Sugarhouse, Taseko price, move up; Nortek prices; Community Health rebounds from Monday slide

By Paul Deckelman and Paul A. Harris

New York, April 12 - Sugarhouse HSP Gaming Prop. Mezz, LP and Sugarhouse HSP Gaming Finance Corp. priced a $235 million issue of five-year secured notes on Tuesday. The Philadelphia-based casino operator's bonds moved up solidly when they were freed for secondary dealings.

Canada's Taseko Mines Ltd. priced a $200 million offering of eight-year bonds. This deal also did well when it moved into the aftermarket.

Building products maker Nortek Inc.'s quickly shopped $500 million of 10-year notes also priced, but it appeared too late for any kind of real secondary activity.

The junk forward calendar grew as new dollar-denominated offerings were formally announced by Medical Properties Trust, Inc., Australia's Consolidated Minerals Ltd. and Greece's NewLead Holdings Ltd. High-yield syndicate sources also heard European issuer Dematic SA on the road with a dollar deal.

The sources also heard price talk emerge on Commercial Vehicle Group Inc.'s $225 million of eight-year secured notes.

Apart from the trading in the day's new issues, secondary activity remained focused on Community Health Systems Inc.'s bonds, which saw extremely heavy dealings for a second consecutive session. However, unlike Monday, when the hospital operator's bonds were hammered down on news of a lawsuit against the company, Tuesday's dealings saw them bounce off the lows at which they had closed on Monday.

Secondary trading generally was easier, and statistical indicators all pointed south.

Nortek drives by

Primary market activity remained vigorous on Tuesday. Three issuers, each bringing a single tranche of notes, raised $935 million.

Tight executions prevailed despite overall softness in junk and against a backdrop of declining equity prices.

Nortek priced a $500 million issue of 10-year senior notes (Caa1/B) at par to yield 8½% on Tuesday, according to an informed source.

The yield printed at the tight end of the 8½% to 8¾% price talk.

UBS Investment Bank ran the books.

The Providence, R.I.-based building products company plans to use the proceeds, together with borrowings under its term loan, to refinance its outstanding 11% notes.

Investors rolling out of the 11% bonds into the new 8½% notes due 2021 factored into the deal, according to an informed source.

However, it was not a massive roll, and the source specified that the deal was multiple-times oversubscribed.

Sugarhouse prices at tight end

Elsewhere, Sugarhouse HSP Gaming priced a $235 million issue of five-year senior secured second-lien notes (B3/B-) at par to yield 8 5/8%. It was at the tight end of price talk, had been set in the 8¾% area.

Credit Suisse (USA) Securities LLC and Goldman Sachs & Co. were the joint bookrunners.

Proceeds will be used to refinance bank debt and vendor financing and for general corporate purposes.

Sugarhouse allocations were horrible, according to an investor who scarcely got one at all and was watching as the new par-pricing 8 5/8% notes due 2016 traded to 102 5/8 bid.

Taseko also prices tight

Meanwhile, Taseko Mines priced a $200 million issue of eight-year senior notes (B3/B) at par to yield 7¾%, at the tight end of the 7¾% to 8% price talk.

Barclays Capital Inc. ran the books.

The Vancouver, B.C., mineral and metals exploration and production company plans to use the proceeds to fund the expansion of Gibraltar Mine and for general corporate purposes.

As with Sugarhouse, Taseko allocations were discouraging to the investor, who put in orders for all three of Tuesday's deals.

Stick with the calendar

Miserable allocations notwithstanding, the calendar remains the place to be, the high-yield mutual fund manager insisted during a Tuesday call.

It is rare to see recently issued bonds trading below issue price these days, the buysider added, noting that the J. Crew Corp. 8 1/8% senior notes due 2019, which priced in early March at par in a $400 million issue (Caa1/CCC+/), did not perform well out of the box but were nevertheless par bid on Tuesday.

"I'll bet that out of the last 30 deals, 28 are trading at or above issue price," the investor said. "That's not a bad batting average."

Talking the deals

Commercial Vehicle Group talked its $225 million offering of eight-year senior secured notes (B2/B-) with a yield in the 8% area on Tuesday, according to a market source.

The deal is set to price on Wednesday.

Credit Suisse Securities (USA) LLC has the books.

Elsewhere, its roadshow concluded, German telecommunications firm Freenet AG set 6½% to 6¾% yield guidance for its €400 million offering of unrated five-year notes.

Commerzbank AG, Deutsche Bank AG and UniCredit SpA are leading the deal.

And Sizzling Platter, LLC launched its $150 million offering of five-year first-lien senior secured notes (Caa1/B-/) with a 12¼% coupon at 98.1 to yield 12¾% at a 1,064 basis points spread to Treasuries, according to a market source.

The final terms were nowhere in sight hours after the Tuesday close, the source added.

Global Hunter Securities, Maxim Group and Knight Capital Markets are leading that deal.

Medical Properties ahead

The active new deal calendar continued to build impressively on Tuesday.

Medical Properties Trust will begin a roadshow on Wednesday for its $450 million offering of 10-year senior notes.

J.P. Morgan Securities LLC, Merrill Lynch, Deutsche Bank Securities Inc. and RBC Capital Markets are the joint bookrunners for the debt-refinancing deal.

Consolidated Minerals to price

Elsewhere, Australia's Consolidated Minerals plans to price a $400 million offering of five-year senior secured notes (expected ratings B3/BB-) during the week ahead following a global roadshow.

Deutsche Bank Securities and Citigroup Global Markets Inc. are the joint bookrunners.

Proceeds will be used to repay shareholder loans and for general corporate purposes.

Dematic starts roadshow

Finally, Dematic began a roadshow on Tuesday for its $300 million offering of senior secured first-lien notes (B3/B).

JPMorgan and Deutsche Bank are the joint bookrunners.

The supplier of logistics and materials handling solutions plans to use the proceeds to repay its term loan and to fund a dividend.

New Sugarhouse surely surges

When the Sugarhouse Casino five-year senior secured notes were freed for secondary activity after pricing at par, a trader saw them having firmed smartly to 102 5/8 bid, 103 offered.

"It was a really sweet deal," a second trader quipped, pegging the bonds at 102¼ bid, 102¾ offered.

Yet another trader pronounced the new bonds "up pretty handsomely," seeing them at 102 5/8 bid, 102 7/8 offered.

Taseko Mines moves up

A trader said that the new Taseko Mines notes "also did well," locating the new bonds at 102½ bid, up from their par issue price earlier.

A second trader quoted the new bonds trading at 102¾ bid, 102 7/8 offered.

Yet another trader had them at 102½ bid, 103 offered.

One of the traders noted that "there was a story out today that people like to buy [bonds of] mining companies as an inflation hedge."

He acknowledged that when he first looked at the deal and heard the price talk, he thought it seemed "a little rich" relative to last week's deal from Australia's Mirabela Nickel, Ltd., which came to market Thursday with a $395 million offering of 8¾% notes due 2018. That deal, upsized from the originally shopped $375 million, priced at par and then moved up above 102 bid in the aftermarket and stayed there.

He thought that Taseko "wasn't going to do that well" but said that "the mining aspect" was giving it a boost. "People think that copper's going up $10 per pound" and continued demand for industrial metals like copper, molybdenum, which Taseko also produces, and nickel will continue to benefit the bonds of companies like Taseko and Mirabela.

Nortek not seen

Owing to the relative lateness of the hour at which it priced, traders said they had not seen any initial aftermarket dealings in Nortek's new 10-year deal, which priced at par.

A trader theorized that the Nortek deal would likely do all right.

He said the Providence, R.I.-based building products maker "is levered about five times. If housing ever improves, that thing will do a lot better.

"And the way the economy is going, there's an aftermarket for a lot of their stuff too, I think. People remodeling their kitchens and whatnot. It should do OK, I think."

Vail very firm

Monday's offering of 6½% senior subordinated notes due 2019 from Vail Resorts, Inc. was meantime seen building slightly upon the gains notched Monday, when the Broomfield, Colo.-based ski resort operator's $390 million drive-by deal priced at par and then got as good as 101 bid, 101½ offered in the aftermarket.

On Tuesday, two traders at different shops saw the new bonds having added on about one-quarter point to finish at 101¼ bid, 101¾ offered.

Another trader saw the bonds at 101 1/8 bid, 101 7/8 offered during the morning but said he had not seen it after that.

Spencer disappears

For a second day, several traders said that they had seen no aftermarket activity in the new 11% senior secured notes due 2017 that Spencer Spirit Holdings, Inc./Spencer Gifts LLC/Spencer Halloween Superstores LLC brought to market on Monday.

"Not a thing," one flatly declared when asked whether he had seen anything happening with the bonds.

The Egg Harbor Township, N.J.-based specialty retailer of novelties, gags and offbeat gifts priced its $175 million issue, upsized from the originally announced $150 million, at par, but the bonds were not seen in Monday's aftermarket.

On Tuesday, a lone trader said that he had heard the bonds quoted at 101 5/8 bid in morning dealings but with no offered side seen "and that was about it."

Secondary indicators lower

Away from the new-issue realm, a trader saw the series 16 Markit CDX North American High Yield index down three-eighths of a point on Tuesday to end at 102 5/8 bid, 102 7/8 offered after having been off three-sixteenths of a point on Monday.

The KDP High Yield Daily index meantime fell by 5 bps Tuesday to end at 75.84, on top of the 13-bps slide seen on Monday. Its yield rose by 2 bps to 6.59% after having gained 5 bps on Monday.

Even the heretofore strong and solid Merrill Lynch High Yield Master II index finally declined. It fell by 0.05% on Tuesday, its first downturn after nine consecutive daily gains including Monday's 0.094% advance. That left its year-to-date return at 4.665% - down from Monday's 4.718%, the high point for the year so far.

Advancing issues trailed decliners on Tuesday for a second straight day after having previously led them for eight consecutive sessions.

The losers led the winners by a margin of better than six to five, increasing their advantage from Monday's ratio of "almost" six to five.

Overall market activity, as measured by dollar-volume levels, plunged by 47% on Tuesday after having slid by 27% on Monday from the previous session's levels.

Community Health recovers

Among specific names, Community Health Systems' 8 7/8% notes due 2015 were easily the most actively traded bonds in the high-yield sphere for a second straight day.

"One of the big-volume guys again today," was how a trader put it - in fact, THE "big-volume guy."

Although turnover was well down from the more than $200 million that changed hands on Monday on adverse legal news, he said the activity level still topped $120 million.

And unlike Monday, when the bonds were seen down as much as 4 or 5 points in intra-day dealings before going out with about a 3-point loss, on Tuesday, they were coming off their lows.

One trader called the Franklin, Tenn.-based hospital operator's bonds "the most active one again," seeing its paper moving up 1 to 1½ points to 102½ bid.

Another trader said Community Health was "trading up a storm," seeing the bonds "bounce back" to around 102.

"They definitely did better today," yet another trader said. "The stock was up about $5.00." More precisely, the stock rose $5.59, or 21.59%, to end at $31.48 after having swooned $14.41, or 35.76%, on Monday. He saw the bonds trading all day in a 102-103 context, with most of the trades around 1021/2.

On Monday, Community Health's bonds and shares got clobbered on the news that smaller peer Tenet Healthcare Corp. - which is vigorously resisting Community Health's hostile $6.00-per-share takeover try - had leveled serious charges of improper admissions and Medicare billings against its would-be suitor in a lawsuit filed with the federal court in Dallas, where Tenet is based. Community Health said the charges are unfounded, irresponsible and without merit.

Tenet's bonds also fell on Monday, with its most actively traded issue, the 8% notes due 2020, off 1 to 2 points to finish at 102½ bid, 103½ offered. On Tuesday, unlike Community Health's rebound from its lows, "there was not a lot of activity in Tenet," a trader said, saying he had seen "maybe one or two trades per issue."

He saw the bonds staying around that 103ish level, down a deuce from pre-news levels seen last week around 105.

"There was not much volume in Tenet," another trader agreed. Overall, it was unchanged on the day - "nothing like CYH."

Level 3 keeps firming

Monday's other big non-new-deal news in Junkbondland - the agreement for fiber-optic network operator Level 3 Communications Inc. to acquire sector peer Global Crossing Ltd. in a deal valued at $3 billion including debt assumption - also continued to reverberate on Tuesday.

Unlike the Community Health Systems/Tenet news being played out against the backdrop of a nasty takeover battle, the agreement between Broomfield, Colo.-based Level 3 and Bermuda-based Global Crossing is amicable, and bondholders and shareholders of both companies like the deal. Both entities' bonds firmed solidly on Monday.

On Tuesday, a trader said, "they're both still pretty strong."

He saw Level 3's 11 7/8% notes due 2019 - which on Monday had zoomed 11 points to around the 107 bid level - traded up further, to 108 3/8 bid, 109 offered, "so they keep moving up."

He saw the company's 10% notes due 2018 - Level 3's most actively traded bond on Tuesday - heading home around the 107¼ level, versus 106½ bid on Monday and 101 bid before the merger news was announced.

As for Global Crossing, he saw the 12% notes due 2015 unchanged most of the day at 116 7/8 bid, 117¼ offered, but he noted that the paper was "up quite a bit" from the pre-news levels around 114.

Solo Cup softens

Elsewhere, a trader said that he "saw a lot of" Solo Cup Co.'s 8½% notes due 2014 trading in the morning, with the bonds ending around an 88-89 range versus 90-91 at the close on Monday. "I would say Solo Cup had an interesting day," he said, "with a good amount of volume trading today" and down 1½ points.

There was no fresh news seen out on the Lake Forest, Ill-.based manufacturer of disposable paper and plastic cups, plates and utensils that might explain the activity.

A market source said that trading in Solo was around $25 million, one of the day's busiest junk issues. He pegged the bonds at 91 3/8 bid.

SuperValu awaits numbers

A distressed-debt trader said that SuperValu Inc.'s bonds are "something I'm starting to see more of."

He said that the company's 8% bonds due 2031 - originally issued by Albertsons, which was later acquired by Eden Prairie, Minn.-based SuperValu - were quoted at 82 bid, 83 offered, "but I just don't see much trading in it." He said that the bonds have been trading in that low-80s range for a while, while "the shorter ones are down near par."

SuperValu is scheduled to report its fiscal 2011 fourth-quarter and full-year earnings on Thursday as the markets open. Wall Street is looking for earnings of around 35 cents per share - although SuperValu undershot estimates in each of the previous two quarters.

Stephanie N. Rotondo contributed to this report

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