High-yield bonds finish day mixed; DISH, Sprint gain on merger woes; Exide regains ground

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, June 12 - The high-yield bond market "started off with a nice tone," a trader said Wednesday, while the primary market saw an intensified news flow.

Three issuers raised a total of $1 billion through a combined four tranches of dollar-denominated notes.

Quicksilver Resources Inc. priced a downsized $525 million of notes in two tranches.

Summit Midstream Holdings, LLC and Summit Midstream Finance Corp. priced a $300 million issue of eight-year senior notes to yield 7½%.

And Emerald Exposition Holdings priced $200 million eight-year senior notes to yield 9%.

That activity was better than the single deal for $150 million sold in Tuesday's market.

However the better secondary tone did not last and by the end of the day a declining equity market brought the whole thing down.

DISH DBS Corp. and Sprint Nextel Corp. managed to buck the day's trend. DISH is currently in a battle with SoftBank Corp. to buy Sprint and has until June 18 to come up with an offer that beats SoftBank's.

As for the rest of the market, a lot of the activity was focused on so-called "go-go" names, such as Ally Financial Inc. Ally's 7½% notes due 2020 were up 1¾ points at 1161/4, even as its 4 5/8% notes due 2015 slipped ½ point to 1021/4.

Chrysler Group LLC's 8¼% notes due 2021 were also better, up slightly at 110.

Quicksilver gets two-part deal

Executions for Wednesday's new deals were a mixed bag. No deals were upsized, although one was downsized. One tranche priced at the tight end of talk, another came on top of talk, and the remaining two came wide of talk.

In the secured tranche of Quicksilver's two-part sale, the company priced $200 million of six-year second-lien senior secured floating-rate notes (B2/CCC+) at 97. The Libor plus 575 basis points coupon has a 1.25% Libor floor.

The spread, reoffer price and Libor floor came on top of talk.

Credit Suisse and J.P. Morgan were the global coordinators and joint bookrunners. Citigroup, Deutsche Bank, Wells Fargo and BofA Merrill Lynch were also joint bookrunners.

In the unsecured tranche, Quicksilver priced a downsized $325 million of 11% eight-year senior notes (Caa2/CCC) at 94.928 to yield 12%.

The yield printed 12.5 bps beyond the wide end of talk set in the 11¾% area. The reoffer price came cheap to discount talk of three to four points.

The tranche was reduced from $675 million.

Credit Suisse, Citigroup and Deutsche Bank were global coordinators and joint bookrunners. JPMorgan, TD and UBS were also joint bookrunners.

The Fort Worth-based owner and acquirer of oil and gas properties decreased the overall deal size from $875 million.

Proceeds and cash on hand will be used to repurchase any and all of the 8¼% senior notes due 2015 and the 11¾% senior notes due 2016 validly tendered in previously announced tender offers and repurchase, redeem or discharge the notes outstanding after the tenders.

Summit at the tight end

Summit Midstream Holdings, LLC and Summit Midstream Finance Corp. priced their $300 million issue of eight-year senior notes (B3/B) at par to yield 7½%, at the tight end of the 7½% to 7¾% talk.

BofA Merrill Lynch, Deutsche Bank, RBC and RBS were the joint bookrunners.

The Dallas-based natural gas master limited partnership plans to use the proceeds to pay down its revolver.

Emerald Expo wide of talk

Emerald Exposition Holdings priced a $200 million issue of eight-year senior notes (Caa2/B-) at par to yield 9%.

The yield printed 25 bps beyond the wide end of the 8½% to 8¾% yield talk.

Goldman Sachs, BofA Merrill Lynch, Credit Suisse, Morgan Stanley, RBC and UBS were the joint bookrunners for the acquisition financing.

Talking the deals

The Thursday session looks to be a busy one, with deal terms expected in Europe and the United States.

Zurich-based chocolate-maker Barry Callebaut Services NV talked its $600 million offering of non-callable 10-year senior notes (confirmed Ba1/expected BB+) to yield 5½% to 5¾%.

Joint bookrunner Credit Suisse will bill and deliver. Goldman Sachs, ING, Jefferies, RBS, Rabobank and UBS are also joint bookrunners.

Swiss medical diagnostics and laboratory services provider Unilabs set price talk for its €685 million three-part notes offer.

The deal involves two separate issuing entities.

Unilabs SubHolding AB has two of the three tranches, representing €510 million of the overall total: a tranche of five-year senior secured fixed-rate notes (B3//), non-callable for two years, is talked to yield 8¾% to 9%, and a tranche of five-year senior secured floating-rate notes, non-callable for one year, is talked at a 650 bps to 675 bps spread to Euribor.

Tranche sizes remain to be determined.

Meanwhile Unilabs MidHolding AB has the remaining €175 million, coming in the form of 5.5-year second-lien PIK toggle notes, callable in two years at 103, talked to price at par, and to yield 13%.

Joint bookrunner JPMorgan will bill and deliver. Lloyds, Nordea and SEB are also joint bookrunners.

The deal underwent structural changes and covenant changes.

With respect to the PIK toggle notes, in-kind coupon payments may be made at the company's discretion for the first two years. Thereafter, however, in-kind payments are subject to the company's ability to make cash coupon payments. Previously the deal permitted the company to make in-kind coupon payments for the life of the bond.

Also, dividend payments by the company may only be made if leverage through the PIK toggle notes is less than four times EBITDA, whereas previously the leverage threshold was five times.

Yankee Candle prices Thursday

The Wednesday session also saw a buildup of the forward calendar.

Yankee Candle Co. plans to price a $450 million offering of five-year senior notes (/CCC+/) on Thursday.

Initial whisper has the deal coming with a yield in the low-to-mid 7% range, according to an investor.

Barclays and BofA Merrill Lynch are the joint bookrunners.

Proceeds, together with a $950 million term loan, will be used to fund a distribution to equity holders and to refinance all existing debt.

National starts roadshow

National Financial Partners Corp. began a roadshow on Wednesday for its $337 million offering of eight-year senior notes (Caa2/CCC+).

The deal is expected to price on June 19.

Deutsche Bank, Morgan Stanley, UBS, Credit Suisse, MCS and RBC are the joint bookrunners for the acquisition financing.

Technicolor starts Thursday

Technicolor plans to start a roadshow on Thursday for its $330 million offering of seven-year senior secured notes (expected ratings B3/B).

The deal is expected to price on June 21.

JPMorgan, Goldman Sachs and Morgan Stanley are the joint bookrunners for the debt refinancing.

Altice 10-year deal

Israel-focused telecom company Altice Group began marketing a €250 million offering of 10-year senior notes on Wednesday.

Goldman Sachs and Morgan Stanley are the active bookrunners. Credit Agricole, Credit Suisse and Deutsche Bank are the passive bookrunners.

Proceeds will be used to refinance debt and fund acquisitions.

Indexes pressured

The market opened the day strong, but started to drift down as the day came to a close, a trader said, resulting in an overall mixed day.

Market indexes followed in line with the day's trend.

The KDP High Yield Index fell to 74.02 from 74.08. Yields widened to 6% from 5.95% previously.

The Markit Series 20 North American High Yield Index meantime held in at 102¾ bid, 103 offered.

DISH, Sprint firm

DISH and Sprint paper was trading actively and better on Wednesday, as the two companies attempted to come to terms on a merger agreement.

A trader saw DISH's 5 7/8% notes due 2022 rising 1¾ points to 101. The 5% notes due 2023 were up a like amount, he said, trading around 953/4.

The trader also saw Sprint's 6% notes due 2022 at 103 1/8, up nearly ½ point.

At another desk, a trader called DISH's 5 7/8% notes up around 101, while the 5% notes put on 1½ points, closing around 951/2.

"Sprint bonds were up just a touch," the trader noted.

A third market source placed the DISH 7¾% notes due 2015 at 110, up ½ point. Sprint's 6% notes due 2016 increased ½ point as well, to 106½ bid.

Late Tuesday, Bloomberg reported that talks between DISH and Sprint had faltered, due in large part to a disagreement over a reverse-break-up fee. Sprint had requested a fee of $3 billion and DISH had countered with $1 billion.

Sprint's demand was five times the amount requested from SoftBank.

Earlier in the week, Sprint said DISH had not come up with a deal that the company deemed good enough to compete with SoftBank's $21.6 billion offer. DISH has until June 18 to either come up with a better offer or to walk away.

Exide rallies

Exide Technologies Inc.'s 8 5/8% notes due 2018 were again the focus in the distressed space on Wednesday, following the company's bankruptcy filing on Monday.

But after two days of losses, the paper was moving up, with a trader seeing a "smart rebound" to 59.

He called that up 2½ points on the day.

Another trader said the issue hit highs around 59, leaving it 58½ bid, 59 offered.

Yet another trader said the debt was "better," hitting 59 late in the session.

The Milton, Ga.-based battery maker and recycler sought Chapter 11 protection on Monday, citing a shutdown of its recycling plants in California, as well as a declining balance sheet. The company's financials have been soft, especially since Wal-Mart opted to buy batteries from Johnson Controls Inc. instead of Exide in 2010.

Additionally, there is about $31 million in interest payments due in August and a floating-rate convertible note that comes due in September.

Exide was previously in bankruptcy in 2002.

Momentive dips

Momentive Performance Materials Inc. was softer during the midweek trading session, though without any fresh news.

A trader saw the 9% notes due 2021 closing at 89, down a point.

Another trader echoed that level.

Momentive is an Albany, N.Y.-based specialty chemical manufacturer.

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