Prestige Brands prices; new Ally, Aircastle bonds busy; AK Steel up on trade ruling

By Paul Deckelman and Paul A. Harris

New York, Dec. 3 - High yield primaryside activity slowed a little on Tuesday, as just one deal - a quickly shopped $400 million offering of eight-year notes from consumer products company Prestige Brands Holdings, Inc. via a subsidiary - was heard by syndicate sources to have come to market during the session.

That was down from the $1.4 billion in two transactions that was recorded on Monday.

Both of those quick-to-market deals that priced on Monday - from lender and online banking operator Ally Financial, Inc. and commercial jet leasing firm Aircastle Ltd. - were busily trading on Tuesday, traders said, although both new deals didn't stray far from Monday's initial aftermarket levels.

Away from the new deals, market participants reported some brisk activity in AK Steel Holding Corp.'s bonds, in line with stock gains that followed a favorable ruling for the specialty steel manufacturer in an international trade case.

Elsewhere, Arch Coal, Inc.'s bonds were active at higher levels, helped by the energy company's announced refinancing plans.

The overall market was described as subdued, however, due to factors ranging from investor caution ahead of Friday's November employment numbers to the effect on the market of Bank of America Merrill Lynch's traditionally well-attended leveraged finance conference going on this week in Florida.

Statistical measures of market performance were mixed on the session.

Conference provides lull

The primary market news flow thinned on Tuesday, with one market source chalking the slowness up to the BofA Merrill Lynch Leveraged Finance Conference, underway through Wednesday in Boca Raton, Fla.

"We're still expecting this to be a relatively busy week, and next week should be a busy one," the trader said.

"Things could begin to wind down after that, but of course that's what we were expecting last year, and that slowdown never really materialized until a week before Christmas."

Indeed, the final active day in the primary market in 2012 was Wednesday, Dec. 19, which saw $1.97 billion of issuance in four deals, including a $1.5 billion whopper from DISH DBS Corp., which priced its 5% notes due March 15, 2023 at par that day.

Prestige Brands at tight end

Dialing forward to Tuesday's session, Prestige Brands, Inc. brought the session's sole dollar-denominated deal in a drive-by, pricing $400 million of eight-year senior notes (B2/B+) at par to yield 5 3/8%.

The yield printed at the tight end of yield talk in the 5½% area; the quick-to-market deal was guided in a high 5% yield context earlier in the day.

Joint bookrunner Morgan Stanley will bill and deliver. Citigroup, RBC and Deutsche Bank were also joint bookrunners for the debt refinancing and general corporate purposes deal.

One Call starts Wednesday

Opal Acquisition, Inc., an affiliate of OC Medical Holdings, Inc. (One Call Care Management), plans to start a roadshow on Wednesday for a $610 million offering of eight-year senior notes.

The deal will be unwrapped in a group meeting at the BofA Merrill Lynch Leveraged Finance Conference on Wednesday.

Pricing is expected on Dec. 10.

BofA Merrill Lynch, RBC, Morgan Stanley, Deutsche Bank and Jefferies are the joint bookrunners.

Proceeds will be used to repay the second-lien term facility, which, together with borrowings under the first-lien credit facility, was used to fund the acquisition of One Call, and, together with incremental borrowings under the first-lien credit facility, to fund the acquisition of Align Networks, to refinance debt of Align and its subsidiaries and for other general corporate purposes.

Elsewhere in this week's dollar market, deals on deck to price before Friday's close include the Forest Laboratories, Inc. $1 billion offering of senior notes due 2021.

Official price talk had not yet been announced at Tuesday's close, according to market sources. However unofficial talk has the deal coming in the low 5% yield range, the sources said.

Joint bookrunner Morgan Stanley will bill and deliver.

And Ultra Petroleum Corp.'s $400 million senior notes due 2018 have yet to be officially talked, sources say.

However, the unofficial talk is 6% to 6¼%.

Goldman Sachs, Citigroup, Wells Fargo, J.P. Morgan and CIBC are the leads.

HeidelbergCement prices

In Tuesday's European market, HeidelbergCement Finance Luxembourg SA priced a €500 million issue of 3¼% senior notes due Oct. 21, 2021 (Ba2//BB+) at 99.337 to yield 3 3/8%, on top of guidance.

Danske Bank, Deutsche Bank, ING and Nordea were the joint bookrunners for the general corporate purposes deal from the German building products company, which is a familiar fixture in the European high yield.

SGL Carbon roadshow

Elsewhere, Germany's SGL Carbon SE began a roadshow in Frankfurt and Zurich on Tuesday for its €250 million offering of senior secured notes due Jan. 15, 2021.

The deal was signaled in a "save-the-date" memo circulated by joint bookrunner Deutsche Bank, which will bill and deliver for the Regulation S only deal. Credit Suisse, Commerzbank and LBBW are also joint bookrunners for the debt refinancing.

Prestige: aftermarket no-show

In the secondary market, Prestige Brands' new 5 3/8% notes due 2021 appeared too late in the day for any kind of real aftermarket dealings, several traders said.

New Ally, Aircastle busy

In contrast, Monday's two new deals - Ally Financial's 2¾% senior guaranteed notes due 2017 and Aircastle's 4 5/8% notes due 2018 - were busily traded on Tuesday.

A market participant said that the Ally issue "was actually pretty busy - it was the number-one trader of the day," with over $30 million of the notes having changed hands.

But he saw the bonds little changed from where they had been in Monday's initial aftermarket dealings, inside a 99 7/8 to 100 1/8 bid context.

That was slightly above the 99.622 level at which Ally, a Detroit-based automotive lender and online banking company, had priced its quick-to-market $1 billion issue on Monday after having radically upsized the well-oversubscribed deal from the initially planned $500 million.

At another desk, a trader pegged the Ally bonds down 1/8 point on the day, at 99¾ bid, 100 1/8 offered.

As for Aircastle, the first trader said that the new drive-by deal also saw some brisk action, with volume of over $17 million.

He said the bonds were "pretty much inside" of 100½ to 100 7/8 most of the day, which he saw as up 3/8 point.

At another shop, the bonds were seen having gained ½ point to end at 100¾ bid, 101 offered.

On Monday, Aircastle, a Stamford, Conn.-based commercial jet leasing company, "flew by" the market with its unscheduled $400 million deal, which priced at par after having been upsized from an originally announced $300 million.

Wise, T-Mobile trade around

While Monday's deals saw an active aftermarket presence on Tuesday, traders said there was not very much activity seen in other recently priced issues - with two exceptions.

A trader saw Wise Metals Group LLC's 8¾% notes due 2018 at 103 bid, 104 offered - a 1 point rise from its recent levels.

Wise, a metals recycling company and sheet aluminum producer based in the Baltimore suburb of Linthicum, Md., priced $650 million of the notes at par on Nov. 26. The Wise issue immediately firmed smartly, quickly moving up to above the 102 bid area and then staying up there.

A trader also saw a fair amount of activity in T-Mobile USA Inc.'s 6 1/8% notes due 2022, calling them down 1 point on the day to end at 101¾ bid on volume of over $12 million.

The Bellevue, Wash.-based number-four U.S. wireless service provider had priced $1 billion of the notes at par on Nov. 18, and they had gradually moved to levels above 102. That $1 billion was just one tranche of a $2 billion megadeal that also included $1 billion of 6½% notes due 2024.

The trader said that the 6 1/8s "were the busiest in T-Mobile," which has a number of different tranches of bonds out. He said most of the company's other bonds were unchanged on the day.

AK Steel strengthens

Away from the new-deal arena, traders saw some activity in AK Steel's bonds, on the heels of a favorable ruling for the West Chester, Ohio-based steel manufacturer in an international trade dispute.

Its 7 5/8% notes due 2021 traded around 95 bid all day before going out at that level, about unchanged on the day, with over $10 million traded.

Its 8 3/8% notes due 2022 were about ½ point better at 951/2, though there were only a handful of sizable trades; most of the day's intense activity in both credits was in smaller round lot pieces.

AK's New York Stock Exchange-traded shares meantime rose 17 cents, or 3.05%, to end at $5.74, although volume of 5.34 million shares was a little subpar.

The company said that the U.S. International Trade Commission had made a unanimous preliminary determination that non-oriented electrical steel, or NOES, produced in several foreign countries is causing injury to AK Steel, which also produces such steel alloys. The preliminary injury determination means that cases against NOES producers in six countries will proceed.

"We applaud the ITC's preliminary ruling against unfairly traded imports of non-oriented electrical steel," said James L. Wainscott, the company's chairman, president and chief executive officer. "The rules of fair trade apply to all of our competitors, and we will continue to vigorously defend our ability to compete by using every tool at our disposal."

Arch coal refinancing

A trader said that Arch Coal "was pretty active today, seeing its 8¾% notes due 2016 up 2 points at 105 bid on turnover of $15 million, while its 7% notes due 2019 rose 1¾ points to 78¼ bid, on $11 million of volume.

St. Louis-based Arch said Monday that it was seeking amendments to its bank debt, as well as asking for $300 million to be added to its senior secured term loan B facility. Additionally, the company said it was launching a cash tender offer for $600 million of its 8¾% notes due 2016.

Those that participate in the tender by Dec. 13 will receive a total of $1,049.25 for each $1,000 of notes validly tendered.

"On the positive side, the company's addressing of its 2016 debt maturity and modifying covenants should make the risk of non-compliance less likely over near to intermediate term," wrote Gimme Credit LLC analyst Evan Mann in an afternoon comment published Tuesday. "On the negative side, these transactions will put an incremental $300 million of term loan debt ahead of the remaining unsecured notes due 2019, 2020 and 2021."

Market signs mixed

Overall, statistical junk-market performance indicators remained mixed on Tuesday.

The Markit Series 21 CDX North American High Yield index suffered its third consecutive loss, retreating by 7/32 point to end at 106¾ bid, 107 offered, after having lost 1/32 point on Monday.

But the KDP High Yield Daily index edged up by 1 basis point Tuesday to end at 74.4 after having lost 5 bps on Monday, its first loss after four straight advances.

Its yield meantime came in by 1 bp to 5.63% after having moved up by 2 bps on Monday, its first widening after four straight sessions of having declined.

And the widely followed Merrill Lynch High Yield Master II index posted its eighth straight gain, improving by 0.005% on top of Monday's 0.016% improvement.

The latest gain lifted its year-to-date return to 6.855%, an eighth consecutive new peak level for the year, eclipsing Monday's 6.85% reading, which had been the previous new 2013 zenith.

Stephanie N. Rotondo contributed to this review.

© 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.