Upsized TitleMax prices, Michael Foods shops deal; Gulf energy names mixed; NewPage rebounds

By Paul Deckelman and Paul A. Harris

New York, June 16 - TitleMax Finance Corp. was heard by high yield syndicate sources on Wednesday to have ended the roadshow for its bond deal a day early and then to have come to market with an upsized offering of five-year secured paper.

However, several traders all said that they had not seen any aftermarket activity in the Savannah, Ga.-based consumer loan provider's new issue.

Elsewhere in the primary arena, the sources heard Michael Foods Group, Inc. getting ready to hit the road Thursday with an offering of eight-year notes, with pricing expected early next week.

In the secondary realm, there was considerable activity in Gulf of Mexico-related energy names, including BP Capital Markets plc and Transocean Inc., at the heart of the disastrous Deepwater Horizon oil drilling rig accident which has turned the vast Gulf into a sloppy, oily mess. Those bonds were mixed. ATP Oil & Gas Corp.'s bonds, which have recently been under pressure as a likely victim of tough new federal oil-drilling rules proclaimed after the April 20 accident, were seen better on the day.

Also bouncing back was NewPage Corp., whose bonds had slid in heavy trading on Tuesday following the abrupt and still largely unexplained resignation of chief executive officerTom Curley - just four months after he assumed that post.

Traders noted the overall firm tone in Junkbondland.

TitleMax upsizes

The new issue market saw pricing of the week's first deal on Wednesday.

TMX Finance LLC and TitleMax Finance Corp. priced an upsized $250 million of 13¼% five-year senior secured notes (B2/B+) at 99.078 to yield 13½%.

The yield printed on top of the yield talk. The reoffer price came in line with discount talk of approximately 1 point. TitleMax increased the size from $225 million.

Jefferies & Co. ran the books.

Proceeds will be used to repay existing debt.

In addition to the upsizing, timing was moved ahead due to demand, an informed source said.

Michael Foods roadshow starts Thursday

There was also a deal announcement on Wednesday.

Michael Foods Group, Inc. will begin a roadshow on Thursday for a $430 million offering of eight-year senior unsecured notes.

Pricing is expected on Tuesday.

Goldman Sachs & Co. is the left lead bookrunner. Bank of America Merrill Lynch and Barclays Capital are joint bookrunners.

Proceeds will be used to help finance the LBO of the company by GS Capital Partners from Thomas H. Lee Partners LP.

Substantial improvement

High yield was better bid on Wednesday, according to a high-yield mutual fund manager.

Year-to-date returns, which began the week at around 2%, looked to be closing around 3% on Wednesday - a 100 basis points improvement in three days - the buy-sider added.

Bonds of General Motors Corp. were poised to close at 33 3/8 bid, up from 31½ bid earlier in the week, the investor said.

The badly beaten up bonds of offshore driller ATP Oil & Gas were at 73 bid, 74 offered, heading toward Wednesday's close, up from 68¾ bid on Monday morning.

The news surrounding the disastrous disgorgement of crude oil from the wrecked Deepwater Horizon well, the head of which lies beneath 5,000 feet of water in the Gulf of Mexico, remains dire, said the investor, who keeps a close eye on the energy sector.

"There won't really be any true improvement until they stop the leak," the source remarked.

However, reactions to news that BP plc, the owner of the Deepwater Horizon well, intends to set up a $20 billion escrow account to address widespread damages caused by the ongoing leak, have been generally favorable, the investor said.

"It may be enough money to go around, and it probably means that the government won't shut down BP," the buy-sider commented.

"It also seems likely that ATP, and others, should eventually be able to resume drilling."

Expecting an inflow

Meanwhile, another leak impacting speculative-grade debt securities, namely the six consecutive weekly outflows form the high-yield mutual funds that have been reported by Lipper-AMG, appears to have been stopped, according to the mutual fund manager.

This source reported seeing positive flows every day since last Thursday, which is the first day of Lipper-AMG's seven-day reporting period.

Monday's inflow was conspicuously big, the source said, adding that substantial inflows were also seen Wednesday.

Given the dramatic turnaround thus far in the June 14 week, a $300 million weekly inflow for the seven-day period concluding at Wednesday's close is not out of the question, the source added.

Lipper-AMG customarily reports the weekly funds flows numbers late on Thursday afternoons.

New TitleMax offering unseen in aftermarket

After TitleMax priced its upsized offering of 13¼% secured notes due 2015, several traders queried by Prospect News said that they had seen no sign of the new deal in the secondary market.

"Not a peep," declared one, who noted that at $250 million, "it was not that large a deal," suggesting that as a smaller offering it would get snapped up and put away.

A second trader agreed with that proposition, also noting that the deal had been brought to market by bookrunner Jefferies & Co. He said that it had been his experience that while "they do a good job, but you don't see [their deals] as often as you see a lot of other people's new issues."

Recent TransUnion continues climb

Among recently priced issues, a trader said that TransUnion Corp.'s 11 3/8% notes due 2018 got as good as 103½ bid in early trading, although he did not see the bonds after that.

In fact, a second trader said, "there really hasn't been a lot of trading in them for a couple of days." He pegged those bonds around where they had traded on Monday.

Still, the first trader concluded, "those have been very good."

The Chicago-based company - one of the "Big Three" of the consumer-credit reporting industry - priced its $645 million offering at par last Thursday. The new bonds shot up to 101¼ bid, 102 offered in initial aftermarket dealings later that same session, and continued to firm on Friday, heard going home at 101½ bid, 102¼ offered.

The bonds then resumed that firming trend during all of this week's sessions.

Market indicators rally rolls on

Back among bonds not related to the new deal realm, a trader saw the CDX North American HY Series 14 Index up by ¾ point on Wednesday to finish at 96¼ bid, 96½ offered, after having risen by a full point Tuesday, on top of Monday's 5/8 point gain.

The KDP High Yield Daily Index, meantime, rose by 24 basis points on Wednesday to end at 70.14, after having jumped by 45 bps on Tuesday. Its yield came in by 8 bps to 8.80%, after having narrowed by 16 bps on Tuesday.

Advancing issues beat decliners for a fourth straight session Wednesday, opening a nearly nine-to-five advantage, after having held an eight-to-five edge for two straight sessions.

Overall market activity, represented by dollar-volume levels, fell by 10% on Wednesday, after having zoomed by 47% on Tuesday, on top of Monday's 21% gain.

A trader said that the junk bond market showed "a firm tone, once again. There was definitely better buying interest."

He noted that "there was a big coupon payment made on [Tuesday] the 15th, a big coupon date. It definitely feels like a lot of money was put to work the last couple of days, there's been real buying across the board."

He saw names like Harrah's Operating Co. Inc. and MGM Mirage "up another point to two points today, in your go-go casino space."

He also said that "some of your lower-beta stuff did all right too," such as Community Health Systems Inc.'s 8 7/8% notes due 2015 "is probably back to 103-104 now," this after the Franklin, Tenn.-based hospital operator's bonds recently traded as low as a 101-102 context. "So even stuff that was not real high beta traded well."

He said with the overall market enjoying "a good tone, quite honestly, the only bond I could find that's down today is Ahern Rentals - and that's only on one trade, so it might be just an outlier." The Las Vegas-based equipment rental company's 9¼% notes due 2013 dropped by 1½ points to 37½ bid.

NewPage rebounds

A trader said NewPage Corp.'s bonds "seemed to be up.," quoting its 11 3/8% first-lien senior secured notes due 2014 bid at 92, calling that a gain of between 1 and 1½ points, and he saw the 10% second-lien secured notes due 2012 get as good as a 541/2-55 context, or up 2 points.

While trading was heavy on Tuesday - when the bonds retreated on the unexpected news of recently appointed CEO E. Thomas Curley's resignation from his post just four months into his tenure - on Wednesday, the trader said, there was "not a heck of a lot" of NewPage paper trading around. He estimated that about $10 million of the 10s traded and just $4 million of the 11 3/8s - versus estimated volume in the latter bonds on Tuesday of around $100 million.

"It looks like most of the action happened [Tuesday]."

CIT seen better

A trader saw gains across the board, in "very active" trading, in the bonds of New York-based commercial lender CIT Group Inc. He saw the bonds up between 1 and 2 points, with its 7% notes due 2017 at 92½ bid, 93 offered, and its 7% notes due 2016 at 93 bid, 94 offered.

The company's shortest issue, the 7% notes due 2013 ended at 96½ bid, 97½ offered.

However, another market source saw the CIT 2016 bonds down ¼ point at just under 93, while its 2017s lost 5/8 point. To end just over 92 bid. However, CIT's 2014 notes, also with a 7% coupon, were seen having firmed 2½ points on the day to 95 bid.

Gulf energy names seen mixed

A trader said that "you just have a lot of the Gulf names coming across, the BPs, the ATPs."

He said BP Capital Markets plc "has been very, very active," with total trading in the name on Wednesday of "close to $1 billion" - but he cautioned that "most of that activity is still taking place on the high-grade desks. You're just starting to see it a little more active on the junk desks, but the volume isn't anywhere near what it is on the high-grade side."

He said that "those bonds kind of came in, and after the whole little 'beer summit'" -he was referring to the four-hour White House meeting Wednesday between the president and administration officials on the one hand and BP's chairman, Carl-Henric Svanberg, and other executives from the oil company on the other, at which BP apologized and pledged to pay at least $20 billion into a fund to compensate people in the Gulf region for oil-related losses - "then they rebounded a little bit."

He saw BP's shorter paper up 1½ to 2½ points, helped by the news that Bill Gross, the manager of the PIMCO Total Return fund - the world's biggest bond fund - has been buying BP's one-year paper, accumulating about $100 million of the notes in order to reap yields as high as 10% to 11%.

"So that paper has rallied." He quoted BP bonds due in 2011 or 2012 as trading in the low 90s. He meantime saw BP's 2013 and 2014 bonds down anywhere from 1½ to 2 points, "all on $100 million to $200 million traded."

He said the 3 5/8% notes due 2014 were down 2 points at 84 bid, the 3 7/8% notes due 2015 were around 85, while the 4¾% notes due 2019 were around 85¼ bid.

He meantime saw ATP Oil & Gas' 11 7/8% second-lien senior secured notes due 2015 "doing pretty good," moving as high as 73-74, versus a 69-70 context at the close Tuesday, "so that's up a good 2 1/2, 3 points today."

At another desk, a trader said that "ATP bounced nicely" in gaining 3 points on the day. "It definitely had a good tone. The equity bounced nicely as well," with the Houston-based oil and gas exploration and production company's Nasdaq-traded shares gaining 99 cents, or 9.58% on the day to end at $11.32. Volume of 6.9 million shares was almost double the norm.

Another junk-rated energy E&P name, Mariner Energy Inc., was also seen moving around. "There were a lot of Mariner's 11¾% notes due 2016 trading today," a market source said, pegging the Houston-based company's bonds at 123¾ bid, 124¼ offered, on "pretty good volume."

He wondered whether there was any news out that might explain the sudden activity in the credit, whose bonds shot up to premium levels in mid-April after it announced that it would sell itself to Apache Corp. in a $2.7 billion deal. Like ATP, Mariner is seen as a company likely to be hurt by any federal tightening of deepwater drilling regulations, since it has extensive reserve holdings in the Gulf.

A trader saw Transocean Inc.'s mixed on "pretty good volume." He saw the Deepwater Horizon owner's 5¼% notes due 2013 up 2 points to close at 93½ bid, on volume of some $25 million.

He also saw its 6% notes due 2018 down a point at 87½ bid, while its 7 3/8% notes due 2018 lost 1½ points to end at 90 bid. Transocean's 6.80% bonds due 2038 were unchanged to down 1/8, trading at 87 bid.

OPTI Canada seen active

OPTI Canada Inc.'s bonds had "some activity" on Wednesday a trader said, a day after the company's chief executive officer reiterated at an investment conference the need for the Canadian energy company to do an asset sale or some other kind of strategic transaction in order to improve its balance sheet, currently groaning under a $2.2 billion debt load (see related story elsewhere in this issue).

A trader saw its 8¼% notes due 2015 down ¾ point from Tuesday's levels - though still up 2 points from a couple of days ago. He saw the bonds at 86½ bid. On Monday, he said, the bonds traded at 85¼ bid, and had been at 84½ last week.

In a presentation at the Canadian Association of Petroleum Producers' Oil and Gas Investment Symposium on Tuesday in Calgary, Alta., Christopher Slubicki, who also serves as the president of OPTI Canada, said that the crushing debt burden "is why we're in a strategic alternatives process," which began last November, and which is aimed at bringing down the company's total leverage and positioning it to move onto its Phase 2 development. He called dealing with that heavy debt "our Number One issue" at this point.

"We need to transact [a deal] in order to address our balance sheet. Whether it's an asset sale or a corporate sale, or anything else remains to be seen - but it's our intent to transact this year."

On Wednesday, the company - saying it was responding "to [media] comments erroneously attributed" to Slubicki, declared that its board of directors continues to move forward with its exploration of strategic alternatives, which it said "may include capital market opportunities, restructuring the current credit facility, asset divestitures, and/or a corporate sale, merger or other business combination." It also warned that it would not further disclose developments relating to its strategic alternatives review until the board has approved a definitive transaction or strategic option.

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