Verso Paper bonds rise with new issue; Caesars finishes higher; funds see $957 million inflow

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., March 8 - The high-yield bond market had "a much better tone today," a trader said at the end of Thursday's session.

The primary arena continued to thrive. Four issuers, each one bringing a single tranche of notes, raised a combined $1.45 billion.

Verso Paper Corp. came with a $345 million sale of 11¾% seven-year notes, which were discounted. The deal held in around its original price, but its emergence also helped the company's older issues gain ground.

Meanwhile, Bon-Ton Stores Inc.'s debt continued to soar after reporting earnings on Wednesday. The bonds rose 4 to 5 points on Wednesday and tacked on another 4 points come Thursday trading.

In earnings-related news, Nevada's gaming revenue report for January was released, and the improved performance helped Caesars Entertainment Corp.'s notes firm.

And Springleaf Finance Corp. was going against the grain Thursday, falling about half a point on the day. Earlier in the week, the company announced office and branch closures, which will affect more than 300 employees.

AMG posts $957 million inflow

High-yield mutual funds saw $957 million of inflows during the week to Wednesday, according to a weekly report from Lipper AMG, market sources said.

It follows the previous week's $565 million inflow.

It was the 10th consecutive gain so far this year, extending year-to-date flows to $14.32 billion, according to a Prospect News analysis of the data.

B/E Aerospace upsizes

B/E Aerospace, Inc. priced an upsized $500 million issue of 10-year senior notes (Ba2/BB/) at par to yield 5¼%, on top of yield talk.

Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. and UBS Securities LLC were the bookrunners for the quick-to-market issue, which was upsized from $375 million.

Proceeds will be used for general corporate purposes.

The issuer is a Wellington, Fla.-based manufacturer of aircraft cabin interior products and a distributor of aerospace fasteners and consumables.

Covanta prices at tight

Covanta Holding Corp. priced a $400 million issue of 10-year senior notes (Ba3/B+/) at par to yield 6 3/8%, at the tight end of the 6½% area yield talk.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Barclays Capital Inc., Credit Agricole Securities (USA) Inc., JPMorgan and Citigroup were the bookrunners. The senior co-managers were HSBC Securities (USA) Inc., Mitsubishi UFJ Securities (USA), Inc., RBS Securities Inc. and TD Securities (USA) LLC.

The Fairfield, N.J., renewable energy and waste disposal company plans to use the proceeds to repay a portion of its $650 million term loan.

Verso brings secured deal

Verso Paper subsidiaries Verso Paper Holdings LLC and Verso Paper Inc. priced a $345 million issue of 11¾% seven-year senior secured notes (Ba2/BB-/) at 98.896 to yield 12%.

The yield printed on top of the yield talk. The reoffer price came in line with discount talk of one point to two points.

Credit Suisse, Citigroup, Barclays and Goldman Sachs were the bookrunners for the quick-to-market issue.

The Memphis-based producer of coated papers plans to use the proceeds to refinance first-priority senior secured notes due 2014 and for general corporate purposes.

EV Energy taps 8% notes

EV Energy Partners LP and EV Energy Finance Corp. priced an upsized $200 million add-on to their 8% senior notes due April 15, 2019 (B3/B-/) at 103.0 to yield 7.281%.

The reoffer price came at the rich end of the 102.5 to 103 price talk.

JPMorgan, RBC Capital Markets, Wells Fargo Securities LLC and Citigroup were the bookrunners for the quick-to-market deal, which was upsized from $100 million.

Proceeds will be used to repay bank debt.

The original $300 million issue priced at par in March 2011.

Office Depot sets talk

Office Depot, Inc. talked its $250 million offering of seven-year senior secured notes (B2/B-/) to yield 9½% to 9¾%.

The deal is set to price Friday morning.

Citigroup is the left bookrunner. Bank of America Merrill Lynch, JPMorgan, Morgan Stanley and Wells Fargo are the joint bookrunners.

The Boca Raton, Fla.-based supplier of office products and services plans to use the proceeds to fund the tender offer for its 6¼% notes due 2013.

Cenveo starts Friday

Cenveo Corp. will start a roadshow on Friday for its $450 million offering of senior notes due May 15, 2020, according to a syndicate source.

A global investor call is set to take place Monday.

The deal is set to price in the middle part of the week ahead.

Bank of America Merrill Lynch, Morgan Stanley, Macquarie Capital and Barclays are the joint bookrunners.

The Stamford, Conn.-based printing company plans to use the proceeds, together with borrowings under its 2010 credit facilities, to tender for its 10½% senior notes due 2016, its 7 7/8% senior subordinated notes due 2013 and its 8 3/8% senior subordinated notes due 2014.

Market mixed once more

Market indicators were again mixed on Thursday.

The KDP High Yield index closed at 74.11, with a 6.6% yield. That compared to Wednesday's reading of 74.12, with the same yield.

The CDX North American High Yield index was up over half a point at 97 1/16 bid, 97 5/16 offered, according to a market source.

Verso rises with new issue

A trader said Verso Paper's new issue, which priced at 98.896, was "straddling where the deal came" at 98 5/8 bid, 98 7/8 offered. Another trader saw the notes settling in at 99 5/8 bid, 99 7/8 offered, down from the day's high around 1001/2.

Proceeds from the new deal will be used, in part, to refinance the company's 11½% notes due 2014, which traded up to 105 5/8, a trader said.

The 8¾% notes due 2019 were also firmer, gaining 3 points to finish around 55.

Verso Paper is a Memphis-based coated papermaker.

Bon-Ton: Full steam ahead

Bon-Ton Stores' debt continued to gain momentum Thursday, a day after the company released earnings.

A trader said the 10¼% notes due 2014 were "better again," quoting the issue at 76 bid, 77 offered.

Another trader said the bonds were up 4 points "on pretty good volume" around 761/2.

A third trader deemed the debt up 4 to 4½ points at 76¾ bid, 77 offered, with about $22 million changing hands.

"The bonds are really up in the last couple days," he said. He added that while the quarterly figures were not great, management's assertions that the company will be profitable in 2012 were viewed positively.

The York, Pa.-based retailer said in its earnings release Wednesday that fourth-quarter profit dropped 8.1% due to weaker same-store sales and margins. For the quarter ended Jan. 28, profit was $78.2 million, or $4.00 per share. That compared to $85 million, or $4.41 per share, the year before.

Same-store sales fell 2.6% in the quarter, and gross margin declined to 34.6% from 37%.

Total sales were $983 million, a 2.7% decrease from the year before.

Bon-Ton also provided 2012 guidance, forecasting earnings of 15 cents to 75 cents per share, with same-store sales gaining 1% to 2%.

On the positive side, the company did buy back $46 million of its bonds and ended February with $453 million of excess borrowing capacity.

Gaming revenues boost Caesars

A trader said Caesars Entertainment's 10% notes due 2018 ended about a point higher around 75.

Another trader called the paper up "a point and change," finishing around 75 3/8, on about $20 million traded.

On Thursday, Nevada's Gaming Control Board released its revenue report for January, which showed an 18.4% increase from the year before.

The gain was attributed in part to Chinese New Year.

Casinos took in $1.04 billion in January, versus $877 million taken in during January 2011. The total win was the first time the state has hit over $1 billion since September 2008.

On the Las Vegas Strip, revenues improved by over 29%, increasing to $624 million from $483 million.

Caesars is a Las Vegas-based casino and hotel operator.

Springleaf takes a fall

Springleaf Finance - formerly known as American General Finance Corp. - saw its bonds weaken in active trading, a trader reported.

He saw the 6.9% notes due 2017 fall nearly half a point to 78 3/8, with about $20 million of paper changing hands.

"That's a lot of activity for that name," he said.

Earlier in the week, the Evansville, Ind.-based financial services firm said it was immediately shuttering 150 branch offices in 25 states, reducing its workforce by 360 employees.

The closures were done as part of the company's strategic review of operations. The company has reduced its workforce by 690 employees in the first quarter.

The recent layoffs will likely result in a pretax charge of $12.5 million, the company said, due to severance costs and lease termination fees, among other things.

Elsewhere in the financial realm, First Data Corp.'s 12 5/8% notes due 2021 were up three-quarters of a point at 102 1/8, a trader said.

Edison gains again

Edison International Inc. paper remained on an upward course Thursday.

"They had been off," a trader said. "But that stuff came back."

He saw the 7½% notes due 2013 gaining nearly a point, closing at 79¾ bid, 80 offered.

"Not a lot of volume, but definitely better," he said.

Another trader called the 7% notes due 2017 better, seeing the issue trade around 62.

Edison is a Rosemead, Calif.-based power producer.

© 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.