Lyondell megadeal, Avis add-on price; Hercules coming next; Poindexter pop continues

By Paul Deckelman and Paul A. Harris

New York, March 26 - LyondellBasell Industries NV kicked off the new week on Monday with a bang, as high-yield syndicate sources heard the Dutch chemical manufacturer priced a quick-to-market $3 billion offering of seven- and 12-year notes.

The giant-sized two-part deal was believed to be the second-biggest junk deal this year, trailing only CIT Group Inc.'s $3.25 billion two-part titan that priced in early February.

Lyondell's leviathan came to market too late in the day for any real trading, although it was quoted slightly higher in the gray market.

Earlier in the session, a giant of a different sort, Avis Budget Group, Inc., which is considered the worldwide No. 2 car rental company - drove by the junk market, although with a relatively small $125 million add-on to its existing 2019 bond issue. Those bonds firmed in the aftermarket.

While those were the only two deals to actually price on Monday, the primary sphere was hopping on a number of fronts.

Price talk emerged on energy drilling contractor Hercules Offshore Inc.'s pending $500 million two-part deal, which could come to market during Tuesday's session.

Lawson Software Inc. also was seen waiting in the wings with a pricing expected soon on its $1.5 billion equivalent dollar- and euro-denominated deal.

Several companies announced new bond deals Monday, including Vanguard Natural Resources, LLC, Heckman Corp., Aircastle Ltd. and HD Supply, Inc. Primaryside sources saw Vanguard, Heckman and HD starting roadshows to market their respective deals.

They also saw several other borrowers hitting the road to pitch bond deals to investors, even without formal announcements, including builder Taylor Morrison Communities, Inc. and French construction and engineering company SPIE, which is doing a euro-denominated issue.

Among recently priced deals, Friday's transaction from diversified manufacturer J.B. Poindexter & Co. Inc. remained popular with investors. Those bonds, which firmed smartly after pricing, continued to gain strength on Monday.

Away from the new deals, statistical measures of secondary-market performance turned higher after several sessions on the downside.

There was more trading in Solo Cup Co., which was last week's most popular bond following news of its impending acquisition, although Monday's volume was off from last week's levels.

LyondellBasell pushes higher

An extremely busy primary market saw two issuers bring a combined three tranches, raising a total of $3.13 billion on Monday.

LyondellBasell Industries priced $3 billion of non-callable senior notes (Ba2/BB+/) in two tranches.

The chemical company priced a $2 billion tranche of seven-year notes at par to yield 5%. The yield printed on top of price talk, which was upwardly revised from previous talk of 4 7/8% to 5%.

In addition, LyondellBasell priced a $1 billion tranche of 12-year notes at par to yield 5¾% on top of price talk, which was upwardly revised from previous talk in the 5½% range.

J.P. Morgan and Credit Suisse were the joint physical bookrunners for the debt refinancing.

Barclays, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, HSBC, ING, Morgan Stanley and Wells Fargo were the joint bookrunners.

Avis taps 8¼% notes

Avis Budget Car Rental, LLC and Avis Budget Finance, Inc. priced a $125 million add-on to its 8¼% senior notes due Jan. 15, 2019 (expected ratings B2/B) at 103.50, resulting in a 7.329% yield-to-worst, according to a syndicate source.

The yield-to-worst came in line with the 7 3/8% area guidance.

Barclays, Deutsche Bank, Bank of America Merrill Lynch and J.P. Morgan were the bookrunners for the quick-to-market add-on.

The Parsippany, N.J.-based vehicle rental company plans to use the proceeds to repay a portion of its 7 5/8% notes due 2014.

The original $400 million issue priced at par in October 2010. A previous $200 million add-on priced at 101 in November 2010, resulting in an 8.039% yield-to-worst.

HD Supply brings refinancing

The forward calendar saw a massive buildup on Monday, with business expected to play out during the remainder of the present week and well into the week ahead.

HD Supply plans to bring $2.625 billion of supply in a three-tranche offering of secured paper coming in the form of secured bonds and a bank loan.

The deal features $1.85 billion of debt that will come in the form of a term loan B and seven-year senior secured first-priority notes.

These tranches, the sizes of which remain to be determined, are being led by joint bookrunners Bank of America Merrill Lynch, Goldman Sachs & Co., Barclays Capital Inc., J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Wells Fargo Securities LLC and UBS Securities Inc.

In addition HD Supply is offering $775 million of eight-year senior secured second priority notes.

On the second-lien tranche, Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS are the joint bookrunners.

The roadshow for the notes begins on Thursday with pricing set for the middle part of the week beginning April 2.

The term loan kicks off with a bank meeting on Tuesday in New York.

The proceeds from the Rule 144A and Regulation S with registration rights notes and the new term loan B will be used to refinance the HD's 12% senior notes due 2014, its ABL credit facility and its existing senior secured term loan.

Taylor Morrison sets roadshow

Taylor Morrison Communities and Monarch Communities, Inc. began a roadshow on Monday for its $500 million offering of eight-year senior notes that are expected to price late this week or early in the April 2 week.

Credit Suisse, Deutsche Bank and HSBC are the joint bookrunners.

The Scottsdale, Ariz.-based homebuilder plans to use the proceeds to refinance bank debt and increase its cash balance.

Vanguard offers $300 million

Vanguard Natural Resources and VNR Finance Corp. began a roadshow on Monday for their $300 million offering of eight-year senior notes (Caa1/B-).

Citigroup is the left bookrunner. Credit Agricole, RBC, UBS and Wells Fargo are the joint bookrunners.

The Houston-based oil and gas production and development company plans to use the proceeds to repay its term loan and reduce revolver debt.

Heckmann starts Tuesday

Heckmann plans to start a roadshow on Tuesday for its $250 million offering of six-year senior notes.

The roadshow is scheduled to wrap up during the middle part of the April 2 week.

Jefferies is the left bookrunner. Credit Suisse and Wells Fargo are joint bookrunners.

The proceeds, along with proceeds from a concurrent equity offering, will be used to finance the acquisition of Thermo Fluids Inc.

Aircastle plans two-parter

Aircastle plans to price an $800 million two-part offering of senior notes mid-to-late in the April 2 week.

The deal will be comprised of notes maturing in 2017 and in 2020, with tranche sizes remaining to be determined.

Goldman Sachs, Citigroup and J.P. Morgan Securities LLC are the joint bookrunners.

The proceeds will be used to repay bank debt with any remaining proceeds to be used for general corporate purposes, including the purchase of aviation assets.

SPIE starts roadshow

French engineering firm SPIE began a roadshow on Monday for its €375 million two-part senior notes offering.

The deal features tranches of 7.5-year notes and 3.5-year notes.

Joint bookrunner and joint global coordinator Morgan Stanley will bill and deliver. HSBC and SG CIB also are joint global coordinators and joint bookrunners. Credit Agricole CIB, Deutsche Bank AG, BNP Paribas and Natixis are joint bookrunners.

The roadshow wraps up on Wednesday.

The proceeds will be used to refinance debt.

Hercules Offshore sets talk

Looking to the Tuesday session, Hercules Offshore set price talk for its $500 million two-part notes offering.

A $300 million tranche of five-year senior secured notes (B1/B+/), non-callable for two years, is talked with a yield in the 7¼% area.

A $200 million tranche of seven-year senior unsecured notes (Caa1/B-/), non-callable for three years, is talked with a yield in the 9¾% area.

The deal is set to price on Tuesday afternoon.

Deutsche Bank, Credit Suisse, Goldman Sachs and UBS are leading the deal.

Waiting for Lyondell

Traders said that a large part of the junk market on Monday was basically sitting around and waiting for LyondellBasell to price its giant-sized deal - a process that dragged on after the revised talk on the huge offering came out around mid-afternoon.

"That was pretty much it," a trader said.

After the deal finally did price late in the day, there was no real aftermarket seen in those bonds.

However, one trader quoted the seven-year piece in the unofficial "gray market" at 100½ bid, 100¾ offered, versus their par issue price earlier.

Existing Lyondell bonds better

Another trader saw Lyondell Chemical's 11% notes due 2018 - one of the two dollar-denominated issues slated to be taken out via a tender offer using the proceeds of Monday's transaction - moving up to 110¾ bid, equal to the tender offer consideration before the consent payment.

He noted that on Friday before the tender offer was announced, those bonds traded around 109¼ bid, making Monday's move at least a 1½ point gain.

Volume was some $12 million, making the 11s one of the more actively traded credits in Junkbondland.

Lyondell's dollar-denominated 8% notes due 2017, also being taken out via the tender offer announced Monday, had moved up to 112 5/8 bid, a 1 5/8-point gain from the pre-tender levels around 111, seen when the bonds last traded a week ago. About $4 million of the bonds were traded on Monday.

Avis up a little

A trader said that Avis Budget's new 8¼% notes were trading at 104 bid, 104 3/8 offered. That was up from the 103.5 level at which the $125 million add-on priced.

Another trader, looking at the car-rental giant's existing bonds, saw little or no activity in the outstanding $600 million of 81/4s.

He saw just one trade - a $250,000 odd-lot - in its 9 5/8% notes due 2018, at around the same 108¾ bid level seen last week.

And there was no trading seen on Monday in Avis' 7 5/8% notes due 2014, the issue that the company plans to partly redeem using the add-on proceeds.

Those bonds were most recently quoted last week at 101 bid, strictly on an odd-lot basis, and at 101¼ bid on a round-lot basis around the middle of the month.

"That's crazy," the trader said of the lack of real activity in the Avis issues. "You would think there would have been more."

Poindexter keeps popping along

Among recently priced issues, traders noted the continued strong performance of J.B. Poindexter's new 9% notes due 2022.

The Houston-based diversified manufacturer priced its $200 million issue at par on Friday after a short roadshow. The new bonds were seen at that time firming smartly to the 102¼ bid, 102¾ offered level.

On Monday, a trader saw them in the morning at 101½ bid, 102½ offered, but by early afternoon, they moved up still further to 103 bid, 104 offered.

A second trader also saw the issue at those still-higher levels and noted that the deal was fairly small and the company would probably not be considered a "go-go" name in a "hot" area.

"Who would have guessed?" the trader said.

Terex, Cimarex hold gains

The second trader saw Terex Corp.'s recent 6½% notes due 2020 trading around a 101 to 101 1/8 bid context on Monday.

The Westport, Conn.-based manufacturer of cranes and other construction and industrial equipment priced its quickly shopped $300 million issue on Thursday at par. Those bonds were seen moving up to a 101- to 1011/2-bid context shortly afterward, staying there on Friday and Monday as well.

He also saw Cimarex Energy Co.'s 5 7/8% notes due 2022 trading at 101 3/8 bid, 101 7/8 offered.

The Denver-based oil and gas exploration and production company priced its quick-to-market $750 million issue of those bonds - upsized from an originally announced $650 million - on Thursday at par.

They appeared too late in the day Thursday for any kind of aftermarket, but moved up to 101 bid, 101¼ offered on Friday, and added marginally to those gains on Monday.

Several other deals from late last week were not seen in Monday's market, traders said, including Friday's $50 million add-on issue to Houston-based seismic services provider Global Geophysical Services Inc., which priced at 94 to yield 12.06%,

Another aftermarket no-show Monday was Alliance Data Systems Corp.'s 6 3/8% notes due 2020. The Dallas-based business services provider priced its $500 million forward-calendar deal - upsized from the original $350 million - at par late Thursday. The bonds were last seen on Friday at 101 5/8 bid, 102 1/8 offered.

One of the traders also noted that he saw no activity Cenveo Corp.'s new 11½% notes due 2017.

The Stamford, Conn.-based commercial printer came to market with its deal -radically downsized to $225 million from an original $450 million - on Thursday with the bonds pricing at 96.328 to yield 12½%. There was no activity on Thursday, but on Friday, traders saw the bonds tumbling down to bid levels as low as 891/2, and offered at levels not much better at 92.

"That was painful," the trader said Monday, but he saw no further dealings.

Meanwhile, the company's existing 7 7/8% notes due 2013 continued to gyrate around at mostly lower levels.

Those bonds fell to 95 bid late Friday, a 5-point plunge on the session with traders citing investor dismay over the greatly diminished tender offer.

On Monday, they opened at that same 95 level, but moved back up by the end of the day to around 1001/4.

However, a market source pointed out those higher levels were due to generally smallish odd-lot trades later on in the session; going strictly by the more representative round-lot dealings, the bonds were little changed on the day, still down around 95 to 95¼ bid on volume of about $4 million.

Market indicators turn lower

Away from the new deals, traders said that Monday's session was very limited. Statistical measures of junk market performance turned upward, after having been either off or mixed with a downside bias over the previous few sessions.

A market source said that the CDX North American Series 17 High Yield index was up about 5/8 of a point on Monday to end at 98¾ bid, 99 offered after having gained 3/16 of a point on Friday.

The KDP High Yield Daily Index meantime finally broke a six-session losing streak on Monday, rising by 3 basis points to 74.02; on Friday, it eased by 5 bps. Its yield declined by 1 bp on Monday to 6.58%, after rising 2 bps Friday.

And the widely-followed Merrill Lynch High Yield Master II Index turned higher on Monday after two straight losses. It was up by 0.091% versus Friday's 0.016% retreat.

That gain lifted the index's year-to-date return to 5.122%, up from Friday's 5.027% reading, although still well down from its peak level for 2012 of 5.361% recorded March 2.

Solo still strong

Traders said there still was some activity going on in Solo Cup's bonds, although not quite as intense as last week when the bonds - particularly the 8½% notes due 2014 - rose solidly in brisk trading Wednesday, Thursday and Friday.

The rise was due to news that the Lake Forest, Ill.-based maker of disposable plastic cups and plates agreed to be acquired by industry peer Dart Container Inc. in a $1 billion deal that includes Dart's assumption of about $700 million of Solo debt.

On Monday, a trader said the 81/4s and Solo's 10½% notes due 2013 were "fairly active, though at virtually the same levels" as Friday's finish.

He saw the 81/2s, which gained 3 or 4 points last week, at 100¾ bid on volume of $10 million, while the 101/2s, which were up about a point last week on the acquisition news, finished at 101 7/8 bid, 102 offered with $5 million traded on the day.

A second trader quoted the 8½% paper Monday trading between 100 5/8 and 100 7/8 bid, which he said was just below the level at which the bonds would likely be taken out as part of the acquisition by Dart.

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