GMAC $2 billion deal leads nearly $4 billion primary, Blockbuster bashed, NewPage too

By Paul Deckelman and Paul A. Harris

New York, Feb. 9 - With a massive blizzard rapidly bearing down upon New York and other Northeastern business centers, the high yield primary market unleashed its own veritable snowstorm of new paper on Tuesday, as seven deals totaling nearly $4 billion came to market

A $2 billion drive-by offering from GMAC Financial Services paced the busy day, along with a $750 million offering from Freescale Semiconductor, Inc. and a $500 million deal from Sable International Finance Ltd., a unit of Cable & Wireless plc. Both offerings came as senior secured notes.

There were also several smaller deals - an upsized $75 million add-on drive-by issue from Tops Holding Corp./Tops Markets LLC, as well as a trio of forward calendar deals - a downsized $200 million transaction from NFR Energy LLC/NFR Energy Finance Corp., a $225 million offering from Stallion Oilfield Holdings, and the day's sole non-dollar pricing, a €200 million senior secured deal from InterXion Holding.

When they were freed for secondary dealings, GMAC's five-year deal was heard by traders to have moved a little above its issue price, while Sable International's paper traded in a range straddling where those bonds priced. However, Stallion Oilfield's deal dropped at least 1½ points in the aftermarket.

Severstal Columbus LLC's new deal, priced Monday, was hanging onto the gains it had notched in initial secondary dealings.

Away from the new-deal arena, Blockbuster Inc.'s bonds fell sharply, along with its shares, on the troubled company's announcement late in the session that several senior officers had abruptly resigned as part of job-cutting actions at the corporate headquarters level.

NewPage Corp.'s bonds fell badly, with weakness also seen in such rivals as Verso Paper Holdings LLC/Verso Paper Inc. and Appleton Papers, Inc.'s recently priced deal.

The primary market saw $3.75 billion price in half a dozen dollar-denominated tranches on Tuesday.

GMAC sells $2 billion

GMAC Financial Services priced a $2 billion issue of 8.3% five-year senior unsecured notes (B3/B/B) at 99.19 to yield 8½%.

The yield printed on top of price talk.

Barclays Capital, Citigroup, Goldman Sachs & Co. and JP Morgan were joint bookrunners.

The deal was a joint operation between the high-grade desk and the high-yield desk.

Freescale's $750 million restructured

Meanwhile, Freescale Semiconductor, Inc. priced a restructured $750 million issue of eight-year senior secured first-lien notes (B2/B-) at par to yield 10 1/8%.

The yield printed in the middle of price talk that had the notes pricing at par to yield 10% to 10¼%.

The maturity of the notes was decreased to eight years from 10 years. Call protection was decreased to four years from five years.

J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Credit Suisse Securities ran the debt refinancing deal.

Cable & Wireless offers $500 million

Sable International Finance Ltd. (Cable and Wireless plc) priced a $500 million issue of seven-year senior secured notes (Ba2/BB) at par to yield 7¾%.

The yield printed on top of price talk.

The notes will be free to trade at 7:30 a.m. London time on Wednesday.

Barclays Capital, BNP Paribas, JP Morgan and RBS were joint bookrunners.

Proceeds will be used to refinance debt and to provide liquidity.

Of the investors who played the deal, 30% to 40% were dedicated emerging markets accounts.

The issuer is a Bracknell, England-based telecommunications services provider to British Virgin Islands, Cayman Islands, Panama, Macau, Maldives, Monaco, Seychelles, the Falkland Islands, St. Helena, Turks and Caicos Islands, Anguilla, Guernsey and Bermuda.

Stallion brings $225 million

Elsewhere, Stallion Oilfield Holdings, Inc. priced a $225 million issue of 10½% five-year senior secured notes (B3/B-) at 99.049 to yield 10¾% on Tuesday.

The yield printed 25 bps beyond the wide end of the 10¼% to 10½% price talk.

Credit Suisse Securities, Bank of America Merrill Lynch and Jefferies & Co. were joint bookrunners for the bank debt refinancing and general corporate purposes deal.

NFR Energy downsizes

NFR Energy LLC and NFR Energy Finance Corp. priced a downsized $200 million issue of 9¾% seven-year senior unsecured notes (Caa1/B) at 98.733 to yield 10%.

The yield printed 12.5 bps beyond the wide end of the 9¾% area price talk. The amount was decreased from $250 million.

UBS Investment Bank was the left lead bookrunner. Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and BNP Paribas Securities Corp. were joint bookrunners.

Proceeds will be used to repay the Houston-based oil and gas exploration and development company's revolving credit facility and its second-lien term loan.

Tops upsizes tap

Tops Holding Corp. and Tops Markets, LLC priced an upsized $75 million add-on to their 10 1/8% senior secured notes due Oct. 15, 2015 (B3/B) at 101.50, resulting in a yield of 9.71%.

The reoffer price came at the cheap end of the 101.5 to 102 price talk. The size was raised from $50 million.

Morgan Stanley & Co. and Bank of America Merrill Lynch were joint bookrunners.

Proceeds will be used to repay the company's $25 million bridge facility incurred to purchase assets of Penn Traffic Co. and to reduce the balance outstanding under Tops' ABL facility.

The original $275 million issue priced at 98.354 to yield 10½% on Oct. 1, 2009.

InterXion comes atop talk

Finally, InterXion Holding priced a €200 million issue of seven-year senior secured fixed-rate notes (/B-/) at par to yield 9½%, on Tuesday.

The notes priced on top of price talk.

Citigroup, Bank of America Merrill Lynch, Credit Suisse and Barclays Capital were joint bookrunners for the debt refinancing deal from the Tupolevlaan, Netherlands-based provider of carrier-neutral data centers.

Stallion stumbles badly

When the new Stallion Oilfield 10½% senior notes due 2015 were freed for secondary dealings, a trader said the Houston-based oilfield services provider's new issue was down 2 points on the break, pegging them at 97 bid.

Another said that the bonds "broke hard," quoting them at 96 bid, 97 offered.

Yet another opined that the new Stallion deal was "not something you wanted to wait all day to get into."

The company had earlier priced its $225 million offering at 99.094 to yield 10¾%.

New GMAC bonds do better

But the new GMAC 8.30% notes due 2015 were heard to have fared pretty well in the aftermarket, with a trader seeing the bonds changing hands at 99¼ bid, 99¾ offered.

The Detroit-based automotive and consumer mortgage lender's mega-deal had earlier priced at 99.19, to yield 8½%

Sable notes hang around issue

A trader saw Sable International Finance's 7¾% senior secured notes due 2017 trading in a 991/2-101 range.

The $500 million of new bonds - issued by a subsidiary of British communications giant Cable & Wireless plc - had priced earlier in the day at par.

Traders did not see any initial dealings in the NFR, Freescale, Tops or InterXion deals following their respective pricings.

Severstal still strong

Traders said that Severstal Columbus' 10¼% first priority senior secured notes due 2018, which priced on Monday and then moved up by a point, remained strong on Tuesday.

One quoted the Columbus, Miss.-based steelmaker's new deal at 99¼ bid, par offered, enthusing that "we like that issue."

Another said that Severstal "did pretty well," seeing the bonds going home around par - actually, about a point above the levels seen in Monday's aftermarket.

"They held their gains, up one [point] from new issue. The deal went very well."

On Monday, the $525 million bond issue had priced at 98.008 to yield 10 5/8%, before rising further to around the 99 level.

Denbury deal still hot, Manitowoc not

Among other recently priced issues, Denbury Resources Inc.'s 8¼% senior subordinated notes due 2020 were seen by a market source trading at 101 5/8 bid. That was down from the peak levels in a 102-103 context at which the Plano, Tex.-based oil and gas exploration and production company's bonds had traded since their pricing a week ago, on Feb. 3.

However, the source noted that the bonds were still well above the par level at which the $1 billion deal had priced. Over $7 million of the bonds had changed hands as of mid-afternoon.

While Denbury was still sizzling, another deal priced that same day, for Manitowoc Co., was fizzling.

The source saw about $8 million of its recent 9½% notes due 2018 having traded around 98 7/8. That was down from the par level at which the Manitowoc, Wis.-based heavy industrial equipment maker's $400 million deal had priced on the 3rd, to yield 9½%. It was also down still further from the 101½ bid, 102½ offered peak levels to which those new bonds had climbed shortly after their pricing.

Market indicators turn mixed

Back among the established bonds, a trader saw the CDX Series 13 index gain ¼ point on Tuesday to end at 95¼ bid, 95¾ offered, after having plummeted by 1¼ points on Monday to hit its low point so far for the year.

However, the KDP High Yield Daily Index meanwhile fell by 25 basis points on Tuesday - matching Monday's downturn - to finish at 69.80. Its yield widened by 8 bps to 8.58%, the same magnitude of widening seen the previous session.

Advancing issues remained behind decliners Monday for a fourth straight session, by about an eight-to-five margin.

Overall market activity, as measured by dollar-volume levels, rose about 21% from Monday's pace.

A trader - after watching the carnage in the coated-paper segment names like NewPage, Verso and Appleton, suggested that "the market is melting down" - although he later amended that assessment to say that "the higher-quality names are holding up - but the high beta credits are getting whacked."

Another trader said that the overall market was easier. While "certain things were trading, there were no huge events moving one way or another," like the NewPage and Blockbuster debacles. "It maybe was a little bit soft."

He said that "you had a lot of people waiting for these new issues to be priced this afternoon, and then out of the blue, Blockbuster blows up."

He also noted that "with the storm coming in, you had a lot of people either getting out early or making plans for [Thursday] to dig in and stay in the city."

Blockbuster battered around

A trader said that Blockbuster's bonds were "really coming in," along with the Dallas-based movie-rental company's shares - down 7.32% on the New York Stock Exchange -- following a late-session announcement that several senior company executives had resigned, amid reports of a round of job cuts at the corporate headquarters level.

"Looks like someone forgot to rewind the movie when they returned it," he said, quoting the company's 11¾% senior secured notes due 2014 fall to around a 60-63 context, versus around a 66-67 trading level on Monday.

He saw 67 bid as the day's highest level, "but they traded into a 67 bid, then a 66," he said, before moving even below that - first offered at 65, and then, later in the session, as low as a 60½ bid - and even that was getting hit.

He said that the company's 9% senior subordinated notes due 2012 were trading as low as 13 bid, 15 offered, well down from levels around 21-22 on Monday, and were finally going out at around 141/2.

He said that the bonds had held around 20 pretty much the whole day, including "a good size" trading there around 4 p.m. ET - but after Blockbuster minutes later announced an 8-K Securities and Exchange Commission filing in which it detailed the abrupt resignations as of this past Friday of two senior officials and the recent heretofore unannounced resignation of a third officer, "that 20 bid got hit, right at the end of the day," and the next bid was a 13, followed by an offer at 15.

Another trader saw Blockbuster go "straight down," and said it was "definitely going out at its lows" -59-60 for the 113/4s and 15-15½ for the 9s, both of which were down at least 6 points on the day.

Blockbuster announced the Friday resignations - effective immediately - of Eric H. Peterson, who had been serving as Blockbuster's chief administrative officer, executive vice president, secretary and general counsel, and Bill R. Lee, up till now the company's executive vice president and chief merchandising officer. The company filing also noted the previously unannounced resignation on Jan. 19, effective Jan. 29, of Phillip K. Morrow as senior vice president and chief information officer.

"Are they leaving?" the first trader queried. "Or are they being forced out? Is this a case of all of the smart people are leaving - or a case of they're forcing the only people who know how to turn it around out the door?"

News reports late Tuesday indicated that the three departing officers were among an unspecified number of Blockbuster people being let go as the troubled company tries to turn itself around. Just how troubled Blockbuster really is should become apparent in two weeks, on Feb. 24, when the company will report its financial results for the fiscal fourth-quarter and fiscal year 2009 ended Jan. 3, after the close of the U.S. financial markets that day. It will also host a conference call for analysts and investors at that time, on which company executives will provide business updates and discuss the financial results.

Drawing an analogy to one of the biggest "blockbuster" movies of all time - which certainly must have made the company a boatload of money, since this was back in the days when Blockbuster dominated the rental business, before the rise of such pesky upstart rivals as Netflix Inc. and Coinstar Inc.'s Redbox kiosk operation -- the trader opined that "it's the Titanic, but they aren't even playing the music any more; everybody is just getting off the ship. The propeller is sticking straight up in the air, as the ship is going down."

Paper industry problems knock down NewPage

Looking at the other big disaster of the day in Junkbondland, a trader said that paper names were getting pounded, including NewPage Corp. and such sector peers as Verso Paper Inc. and the recently priced offering from Appleton Papers Inc.

"The paper stuff is down pretty hard," he said, quoting NewPage's 10% notes due 2012 having fallen as low as 51 bid, which he called down 2 to 3 points on the day, while "the Versos were getting beat up," falling another two to three points. "Verso and NewPage are just terrible," he declared.

At another desk, a market source saw the Verso 9 1/8% notes due 2014 having eased to 89¼ bid, while the Memphis, Tenn.-based coated-paper company's 11 3/8% notes due 2016 dropped more than 2 points on the day to 76 bid.

Miamisburg, Ohio-based NewPage's 11 3/8% notes due 2014 were seen by a market source down more than 2 points on the day to about the 88 level.

Another trader saw the 10s drop as low as 50½ bid, though with the bonds going home in a 51-52 range. Volume was about $20 million, with "a lot of trading going on at 511/2."

The first trader saw the Appleton 10½% senior secured notes due 2015 - $305 million of which had priced at 98.035 on Jan. 29 to yield 11% but which had traded below issue pretty much from the get-go - trading around 93 bid, around the same levels at which the Appleton, Wis.-based papermaker's new deal was seen going home at on Monday. "Appleton actually outperformed the other guys, but it's still obviously down from new-issue," he added.

At another desk, the Appleton bonds were quoted around 92½ bid, 94 offered, down at least a point or so on the session.

The coated-paper companies have been hurt by, among other things, the continued effects of the recession on advertising-dependent media like magazines, which are big users of coated paper.

On Monday, there was talk in the market of a new research report on the paper industry making the rounds, which discussed some of the negatives facing the coated-paper companies.

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