Targa, Post price add-ons; market awaits Halcon, Stone; SuperValu soars on Cerberus news

By Paul Deckelman and Paul A. Harris

New York, Oct. 22 -The high-yield primary sphere began the week Monday on a quiet note, as just two quick-to-market deals totaling $650 million principal amount ($663 million proceeds) priced.

Post Holdings Inc. served up an upsized $250 million add-on to its existing 7 3/8% notes due 2020, pricing the deal well above par; traders said the new bonds traded up from their issue price.

Targa Resources Partners LP priced $400 million of 10.5-year notes just below par.

Apart from the deals that priced, several other prospective issues were announced with at least two expected to come to market Tuesday.

Halcon Resources Corp., which interestingly is headquartered in the same towering Houston skyscraper as Targa Resources, will bring in a $700 million offering of 8.5-year notes.

Meanwhile, Stone Energy Corp. will be doing a $300 million 10-year deal, also for expected pricing Tuesday.

Ausdrill Ltd. unveiled plans for a $300 million seven-year deal, which will start a roadshow Tuesday.

Also hitting the road to market a deal is chemical manufacturer PQ Corp., although that transaction is not scheduled to price until next week.

In the secondary market, SuperValu Inc.'s bonds picked up right where they left off Friday with the supermarket operator's recently strong paper up by several additional points in heavy trading on news reports that private-equity giant Cerberus Capital Management is trying to cobble together some $4 billion of financing to bid for the troubled company, which has been shopping itself around to potential investors or buyers for a number of weeks.

Also resuming Friday's momentum - only this time to the downside - was Advanced Micro Devices Inc., whose bonds got hammered Friday on bad earnings and continued to lose ground Monday.

Statistical indicators of secondary market performance were mixed on the day.

Targa drive-by

Just like 72% of all deals since the Labor Day summer-fall boundary and for much of 2012, Monday's primary activity came in the form of drive-by deals.

Two issuers, each bringing a single tranche, raised $659 million.

Targa Resources Partners and Targa Resources Partners Finance Corp. priced a $400 million issue of 5¼% 10.5-year senior notes (Ba3/BB) at 99.50 to yield 5.313%.

The yield printed in line with yield talk set in the 5 3/8% area.

The bonds traded up ¾ of a point to a point higher in the secondary market, according to a high-yield mutual fund manager.

Bank of America, Deutsche Bank, Wells Fargo, Barclays and RBS were the joint bookrunners for the deal, with proceeds used for debt-refinancing and general corporate purposes.

Post taps 7 3/8% notes

Nearly all of Tuesday's primary quick-to-market news surfaced from the energy sector.

The exception was Post Holdings $250 million tack-on to its 7 3/8% senior notes due Feb. 15, 2022 (B1/B+), which priced at 106.00 to yield 6.334%.

The reoffer price came at the rich end of the 105.5 to 106 price talk. The 6.334% yield-to-worst came at the tight end of the 6.334% to 6.418% yield talk.

Credit Suisse, Barclays, J.P. Morgan and Wells Fargo were the joint bookrunners for the deal, which was upsized from $200 million.

The St. Louis ready-to-eat cereal maker plans to use the proceeds for general corporate purposes, including paying down debt and funding acquisitions.

Halcon sets talk

Along with the Targa and Post deals, two overnight offerings were announced Monday and are expected to price Tuesday.

Halcon Resources talked its $700 million offering of 8.5-year senior notes (B3/CCC+) to yield 9% to 9¼%.

Books close at noon ET on Tuesday and the deal is set to price thereafter.

Wells Fargo is the left bookrunner. J.P. Morgan, Barclays and Goldman Sachs are the joint bookrunners.

The Houston-based oil and gas exploration and production company plans to use the proceeds, together with cash on hand, to fund a cash consideration payable in connection with the Williston Basin assets acquisition.

Shearer's Foods Inc. also talked its $210 million offering of seven-year senior secured notes (B3/expected B) with a yield in the 9¼% area.

BMO, Barclays and KeyBanc are the leads.

Stone Energy for Tuesday

Also from the energy sector, Stone Energy plans to price a $300 million offering of 10-year senior notes (expected ratings B3/B-) Tuesday.

Bank of America and Barclays are the joint bookrunners.

The Houston-based independent oil and gas exploration and production company plans to use the proceeds to fund the tender offer for its 6¾% notes due 2014 and for general corporate purposes.

Also possible business for Tuesday, according to sources, is the BWAY Parent Co. (BOE Merger Corp.) $375 million offering of five-year senior PIK toggle notes (/CCC+/), via Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs.

The deal was announced last week.

No price talk has circulated as of the Monday close, sources said.

Among deals on the active forward calendar announced last week, the biggest is the WMG Acquisition Corp. (Warner Music Group) $635 million offering of eight-year senior secured notes in dollars and euros.

However that could change, according to a trader who said that Warner is expected to shift proceeds to its bank loan from the bond deal, leaving the overall size of the bond offer around $400 million.

There was no official word from the bookrunners, sources said.

Credit Suisse, Barclays, UBS, Macquarie and Nomura are leading the deal.

PQ starts full roadshow

Also during the Monday primary market session, two prospective issuers brought news of full roadshows.

PQ began a roadshow for its $720 million offering of 5.5-year second-lien senior secured notes, which are expected to price Oct. 30.

J.P. Morgan, Credit Suisse, Barclays, Jefferies, Mizuho and Morgan Stanley & Co. are the joint bookrunners for the debt-refinancing.

Ausdrill starts Tuesday

Australia's Ausdrill Finance Pty Ltd. plans to start a global roadshow in London on Tuesday for its $300 million offering of seven-year senior notes (Ba3/BB).

That roadshow, with stops in New York, Boston, Los Angeles, San Francisco and possibly Hong Kong and Singapore, also is expected to carry into the October-November crossover week.

Morgan Stanley is the left bookrunner. Deutsche Bank and Standard Chartered are the joint bookrunners.

The Kewdale, Western Australia-based mineral exploration company plans to use the proceeds to repay the term loan portion of its credit facility with any remaining proceeds used for general corporate purposes, including a temporary pay down of its revolver.

Post pops a little

When the new Post Holdings' 7 3/8% add-on notes due 2022 were freed for secondary market dealings, a trader quoted the St. Louis-based breakfast cereal maker's upsized $250 million offering as "wrapped around 107," with a wide 106½ bid, 107½ offered level, up from 106 at pricing.

A second trader pegged the Post bonds in a 107-to-107½ context.

Targa creeps up

That trader also saw the new Targa Resources 5¾% notes due 2023 late in the day opening up at par bid, after the Houston-based natural gas company's $400 million transaction priced at 99.5. However, he saw no right-side level in those initial dealings.

Dufry holds gains

Among the deals that priced last week, a trader saw Dufry AG's 5½% notes due 2020 "as good as 102 bid."

A second trader saw that $500 million issue trading between 101½ and 102 bid, while a third located the bonds between 102 and 1021/2.

Dufry is a Switzerland-based travel retailer. It operates hundreds of duty-free shops located at major international airports and seaports, train stations and onboard cruise liners, as well as other tourist locations.

It priced its deal at par Friday via its Dufry Finance SCA subsidiary, and the new bonds were seen quickly firming smartly to a 1013/4-to-102 context.

Another Friday junk deal - Canadian energy and environmental services company Tervita Corp.'s 9¾% notes due 2019 - was seen Monday at 99½ bid, 100½ offered. The Calgary-based company's bonds priced at par late in the session and did not hit the aftermarket until Monday.

A trader, meantime, saw no dealings Monday in Caribbean Financial Group Holdings, LP's 11½% senior secured notes due 2019.

The Puerto Rico-based consumer lender and financial services company priced its $178 million issue Friday at 98, to yield 11.916% via is CFG Holdings, Ltd. and CFG Finance LLC subsidiaries. But, the new bonds were not seen trading around in the junk market.

Older deals little changed

Traders also did not see too much movement in the bonds that priced earlier last week.

One trader, for instance, saw SunGard Data Systems Inc.'s 6 5/8% senior subordinated notes due 2019 trading Monday at 101 bid, 101 3/8 offered.

That's about where the Wayne, Pa.-based software and technical services company's $1 billion of new bonds traded Friday after that quick-to-market deal priced Thursday at par. It was massively upsized from an originally planned $500 million.

Aleris International Inc.'s 7 7/8% notes due 2020 were being quoted by several traders Monday, including one who saw the bonds at 101 bid, 101½ offered.

That was about where the Beechwood, Ohio-based aluminum company priced $500 million of the notes at par Thursday after the deal was upsized from the originally announced $400 million.

However, a trader saw CNH Global NV's 3 7/8% notes due 2015 on Monday at 102¾ bid, 103 offered.

That was up by a half-point to three-quarter point from the levels seen Friday.

The Burr Ridge, Ill.-based maker of heavy construction and agricultural equipment priced its $750 million drive-by deal at par after upsizing it from an originally announced $500 million.

The bonds, which were issued through the company's CNH Capital LLC unit, moved up in the aftermarket, but were last seen mid-week trading around 102 bid.

SuperValu up on Cerberus news

Away from the new deals, the bonds of SuperValu were seen firming smartly for a third consecutive session, amid renewed market speculation that the troubled Eden Prairie, Minn.-based supermarket operator might be getting close to a deal to sell itself to the highest bidder.

According to news reports that hit the tape around midday, the buyer could well be Cerberus Capital Management, which was said by unidentified sources to be working on a $4 billion to $5 billion bid for SuperValu. SuperValu operates the Albertsons, Save-A-lot and Jewel-Osco store chains, among other regional banners.

A trader said that SuperValu's 8% 2016 were up 4¾ points at 94¾ on volume close to $50 million while its 7½% 2014 notes were unchanged at 98½ on volume of $11 million.

A second trader saw the 8s up 2 to 3 points on the back of that Cerberus news.

SuperValu - struggling to hang on to market share in an increasingly competitive environment - announced several months ago that it was undertaking a review of its strategic options, including looking for potential investors or possible buyers for all or part of the company.

While analysts said that parceling out the different regional operations among a number of buyers might be easier to accomplish, company management expressed a preference for selling the whole company to one buyer, if possible.

SuperValu's 8% notes, which were languishing in the lower 80s, jumped by several points in heavy trading Thursday after the company said on its quarterly conference call that it was continuing its strategic review and received expressions of interest from some potential buyers.

The bonds jumped despite poor earnings, including a slide into the red from a year-earlier profit and missing Wall Street's expectations on adjusted per-share earnings.

The rise continued Friday and then again Monday.

SuperValu's New York Stock Exchange-traded shares also continued to fly, zooming 98 cents, or 44.75%, on Monday to close at $3.17 on volume of 58 million, almost five times the norm.

AMD angst continues

A trader said Advanced Micro Devices' 7¾% notes due 2020 fell again.

"They're probably down 10 to 15 points since their numbers were out just 2 or 3 days ago," the trader said.

A second trader said the bonds were last trading at 83, down 3¾ points on the day on top of a 10- or 11-point loss Friday. Over $30 million of the bonds changed hands.

"They're not looking too stellar," he said.

He also said that AMD's 7½% notes due 2022 were trading up at par back in early September, of which $500 million priced at par Aug. 6. "Now, they're in the high 70s. Ouch!" the trader said.

On Thursday, the Sunnyvale, Calif.-based computer-chip maker reported a net loss of $157 million on revenues of $1.27 billion. That compared to a profit of $97 million on revenues of $1.69 billion the year before.

The swing to a loss was due in large part to declining personal computer sales as consumers switch to tablets and smartphones.

Due to the loss, the company also said it was cutting about 15% of its workforce or about 1,800 jobs.

AMD also released very cautious fourth-quarter guidance.

Market indicators mixed on day

Statistical indicators of junk-market performance were mixed Monday after remaining mostly lower Friday.

The Markit Group CDX North American Series 19 High Yield Index fell for a third straight session Monday, losing 1/4-point to end at 100 3/8 bid, 100 5/8 offered, after dropping by 11/16-point on Friday.

The KDP High Yield Daily Index inched downward, losing 1 basis point Monday to close at 74.75; on Friday, it eked out a fifth consecutive advance, rising by 1 bp.

Its yield, though, was down 1 bp, at 5.93%, after remaining unchanged Friday.

The widely followed Merrill Lynch U.S. High Yield Master II Index posted a gain Monday, rising 0.016% after suffering a 0.051% loss Friday, which snapped a streak of six consecutive winning sessions though last Thursday.

That raised its year-to-date return to 13.416%, up from Friday's 13.398%, though still down from Thursday's 13.455%, which was the peak level for the year so far.

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