the aftermarket, traders saw them jump more than 3 points from their par issue price - the latest in a series of recent new deals which have firmed smartly in the secondary market.

Tuesday's new offering from Jarden Corp. began trading and was seen up more than a point from issue. Deals earlier in the week from SunGard Data Systems Inc. and New York Times Co. continued to trade well.

Also pricing were two deals from European issuers - a euro-denominated offering of five-year notes from German airline carrier Air Berlin plc and a sterling-denominated tranche of five-years from British plastic pipe manufacturer Polypipe Ltd.

Back among the domestic names, primaryside players for looking for possible pricings Thursday from Interline Brands, Inc., Spansion LLC and Frac Tech Services.

Calfrac Holdings, LP and Burlington Coat Factory Warehouse Corp. were heard to be shopping new deals around.

Away from the new-deal arena, bonds of paper companies like Catalyst Paper Corp. and NewPage Corp. did very well, aided by Catalyst's third-quarter numbers.

General Motors Corp. bonds, which tumbled on Tuesday, regained some of that lost ground on Wednesday.

Seminole brings split-rated deal

Although no dollar-denominated junk priced on Wednesday, Seminole Tribe of Florida completed a $330 million issue of split-rated seven-year Gaming Division Bonds, Series 2010B (Ba1/BBB-/BB+) at par to yield 7¾%.

The yield printed at the tight end of the 7¾% to 8% price talk.

Bank of America Merrill Lynch ran the books.

Proceeds will be used to fund capital expenditures and for tribal uses.

The par-pricing Seminole 7¾% notes due 2017 rocketed to 104 bid, 104½ offered in the aftermarket, according to a high-yield mutual fund manager who played and then flipped the deal.

"Right now, everyone is focused on the primary market, and allocations on these deals are the worst I've ever seen," said the institutional investor who added that meager allocations - amounting to a paltry fraction of the order (padded or not) - are an invitation to flip bonds and turn a quick buck.

The problem, stated the fund manager, is that investors have to own something, which is becoming increasingly challenging in the furiously rallying high-yield market.

What makes things worse, said the investor, is that fact that Johnny-Come-Lately players are showing up in the high-yield primary, so that allocations are stretched even farther.

For example, the investor said, insurance companies were all over Jarden Corp.'s $300 million issue of senior notes due 2022 (Ba3/BB-/) which priced on Tuesday at par to yield 6 1/8%, via Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC.

The Jarden deal was upsized from $250 million.

Air Berlin closes books early

The European market remained active on Wednesday.

Air Berlin closed the order books early and priced a €200 million issue of five-year bonds at par to yield 8½%.

The issue size came at the high end of the €150 million to €200 million range at which the deal launched.

The yield and reoffer prices came on top of price talk.

Initially the order books were expected to remain open until Friday.

Quirin Bank ran the books.

The German air carrier will use the proceeds to repay debt.

The issue likely played to an abundance of demand from German retail investors, said a sell-side source who was not in the deal.

This source could not come up with another left books deal from underwriter Quirin Bank.

Polypipe at the tight end

Elsewhere, England's Polypipe priced a £150 million issue of five-year notes at par to yield 9½% on Wednesday, according to a market source.

The yield printed at the tight end of the 9½% to 9¾% price talk.

Deutsche Bank Securities ran the books.

Talking the deals

Interline Brands upsized its eight-year senior subordinated notes offer to $300 million from $275 million, and talked it with a 7% to 7¼% yield on Wednesday.

The deal is expected to price on Thursday.

Barclays Capital Inc. and J.P. Morgan Securities LLC are the joint bookrunners.

Meanwhile Spansion talked its $200 million offering of seven-year senior notes (B//) with an 8% area yield.

The books close at 10:30 a.m. ET on Thursday, and the notes are set to price afterwards.

Barclays Capital Inc. and Morgan Stanley & Co. Inc. are the joint bookrunners.

Elsewhere Frac Tech Services moved up timing for its $550 million offering of eight-year notes.

Order books will close at 2 p.m. ET on Thursday, and the notes are expected to price subsequently.

The deal previously was expected to price during the week ahead.

Price talk is expected Thursday morning.

Credit Suisse Securities (USA) LLC, RBC Securities, Inc., Bank of America Merrill Lynch, Citigroup Global Markets, Inc. and Wells Fargo Securities, LLC are the bookrunners.

Calfrac kicks off $400 million

The new issue calendar continued to build on Wednesday, and is expected to continue doing so into the intermediate future, sell-side sources said.

Calfrac Holdings LP will begin a roadshow on Friday for its $400 million offering of 10-year senior notes (current ratings B2/B+).

The deal is set to price during the week ahead.

RBC Capital Markets and Morgan Stanley are the joint bookrunnerst.

Proceeds will be used to repurchase the company's 7¾% senior notes due 2015, as well as to repay bank debt and for general corporate purposes including future capital expenditures.

MedAssets roadshow

Meanwhile, MedAssets, Inc. is roadshowing a $360 million offering of eight-year senior notes, according to market sources who add that the deal is expected to price in the week ahead.

JP Morgan Securities LLC and Barclays Capital are the bookrunners for the acquisition financing.

Burlington Coat Factory Warehouse Corp. announced in a Wednesday press release that it plans to offer $500 million of eight-year senior notes.

J.P. Morgan Securities LLC will lead the deal, according to market sources who add that specific timing remains to be determined.

And Seneca Gaming Corp. announced in a Wednesday press release that it plans to place $325 million of eight-year senior notes.

New Seminole bonds strong

When Seminole Tribe of Florida's new 7¾% first-lien gaming division bonds due 2017 were freed for secondary activity, a trader saw the bonds jump to 103 bid, 104 offered on the break.

"They really rallied," he opined. "It's a 5B, and everybody's reaching, grabbing for whatever they can.

A market source at another desk meantime saw the bonds bid at 103 3/8, well above the par level at which the offering had priced.

And yet another trader quoted the new bonds as high as 104 bid.

Tuesday's Jarden trades up

Tuesday's $300 million offering of 6 1/8% notes due 2022 from Jarden was seen by a trader on Wednesday trading at 101 bid, 101½ offered on the break.

The Rye, N.Y.-based maker of such well-known small-appliance brands as Sunbeam, Oster and Mr. Coffee, along with other consumer products, priced the deal - upsized from the originally announced $250 million - at par on Tuesday. They came to market too late in the day Tuesday for meaningful secondary dealings at that time.

Other new deals strengthen smartly

Apart from the Jarden offering, a trader saw several other recently priced new issues trading above the 103 level along with Seminole Tribe's deal.

"It's kind of crazy, stupid, really," he said, adding: "It's a feeding frenzy."

For instance, he saw both halves of SunGard Data Systems' $1.6 billion two-part deal trading in a 103 ½ bid, 104 context.

That was well up from the par levels at which both the Wayne, Pa.-based information technology company's 7 3/8% notes due 2018 and 7 5/8% notes due 2020 had priced on Monday, although they did not begin aftermarket activity until Tuesday.

That was when the $900 million of eight-year notes and $700 million of 10-year paper had been seen trading around 101 1/8 bid, 101½ offered, and 101½ bid, 102½ offered, respectively.

A trader at another shop saw the eight-year bonds on Wednesday at 102½ bid, 103 offered, and pegged the 10-years at 103½ bid, 104 offered.

The SunGard notes had originally been shopped around as a single $500 million tranche of eight-year bonds, but that was then doubled in size with the addition of a 10-year tranche, and was once again upsized to the $1.6 billion total of bonds which finally priced and then moved up.

The deal was opportunistically timed and quickly shopped around, pricing later in the same session that it was announced.

Also trading in that rarified range above 103 was Monday's upsized $225 million New York Times Co.'s 6 6 5/8% notes due 2016.

The New York-based publishing and media company's quick-to-market deal - upsized from its originally announced $200 million size - had priced at par on Monday and then shot up to above the 102 level in trading later that session, and then above 103 by Wednesday and Thursday

A trader saw the bonds Wednesday at 103¼ bid, 103¾ offered.

Gaming bonds still on losing streak

However, a trader noted that while almost everything which had recently priced was up, some issues still had troubled getting out of their own way and were trading no better than their respective issue prices, if even that.

For instance, MGM Resorts International's 10% notes due 2016 were trading at 98¼ bid, 98¾ offered- actually below the 98.897 level where the Las Vegas-based gaming giant's $500 million deal priced on Oct. 25.

MGM is "in flux" right now, the trader said, and Boyd Gaming Corp.'s new 9 1/8% notes due 2018 "are not much better either." In fact, Las Vegas-based locals gaming hall operator's $500 million deal was trading under the par level at which it priced on Oct. 28, at 98 bid, 99 offered.

Secondary surge rolls on

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index up ¼ point for a second straight session on Wednesday to end at 100 7/8 bid, 101 1/8 offered.

The KDP High Yield Daily index meantime rose by 4 basis points Wednesday to end at 74.72, after having edged up by 1 bp on Tuesday. Its yield narrowed by 1 bps, also for a second consecutive session, to 7.10%.

The Merrill Lynch High Yield Master II index gained 0.089% on Wednesday, after having firmed by 0.095% on Tuesday. The latest advance pushed its year-to-date return up to 14.705%, its 10th consecutive new 2010 peak level, eclipsing the old mark of 14.603%, recorded on Tuesday.

Advancing issues led decliners on Wednesday for a fifth straight session. Their margin of victory rose to six to five, an improvement from the couple of dozen issues out of the nearly 1,500 that traded which was seen on Tuesday.

Overall activity, represented by dollar-volume levels, rose about 2% on Wednesday, after having jumped by 43% on Tuesday from the previous session.

A trader, commenting as much on the overall firm tone of the market as on the aftermarket behavior of the new deals, exclaimed "everything is going up, baby."

Catalyst Paper pops

Among specific secondary issues not connected with the new-deal market, a trader said that "really good numbers" helped Catalyst Paper's bonds gain about 8 points on the day.

The trader said the 7 3/8% notes due 2014 were "very active" around 69, up 8½ points. The 11% notes due 2016 were less active, but also better by 8 points around 94.

Another trader quoted the 11% senior notes at 95 bid, 96 offered and the 7 3/8% subordinated notes at 68 bid, 69 offered.

At another desk, a trader proclaimed that "paper was pretty hot," but rather than give all the credit to the third-quarter numbers, he speculated that a Wall Street Journal article about how China is buying up lumber was causing "everybody to grab paper. People short-covered."

He saw the Catalyst 7 3/8s in the upper 60s and said [Tuesday], you could have bought it at 60."

He also saw the 11% notes at 94 bid, 95 offered, up from prior levels around 90.

"The whole paper sector was up," said another, who likewise attributed the movement in Catalyst, NewPage Corp. and other sector peers to the numbers, saying "they really crushed them."

He saw the Catalyst 11s better by 5 points on the day, while the 7 3/8s were 6-point gainers.

For the third quarter, the Richmond, B.C.-based papermaker reported net profit of C$6 million, or 2 cents per share. That compared to a net loss of C$368.4 million, or 96 cents per share, in the second quarter.

The turn to profit was due in part to a gain in sales. Catalyst had sales of C$322.3 million in the third quarter, up from C$299.4 million in the previous quarter.

The improved bottom line was also helped by "better paper market conditions and operational performance," the company said in its earnings release.

"Business conditions are tough but showing signs of improvement," said Kevin J. Clarke, president and chief executive officer, in the release. "Sales volumes and prices were up as North American paper demand stabilized."

Over the course of the quarter, Catalyst also attempted to delever its balance sheet, repurchasing $9.5 million of its 8 5/8% notes due 2011 for $8.9 million.

Liquidity, however, was weaker at C$183.9 million versus C$208.3 million the quarter before.

Still, Catalyst expects to see "further improvement in benchmark prices across all Catalyst paper products" in the fourth quarter and beyond. Pulp prices are also expected to decline, in part because of weakened Chinese demand.

NewPage active pre-earnings

Also in the paper sector, NewPage's debt traded actively - but "basically unchanged," a trader said - as the Miamisburg, Ohio-based company prepared to release its earnings on Thursday.

The trader pegged the 10% notes due 2012 at 641/2, the 11 3/8% notes due 2014 at 96¼ and the 12% notes due 2013 at 35.

At another shop, a market source said the 10% notes were the "big trader," also placing the paper around the 64½ level.

He added that $30 million to $40 million of the 12% notes changed hands at 35½ bid, 36 offered.

NewPage, said another trader "was bouncing around a lot," and was "up a little" in active dealings.

Earlier in the week, a trader told Prospect News that the market was expecting "reasonable" numbers from NewPage. Catalyst's improved quarterly results likely fueled that belief.

A trader also saw upside movement in some other paper names including Tembec Inc., whose bonds firmed to 100½ bid from 98½ bid, 99½ offered, as well as sector peers like Domtar Inc., AbitibiBowater Inc. and Verso Paper Corp.

GM bounces back

Elsewhere, General Motors continued to be active and "all over the place," according to a trader, as investors got a "little more clarity" regarding the company's planned initial public offering.

The trader saw the benchmark 8 3/8% notes due 2033 closing at 34¾ bid, 35¼ offered, around the day's highs. He added that the bonds had traded as low as 32½ during the midweek session.

Another trader placed the 8 3/8% notes around 35, up 1½ points from the day before. The 7.20% notes due 2011 meantime gained 1¼ points, ending around 331/4.

However, traders at several desks noted that the Detroit-based carmaker's bonds were still well below the peak peak levels seen on Monday, with the benchmarks brushing 37 bid.

GM officially announced the terms of its IPO, which will include the sale of 365 million common shares for proceeds up to $13 billion. The shares are expected to sell between $26 and $29 each.

Additionally, GM will sell 60 million of series B mandatorily convertible junior preferred stock at $50 per share.

The IPO includes an over-allotment option of 54.75 million common shares and 9 million preferreds.

The sale is expected to help the U.S. Treasury Department reduce its stake in the Detroit automaker to 43.3% or lower. The Treasury will sell 263.5 million of its equity holdings, and the United Auto Workers union will sell 71 million of its shares.

The IPO is expected to price Nov. 17, with trading to begin Nov. 18.

Also on Wednesday, GM released preliminary quarterly results. The company expects to see a profit between $1.9 billion to $2.1 billion, with revenue expected to gain 21% to $34 billion.

The full figures will come out Nov. 10.

And, GM also announced its October sales report, which showed a 3.5% increase from the year before.

-Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.