New Look prices to cap $6 billion week, new UAL, KCA bonds soar; SuperValu up on tender news

By Paul Deckelman and Paul A. Harris

New York, May 3 - New Look Group Retail Ltd. was heard by high-yield syndicate sources to have come to market on Friday with a $250 million issue of five-year senior secured notes, part of the British clothing and footwear retailer's big three-part offering, which also included tranches of euro- and sterling-denominated secured bonds.

The dollar portion of that tripartite transaction lifted the week's total issuance of junk-rated, dollar-denominated bonds from domestic or industrialized-country issuers to over $5.9 billion in 13 tranches, according to data compiled by Prospect News, versus the slightly more than $5 billion of such debt which had come to market in 17 tranches during the previous week, ended April 26.

On a year-to-date basis, new-issuance stood at $115.38 billion in 254 tranches, running just marginally ahead of the pace seen in 2012, when $114.69 billion had priced in 236 tranches, according to the data.

Traders did not see any immediate aftermarket dealings in New Look's bonds - but there was no shortage of aftermarket activity in recently priced bonds. One of the most actively traded issues of the day was United Continental Holdings Inc.'s issue of five-year notes, which had priced on Thursday at par. Besides having racked up some big volume numbers, the airline operator's new deal was seen heading skyward, price-wise, up several points on the day.

Traders also saw some smart gains in energy services company KCA Deutag Finance plc.'s five-year secured notes, and in information technology company CompuCom Systems Inc.'s eight-year paper, with both of them also trading well above their respective issue prices.

However, both halves of Sirius XM Radio Inc.'s $1 billion two-part offering were seen up only marginally from their issue price.

Away from the new deals, SuperValu Inc.'s 8% notes due 2016 traded at higher levels, on the announcement by the supermarket operator that it will tender for a portion of those bonds, funding the buyback with the proceeds from a planned new debt offering.

Statistical measures of junk market performance were both higher on the session and versus last week's levels.

New Look in three currencies

England's New Look Retail Group Ltd. was Friday's sole issuer, completing its £809 million equivalent three-part offering of five-year senior secured notes (B1/B-/B).

The deal included £500 million of fixed-rate notes which priced at par to yield 8¾%.

It also included $250 million of fixed-rate notes which priced at par to yield 8 3/8%.

Finally, a €175 million tranche of floating-rate notes priced at par to yield three-month Euribor plus 625 basis points.

All three tranches priced 12.5 basis points inside of price talk.

Goldman Sachs and JPMorgan were the joint global coordinators and joint bookrunners.

Deutsche Bank, HSBC, Lloyds Bank and Royal Bank of Scotland were also joint bookrunners.

Goldman Sachs will bill and deliver.

Proceeds will be used to repay senior and mezzanine debt and to repay PIK loans.

First Quality for late week

The active forward calendar continued to take shape on Friday.

First Quality Enterprises, Inc. plans to price a $500 million offering of eight-year senior notes (B2/BB-) late in the week ahead.

Early guidance on the deal is 5% to 5¼%, according to a trader.

Wells Fargo is the left bookrunner for the debt refinancing deal. J.P. Morgan, BofA Merrill Lynch, RBS and SunTrust are the joint bookrunners.

Dollar deals shaping up

First Quality takes its place on an active forward calendar that includes $2 billion of junk set to price during the May 6 week.

LBC Tank Terminals Holding Netherlands BV is marketing a $350 million offering of 10-year senior notes (B3/B).

The deal is going well, the trader said, and added that preliminary guidance is in the 7½% area.

RBC is the left bookrunner. BNP, Credit Agricole, DNB and ING are the joint bookrunners.

Safway Group Holding LLC is marketing a $540 million offering of five-year senior second-lien notes (B3).

The deal is shaping up in a 7½% to 8% yield context, the trader said.

Goldman Sachs, Wells Fargo, Morgan Stanley, Barclays and Lazard are the joint bookrunners.

ION Geophysical Corp. is roadshowing a $175 million offering of five-year senior secured second-lien notes which are being guided at 8 ¼% to 8 ½%, the trader said.

Citigroup is the left bookrunner. Wells Fargo is the joint bookrunner.

And Seven Generations Energy Ltd. plans to price a $250 million offering of seven-year senior notes (Caa1/CCC) during the week ahead.

Early talk on the deal is in the 9% area, the trader said.

Credit Suisse and RBC are the joint bookrunners.

ista starts Monday

The European market promises to remain active in the week ahead.

One new euro deal got aboard the forward calendar during the Friday session.

Germany's ista plans to start a roadshow on Monday for its €1.025 billion two-part notes offering.

The energy metering company is offering €500 million of seven-year secured notes (expected /B+/) at the holding company level, via Trionista HoldCo GmbH, and €525 million of eight-year unsecured notes (expected /B/) at the operating company level, via Trionista TopCo GmbH.

Deutsche Bank is the global coordinator. BofA Merrill Lynch, Goldman Sachs, JPMorgan, Nomura and UniCredit are the joint bookrunners.

Proceeds will be used to help fund the LBO of the company by CVC Capital Partners.

United gains altitude

In the secondary market, one of the standout performers on Friday was the new issue of 6 3/8% notes due 2018 issued by United Continental Holdings Inc., via its United Air Lines Inc. subsidiary.

The Chicago-based operator of the now-merged UAL and Continental Air Lines priced $300 million of those notes at par on Thursday in a quick-to-market transaction.

The deal came too late in Thursday's session for any dealings - but was seen having pushed up to 103 5/8 bid on Friday by two separate traders, while another pegged the bonds at 103½ bid.

Volume was brisk, with a market source reporting that more than $33 million of the new paper had changed hands by mid-afternoon, putting it among the day's most active junk issues. He suggested that final volume on the day would go even higher than that.

KCA Deutag does well

A trader noted that Scottish energy services company KCA Deutag's 9 5/8% senior secured notes due 2018 had popped solidly when they began trading on Friday.

Like United Continental, that deal had also priced late Thursday and only began trading on Friday - when it moved up "by at least 4 points," he said, locating those bonds at around 100¼ bid, 100½ offered - well up from 96, where that $500 million issue had priced its deal to yield 10.681%, "for the yield hogs," the trader added.

CompuCom adds

Another solid gainer on the day was CompuCom Systems' 7% notes due 2021. The Dallas-based information technology provider's $225 million of new paper had priced at par on Thursday, after having been downsized from $250 million originally. When the bonds were freed to trade on Friday morning, a market source said, they had moved up to 102½ bid, 103 offered.

In contrast though, a trader noted that Sirius XM Radio's two-part deal "didn't pop, like some of the other stuff" that had come to market late Thursday.

"Some of that other stuff went crazy," he said, such as UAL and KCA Deutag.

As for Sirius, he saw both tranches of the company's $1 billion offering hovering just above their par issue price, at 100 3/8 bid, 100½ offered.

Satellite radio broadcaster Sirius priced $500 million of 4¼% notes due 2020 at par, along with $500 million of 4 5/8% notes due 2023. They came too late to trade on Thursday, several sources said, but began trading on Friday right near their issue price.

Another trader quoted both tranches in a par to 101 context, while a third saw them both at par bid, 100 3/8 offered.

Constellation continues to shine

A trader said that "even with low coupons," Constellation Brands, Inc.'s new bonds continued to trade well.

He saw its 3¾% notes due 2021 at 102 1/8 bid, 102 3/8 offered, and its 4¼% notes due 2023 above 103 bid, calling their rise "mind-boggling."

The Victor, N.Y.-based manufacturer of beer, wine and spirits priced $500 million of the 2021 notes and $1.05 billion of the 2023s, both at par, on Tuesday in a quick-to-market deal.

While they had appeared too late in the day to trade on Tuesday, they dominated dealings on Wednesday, with over $60 million of the former and $139 million of the latter having changed hands, both at handsome premiums to their par issue price.

By Thursday, they had gained still further, though on moderated volume, with the 3¾% notes up to 102¼ bid and the 41/4s at 1031/4, and they continued to trade at high levels on Friday.

SuperValu is stronger

Away from the new deals, the news that SuperValu had begun a modified Dutch auction-style tender offer for a $300 million chunk of its existing 8% notes due 2016 sent the latter bond higher on Friday, although volume was restrained.

A trader said that the Eden Prairie, Minn.-based supermarket's 8s had moved above the 113 bid mark, getting as good as 1131/4, before coming off the peak levels to go home at 112 7/8.

He said that was still well up from the 111½ bid close on Thursday, before the company's announcement of the tender offer.

Volume was limited, with only around $4 million to $6 million of round lot dealings, although there was a heavy slate of odd-lot dealings in the company's debt.

Market indicators stay strong

Overall, statistical junk performance indicators were firmer for a second consecutive session on Friday, and were also up across the board from their closing levels the previous week, on Friday, April 26.

The Markit Series 20 CDX North American High Yield Index was up by 11/32 point on Friday to end at 106 5/8 bid, 106¾ offered, its second consecutive gain. On Thursday, the index rose by 23/32 point.

It was also up versus the previous Friday's close at 105¼ bid, 105 5/16 offered.

The KDP High Yield Daily Index, meanwhile rose by 15 basis points to end at 76.65, its ninth straight gain. On Thursday, it had also gained 15 bps.

Its yield came in by 6 bps to 4.95%, its ninth consecutive decline, including Thursday's 7 bps narrowing.

Those levels compare favorably with the previous week's 75.91 index reading and its 5.24% yield.

And the widely followed Merrill Lynch High Yield Master II index posted its 12th consecutive advance on Friday, rising by 0.206%, on top of Thursday's 0.15% gain.

That lifted its year-to-date return to 5.425% - its 10th straight new peak level for the year - from Thursday's 5.209%, the previous peak.

On the week, the index gained 1.002% to notch its second straight weekly gain. It had also risen by 0.746% the week before, when the year-to-date return had stood at 4.379%.

The index's yield to worst also dropped to a new all-time low at 5.082% Friday, eclipsing the prior nadir of 5.122%, set on Thursday. It was the third straight session in which a new low had been reached. Its spread to worst tightened Friday to 438 bps over Treasuries, a new tight level for the year, versus the prior tight point of 447 bps, also recorded on Thursday. It was the third straight session in which a new tight level for 2013 had been set.

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