Vertellus prices, moves up; Continental sells euro deal; Burger King; Rotech, West hit road

By Paul Deckelman and Paul A. Harris

New York, Sept. 27 - Vertellus Specialties, Inc. priced an upsized offering of $345 million of five-year senior secured notes on Monday to kick off the new week in Junkbondland. When the Indianapolis-based chemical company's new deal was freed for secondary trading, the bonds firmed smartly, rising several points from their par issue price.

Vertellus was the only domestic junk deal pricing during the session.

German tiremaker Continental AG brought a quickly shopped €1.25 billion two-part offering of senior secured notes to market just hours after its initial new-deal announcement.

Another German borrower, A.T.U. Auto-Teile-Unger Handels GmbH & Co. KG, which franchises a network of vehicle-repair service stations in that country, began shopping around €450 million of secured notes for pricing likely later this week, while Irish packaging company Ardagh Glass Group hit the road Monday to market a multi-tranche €1.7 billion equivalent euro- and dollar-denominated bond offering to investors in Europe and the United States.

Back on the domestic front, Burger King Holdings, Inc. began shopping its $900 million eight-year LBO financing deal around to would-be buyers, while Rotech Healthcare Inc. and West Corp. were also heard to have launched bond deals.

Secondary traders saw continued activity in recently priced new deals, such as Friday's offerings from Harvest Operations Corp., Stoneridge Inc. and Warner Chilcott plc, all of which were quoted up solidly from their respective issue prices. Aftermarket dealings in new paper again overshadowed trading in existing bonds.

Vertellus upsizes

Both the U.S. and European high-yield primary markets churned out news on Monday.

In the United States, Vertellus Specialties priced an upsized $345 million issue of five-year senior secured notes (B1/B) at par to yield 9 3/8%.

The yield printed in the middle of the 9¼% to 9½% price talk. The deal was increased from $325 million.

Credit Suisse and Jefferies & Co. were joint bookrunners.

Proceeds will be used to refinance the company's first-lien and second-lien term loans.

Burger King to sell $900 million

Elsewhere, the forward calendar grew.

Blue Acquisition Sub Inc. (Burger King Holdings Inc.) is expected to price $900 million of eight-year senior notes late in the present week or early in the week ahead.

Pending demand, part of the issuance could come in euro-denominated notes.

JP Morgan and Barclays Capital are the joint bookrunners.

The notes come with four years of call protection.

Proceeds will be used to help fund the LBO of the Miami-based fast food hamburger chain by 3G Capital.

Rotech starts roadshow

Meanwhile Rotech Healthcare began a roadshow on Monday for a $225 million offering of five-year senior secured notes.

Credit Suisse is the bookrunner for the debt refinancing and general corporate purposes deal.

Conti's third deal for 2010

Making its third appearance for the year, Germany's Conti-Gummi Finance BV priced €1.25 billion of senior secured notes (B1/B) in two tranches on Monday.

The German tire manufacturer priced a €625 million tranche of 6½% notes due Jan. 15, 2016 at 98.861 to yield 6¾%.

The company also priced a €625 million tranche of 7 1/8% eight-year notes at 99.246 to yield 7¼%.

Citigroup and Royal Bank of Scotland were global coordinators and joint bookrunners. Commerzbank, Goldman Sachs & Co., ING, LBBW and UniCredit were joint bookrunners.

Proceeds will be used to refinance debt.

Monday's transaction represents the company's third issue of 2010, and its second in less than a month.

On Sept. 2 the company issued €1 billion of 7½% senior secured notes due 2017 (B1/B/) at 99.3304 to yield 7 5/8%

Previous to that, on July 12, Continental priced a €750 million issue of 8½% senior secured notes due 2015 (B1/B/) at 99.004 to yield 8¾%.

Monday's transaction brings to €3 billion to face amount of the company's high-yield issuance for 2010.

Ardagh plans multi-currency deal

Meanwhile, Ardagh Packaging Finance plc commenced international marketing of a €1.7 billion equivalent multi-currency, multi-tranche notes.

The deal includes €850 million and $375 million of seven-year senior secured notes, which come with four years of call protection, and €315 million and $310 million of 10-year senior unsecured notes, which come with five years of call protection.

The roadshow, which runs in Europe and the United States, is set to wrap up on Thursday.

Citigroup is the left bookrunner. Credit Suisse and JP Morgan are the joint bookrunners.

Proceeds will be used to finance the acquisition of Impress Cooperative UA, and to refinance existing debt.

ATU starts roadshow

Germany's ATU Auto-Teile-Unger Handels GmbH & Co. KG began a roadshow on Monday for its €450 million offering of 3.5-year senior unsecured notes (B3/B-).

The roadshow wraps up on Thursday.

The initial guidance has the yield coming in the 10% to 11% range.

Goldman Sachs & Co. and Morgan Stanley are managing the sale.

Proceeds will be used to refinance debt.

Also in the market, from Europe, German container shipping firm Hapag-Lloyd AG is roadshowing a $500 million equivalent offering of high-yield senior notes.

The offering will be made in dollars and euros, and will be structured as a five-year tranche with three years of call protection, and a seven-year tranche with four years of call protection.

The five-year tranche is being whispered in a 9% yield context, according to a market source.

Deutsche Bank, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and UniCredit are managing the debt refinancing deal.

Vertellus bonds rise vigorously

When Vertellus Specialtes' new 9 3/8% notes were freed for secondary dealings, a trader saw the bonds trading around 102¾ bid, 103 offered, well up from the par level at which the $345 million issue priced earlier in the session. He said that "for the most part," the bonds had traded at bid levels between 102½ and 103 during the session.

'They've been that way most of the day," another trader agreed.

Yet another saw the bonds get as good as 102½ bid, 103¼ offered.

Some recent new deals do well

The firming trend was evident, traders said, in some of the other recently priced new issues.

For instance, one saw Ronkonkoma, N.Y.-based nutritional supplements maker NBTY Inc.'s new 9% notes due 2018 around a "104ish" context, versus the par level at which the $650 million deal priced on Wednesday.

He said that Tomkins plc's new Pinafore bonds "was another one right up there, in the same place, around 104."

The British-based automotive parts and building products manufacturer's $1.15 billion second-lien senior secured 9% notes due 2018 had priced at par last Tuesday, then promptly moved up to above the 103 level in the aftermarket and continued to gain from there.

Friday deals seen firmer

A trader said that Harvest Operations Corp.'s 6 7/8% notes due 2017 were trading right around 102 bid, which he suggested was "a little lower versus Friday." The Calgary, Alta.-based oil and gas company had priced its $500 million offering earlier that session at 99.319 to yield 7%.

Another trader, though, noted that "everyone went home early on Friday," leaving only a few people around to do some thin trading in the new bonds, which were up around 102 bid, 103 offered. He saw the bonds on Monday at 101 7/8 bid, 102 1/8 offered.

A trader saw Warner Chilcott's 7¾% notes due 2018 102¾ bid, 103 offered, which he called "pretty much unchanged" versus Friday, when the Irish pharmaceutical company's $500 million add-on to its original $750 million deal from August priced at 102 bid to yield 7.325% and then proceeded to firm from there in the aftermarket.

A trader saw Stoneridge's $175 million of 9½% notes due 2017 at 102¾ bid, 103¾ offered; the Warren, Ohio-based automotive components maker's deal had priced at par and then firmed to levels as high as 103 bid, 104 offered late Friday, before coming off those peaks to hold around current levels.

Market indicators move higher

Away from the new-deal world, a market source quoted the new CDX North American HY index, which rolled into Series 15 on Monday and began trading when the session opened, at 96.72. On Friday, the now-expired HY Series 14 index had finished at 98¼ bid, 98¾ offered.

The KDP High Yield Daily index meantime rose by 9 basis points on Monday to finish at 72.90, after having gained 13 bps on Friday. Its yield came in by 4 bps Monday to 7.76%, after having narrowed by 6 bps on Friday.

The Merrill Lynch High Yield Master II index rose by 0.186% on Monday, after having improved by 0.077% on Friday. Its year-to-date return ended the day at 11.257%, up from 11.05% on Friday, which established a new 2010 peak level for the first time in nearly a week, eclipsing the old mark of 11.117% set last Tuesday.

Advancing issues led decliners for a second consecutive session on Monday, by around the same nearly seven-to-five ratio as seen on Friday, when the market breadth bounced back from Thursday's loss, which had been the first downturn after 15 straight advances.

Overall activity, represented by dollar-volume levels, fell by nearly 23% on Monday, after having risen by 1% on Friday.

New deals dominate junk

As has been the case over many recent sessions, the heavy tally of new high yield issuance, and the aftermarket activity in that paper when it freed for secondary dealings, has pushed trading in established junk names onto the back burner among many accounts, traders said, and they saw the phenomenon continuing on Monday, especially given the warm aftermarket reception accorded the Vertellus deal, which, as noted, moved up more than 2 points from issue.

"Nothing was crazy today," a secondary trader opined. "We were not seeing a lot of movement."

Freeport an active trader

A trader said that Freeport-McMoRan Copper & Gold Inc.'s bonds were among the more actively traded names Monday, quoting the Phoenix-based metals mining company's 8 3/8% notes due 2017 at 1111/2. He called the bonds pretty much unchanged, on "good volume," with the paper propped up by continued strong gold prices, which currently hover just a little below the recently set record level of $1,301.60 per ounce.

At another shop, a market source saw those bonds get as good as 112¾ bid, with volume of nearly $20 million by mid-afternoon.

Dynegy deal buzz spurs bonds

One established name which did see some activity was Dynegy Inc., with one market source seeing the company's 7¾% notes due 2019 up around 1¼ points on the day and more than 2 points over the past two sessions, at a shade above 68 bid.

A trader at another shop called them up ½ point on the day at 681/2, characterizing them as "pretty active."

A source at another desk, on the other hand, while quoting those bonds around that same 68ish level, pegged them down nearly a point.

And yet another trader agreed that the Dynegy bonds were down ½ to ¾ point around 68.

He noted that at the beginning of last week, they had been around 70, but were "in the 60s all week." He saw "decent volume" in the name on Monday.

The Dynegy bonds orbited that 68 level even as its New York Stock Exchange-traded shares rose by 27 cents, or 5.96%, on volume of 26.6 million, some 2½ times the norm.

And for the second straight session, the shares closed above the $4.50 per-share price at which Blackstone last month announced that it would acquire Dynegy, proposing to pay shareholders $550 million for their equity while assuming some $4.2 billion of debt.

Market-watchers said the rise of the shares above Blackstone's price is an indicator that investors believe the private equity company may raise the per-share purchase price to get the job done. Dynegy shareholders - some of whom have grumbled at what they consider to be a too- low valuation for the company by Blackstone - are scheduled to meet on Nov. 17 to vote on the deal.

Rite Aid rally remains

A trader said that there was "a lot of volume" in Rite Aid Corp.'s bonds, which mostly traded around the levels to which they had risen on Friday as they rebounded from Thursday's downturn that followed the Camp Hill, Pa.-based pharmacy chain's less than stellar second-quarter numbers.

He saw the 8 5/8% notes due 2011, for instance, right around 86 bid, 87 offered, while its 7½% notes due 2017 were at 92¼ bid, 93¼ offered.

"There was some activity - some trading on Friday, some trades today - but that looks pretty much where they were on Friday as well."

However, another trader said Rite Aid's 9½% notes due 2017 eased a little to 83½ bid.

GM gains on busy volume

In the autosphere, a trader said "there was a lot of activity" in the benchmark issues of domestic arch-rivals General Motors Corp. and Ford Motor Co., with the latter's 7.45% bonds due 2031 firmer at 101 ½ bid, 102 offered, "so they're hanging up at those higher levels, on a lot of trading."

Meanwhile, GM's 8 3/8% benchmark bonds due 2033 were up 1 point on the day at 33 bid, 34 offered. Again, he said, "there was a lot of activity in GM, good volume."

A second trader, though, called GM unchanged at 33 bid, 33 ½ offered, and saw Ford's long bonds likewise steady at 100¼ bid, 101½ offered.

Catalyst Paper pops

Catalyst Paper Corp.'s 11% notes due 2016, which had been seen trading busily around last week, were "definitely up two points from Friday, a trader said, quoting the Richmond, B.C.-based papermaker's issue at 83 bid, 84 offered.

A second trader quoted the bonds at 82¾ bid, calling that up 1½ points on the day, in brisk trading.

In that same sector, a trader said he "didn't see much change" in NewPage Corp.'s 11 3/8% senior secured bonds due 2014, saying "they still are" around 90 bid, 91 offered, "slightly better - not much better, but slightly better."

Another trader saw Miamisburg, Ohio-based coated-paper manufacturer's bonds as "pretty active - but it usually is," calling the 91 bid level the bonds reached up ½ point.

Blockbuster holds rebound gains

In the distressed-debt precincts, a trader quoted Blockbuster Inc.'s 11¾% senior secured bonds due 2014 as having "moved back up" to trade at bid levels between 55½ and 57, quoting them not too much changed from Friday but "up a good bit" versus Thursday, when he saw the bonds dip into the lower 50s in the aftermath of the Dallas-based video-rental company's Chapter 11 filing, even though news of the bankruptcy case was hardly unexpected.

"They moved back up on Friday and are hanging in at those higher levels," he said, pronouncing a final trading level for Monday around 56 bid.

A second trader also saw the bonds going home around 56 bid.

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