Reynolds leads drive-by parade, firms solidly; new Prestige Brand paper higher

By Paul Deckelman and Paul A. Harris

New York, Dec. 4 - Reynolds Group Holdings Ltd. was heard by high-yield syndicate sources to have come to market on Wednesday with a quickly shopped $590 million issue of 3.5-year notes via a pair of financing subsidiaries. Those new bonds moved up solidly when they were freed for secondary dealings, traders said.

The New Zealand-based maker of the popular Reynolds Wrap and other food packaging products was one of three issuers heard to have driven-by the junk market with quickly shopped deals, although the other two - add-ons to existing paper from Canadian mining concern HudBay Minerals Inc. and packaging manufacturer Consolidated Container Co. LLC - were not seen in the aftermarket.

Traders did see the late-Tuesday new issue from consumer products company Prestige Brands Holdings, Inc. having been freed for trading and moving moderately higher.

And they saw continued brisk activity - albeit at unchanged levels - from Monday's drive-by deal from lender and online banking firm Ally Financial Inc., which had been very active on Tuesday.

Apart from the deals that have actually priced, primaryside players heard price talk out on prospective megadeal-sized issues from Altice Group and Forest Laboratories, Inc.

Away from the new-deal realm, it was another tough session for the beleaguered phone-service firm NII Holdings Inc., whose bonds topped the Junkbondland most-actives list, while retailing names were mixed.

Trading generally was described as lackluster, and statistical market performance indicators fell across the board after three straight sessions of having been mixed.

Reynolds issue prices tight

Three issuers brought dollar-denominated drive-by deals on Wednesday to raise a combined total of $716 million.

Reynolds Group priced a $590 million issue of senior subordinated notes due June 15, 2017 (Caa2/CCC+) at par to yield 6%, at the tight end of the 6% to 6 1/8% yield talk.

Credit Suisse was the sole bookrunner for the debt refinancing deal.

HudBay taps 9½% notes

HudBay Minerals priced via Jefferies a $100 million add-on to its 9½% senior notes due Oct. 1, 2020 (B3/B-) at par to yield 9½%, on top of price talk.

The Toronto-based integrated mining company plans to use the proceeds for general corporate purposes and for the development of its Lalor, Reed and Constancia projects.

Consolidated Container taps

Consolidated Container launched and priced a $25 million add-on to its 10 1/8% senior notes due July 15, 2020 (Caa1/CCC+) at 105½ to yield 8.646%.

It came with no formal price talk.

Citigroup was the sole lead.

The Atlanta-based plastic packaging company plans to use the proceeds to pay down its revolver, for general corporate purposes and to fund future acquisitions.

Altice sets price talk

Looking toward the latter half of the week, Altice set price talk for its $1,685,000,000 equivalent dual-currency, three-part notes offering on Wednesday.

Altice Financing SA plans to issue $1,285,000,000 equivalent of eight-year senior secured notes in tranches of dollar-denominated notes that are talked to yield 6½% to 6¾%, and euro-denominated notes which are talked to yield 12.5 basis points behind the dollar-denominated secured notes.

Altice Finco SA plans to issue $400 million of 10-year senior unsecured notes, which come with five years of call protection and are talked to yield in the 8¼% area.

The deal is expected to price on Thursday.

Joint global coordinator Goldman Sachs will bill and deliver. Morgan Stanley is also a global coordinator.

Barclays, Credit Agricole CIB and Deutsche Bank are the joint bookrunners.

Forest Labs talks $1 billion

Forest Laboratories, Inc. talked its $1 billion offering of non-callable senior notes due 2021 to yield 5% to 5¼%.

Books close at noon ET Thursday, and the deal is set to price thereafter.

Joint bookrunner Morgan Stanley will bill and deliver. BofA Merrill Lynch is also a joint bookrunner.

Headwaters five-year deal

Headwaters Inc. is expected to price a $150 million offering of five-year senior notes before the end of the week.

Deutsche Bank and Citigroup are the leads.

The South Jordan, Utah-based construction materials and services provider plans to use the proceeds to acquire an 80% equity interest in the business of Roof Tile, Inc., with any additional proceeds to fund future acquisitions and for general corporate purposes, including capital expenditures and debt repayment.

Sierra Hamilton secured notes

Sierra Hamilton plans to price a $110 million offering of five-year senior secured notes late in the Dec. 9 week via Lazard.

The Houston-based energy exploration and production company plans to use the proceeds to refinance debt and fund a small dividend.

CMA CGM starts Thursday

French shipping firm CMA CGM SA plans a roadshow on Thursday and Friday in London for a €300 million five-year senior notes (expected ratings Caa1/CCC+).

Joint bookrunner BNP Paribas will bill and deliver. Credit Suisse and SG CIB are also joint bookrunners for the general corporate purposes deal.

Reynolds wraps it up

In the secondary market, Reynolds Group's new 6% senior subordinated notes due 2017 was clearly the key credit of the day, with traders seeing the bonds having firmed smartly when they moved into the aftermarket.

The Auckland, N.Z.-based packaging products maker's quickly shopped new deal - brought to market via its Beverage Packaging Holdings (Luxembourg) II SA and Beverage Packaging Holdings II Issuer Inc. financing subsidiaries - were seen by one trader having moved up to 101¼ bid, 101½ offered from their par pricing level, "and that, pretty much, was the day's excitement," he declared.

A second trader said that the bonds "tightened just inside 50 bps, and there was a flurry of trading." He pegged the new deal at 101 1/8 bid, 101 3/8 offered.

Add-on deals unseen

Traders did not see any kind of aftermarket activity in either of the day's other two drive-by offerings - the add-on deals from HudBay Minerals and Consolidated Container.

Prestige pops up

Market participants saw Tuesday's new deal from Prestige Brands having moved up when the notes began trading on Wednesday.

The Irvington, N.Y.-based consumer products company's new 5 3/8% notes due 2021 - brought to market via its Prestige Brands, Inc. subsidiary - were seen by one trader at 100 3/8 bid, 100¾ offered, while a second saw them get as good as 100½ bid, 101 offered.

The quickly shopped $400 million issue had priced at par late Tuesday - too late for any kind of aftermarket dealings at that time.

Ally trades actively

For a second consecutive session, Ally Financial's 2¾% senior guaranteed notes due 2017 were busily traded on Wednesday.

A market source said that over $15 million of the notes had changed hands by the close, putting the new deal high up on the most-actives list.

He saw them essentially unchanged, at par bid.

On Tuesday, over $30 million of the notes had traded, making it the day's busiest junk issue, with levels in a 99 7/8 to 100 1/8 bid context, about where they had gone home after Monday's initial aftermarket action.

That was slightly above the 99.622 level at which Ally, a Detroit-based automotive lender and online banking company, had priced its quick-to-market $1 billion issue earlier that session, after having radically upsized the well-oversubscribed deal from the initially planned $500 million.

Traders meantime saw no real activity Wednesday in Monday's other new deal - Stamford, Conn.-based commercial jet leasing company Aircastle Ltd.'s 4 5/8% notes due 2018. Its quick-to-market $400 million deal had priced at par after having been upsized from an originally announced $300 million, and had firmed to about 100¾ bid, 101 offered by Tuesday afternoon.

Subdued secondary market

Apart from the new-issue realm, traders saw yet another lackluster session in the secondary arena.

"It was kind of quiet," one trader said. "I don't know if we're getting our pre-Christmas blues early, or what."

A second trader noted the continued impact on market participation of the Bank of America Merrill Lynch Leveraged Finance Conference, which started on Monday and continued through Wednesday in Boca Raton, Fla. The event is considered one of the highlights of the junk bond market's annual calendar and usually draws a full complement of portfolio managers and other decision makers.

Noting the slightly softer tone in the overall market, he wondered aloud whether it might have been down even lower if a full complement of players had been at their desks in the absence of the well-attended conference.

He also said that it seemed like "some cash was leaving the market," and suggested that "some people are thinking about the Friday [November] jobs numbers" and exercising a little caution.

At yet another desk, a trader said that Wednesday's session was characterized by "pretty light volume."

NII bonds again busy

As has been the case for much of the week, there again was fairly brisk activity in the bonds of troubled international wireless re-seller NII Holdings.

But while one market source said that the Reston, Va.-based company's NII Capital Corp. notes "continued to tread water" at deeply distressed levels, another pointed out that on Wednesday, at least, the bonds seemed to have shown some bounce, even if it was only of the "dead cat" variety, on no fresh positive news.

He saw its 7 5/8% notes due 2020 up 2¾ points at 41¼ bid on volume of over $25 million, the most active purely junk issue.

He also saw the company's 10% notes due 2016 up 2½ points to close at 52, with over $16 million changing hands.

Elsewhere, another trader said that Claire's Stores Inc.'s bonds were off "between 1 and 2 points" after the Hoffman Estates, Ill.-based retailer posted "some ugly numbers" for the third quarter.

Its 8 7/8% notes due 2019 finished the day at 106 bid on volume of more than $16 million.

But he said that fellow retailer J.C. Penney Co. Inc.'s November same-store sales numbers, a key retailing industry performance metric, "were okay."

Plano, Texas-based J.C. Penney's 5.65% notes due 2020 firmed to an 81-82 bid context on volume of more than $10 million.

Market signs turn lower

Overall, statistical junk-market performance indicators were lower pretty much across the board on Wednesday after having been mixed for three consecutive sessions before that.

The Markit Series 21 CDX North American High Yield index suffered its fourth consecutive loss, easing by 1/8 point to end at 106 11/16 bid, 106 13/16 offered, after having dropped by 7/32 point on Tuesday.

The KDP High Yield Daily index retreated by 4 bps to close at 74.36, after having edged up by 1 bp on Tuesday.

Its yield meantime was unchanged at 5.63%, after having come in by 1 bp on Tuesday.

And even the normally staunch Merrill Lynch High Yield Master II index ended on the downside, losing 0.054% on Wednesday - the widely-followed market measure's first setback after eight consecutive gains before that, including Tuesday's 0.005% improvement.

The loss dropped its year-to-date return to 6.798%, down from Tuesday's 6.855%, which had been its eighth consecutive new peak level for the year.

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