JohnsonDiversey, Alliance Healthcare price, market awaits Cloud Peak, Easton-Bell; funds add $360 million

By Paul Deckelman and Paul A. Harris

New York, Nov. 19 - JohnsonDiversey, Inc. and Alliance Healthcare Services Inc. came to market on Thursday with a pair of offerings valued at $590 million, high yield syndicate sources said. In trading, the new JohnsonDiversey issue was seen to have firmed a little to above the par level, while the downsized Alliance deal came too late in the session for any kind of aftermarket activity.

Meanwhile, Wednesday's $1.6 billion offering from Clearwire Communications LLC/Clearwire Finance Inc. was being quoted up solidly from the level at which the mega-deal had priced.

Traders said that generally new-issue paper was better, including such recently priced names as Antero Resources Finance Corp., TRW Automotive Inc. and Landry's Restaurants, Inc.

Primaryside players were getting ready to finish out the week with several pricings Friday, among them Cloud Peak Energy Resources LLC/Cloud Peak Energy Finance Corp. and Easton-Bell Sports Inc. Both companies circulated price talk on Thursday and both offerings were heard to have now been modestly restructured from their original state - Cloud Peak extending the maturity of one of its deal's two tranches by one year, to eight years, rather than seven, while Easton-Bell tinkered with the call-protection schedule for its seven-year secured notes transaction.

Pittsburgh-based chemical producer Koppers Inc. - which did not alter any of its previously announced deal terms on Thursday - is also expected to price a bond offering, for $300 million of 10-year senior notes, during Friday's session.

Away from the new-deal arena, there was brisk activity in Qwest Corp.'s bonds, although traders saw no news out about the Denver-based telecommunications company that might explain the activity.

Junk funds up $360 million

And as trading was winding down for the day, market participants familiar with the high yield mutual fund-flow statistics generated by AMG Data Services of Arcata, Calif. - a key barometer of overall market liquidity trends - said that in the week ended Wednesday, $359.6 million more came into the weekly-reporting funds than left them.

It was the 13th consecutive advance, and followed the $346 million cash inflow seen in the previous week, ended Wednesday, Nov. 11. It was also the 20th week in the last 21 in which inflows were seen, dating back to mid-June. Some $7.129 billion of net inflows have been seen during that stretch, according to a Prospect News analysis of the AMG figures, interrupted only by a lonely $89.9 million outflow recorded in the week ended Aug. 19.

Counting the latest week's number, the year-to-date net inflow for the weekly-reporting funds rose to $18.715 billion, according to the analysis - a new peak level for the year so far, eclipsing the old mark of $18.355 billion recorded the previous week.

With 2009's fourth and final quarter now about half-way done, inflows, including the latest weekly gain, have been seen in 41 weeks out of the 46 since the start of the year, according to the analysis, against just five outflows - the Aug. 19 retreat, a $110 million outflow in the week ended June 24, and three weeks of outflows in late February and early March, totaling $969 million. The inflows, on the other hand, include an incredible 14-week run of consecutive gains, dating from mid-March through mid-June, during which time the funds grew by a record $9.1 billion. Including another category of funds - those which report on a monthly basis, rather than weekly - aggregate inflows for the year so far have mounted to $28 billion.

Such sustained inflows have helped the junk market come roaring back from last year's staggering 25%-plus loss and sharply reduced primary activity totals. Total returns so far this year totaled an eye-popping 52.481% as of Wednesday's close, according to the authoritative Merrill Lynch High Yield Master II index, a new peak level for 2009, handily beating virtually every other major investment asset class. Meanwhile, the $137.479 billion of new high yield debt issued so far this year globally, as of Wednesday's close -- $112.067 billion of it domestic - is running some 91.3% ahead of the feeble pace of last year's global primary tally. Domestic new issuance is 89.1% ahead of its year-ago levels.

Most of the debt-side asset classes saw inflows during the most recent week, a sell-sider noted.

The sole exception was the bank loan sector, which, although essentially flat, saw $29.8 million of outflows for the most recent week, trimming year-to-date flows to bank loan funds to $2.9 billion.

EPFR sees inflows resume

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, which uses a different methodology, calculated a $744 million inflow on the week, extending the trend seen the previous week, ended Nov. 11, when it had reported a $200.8 million gain. The latest week's cash infusion was the biggest in 14 weeks, the service said, "as the prospect of low interest rates in the U.S. and Europe well into next year increased investor comfort with this asset class."

The latest inflow brought the year-to-date cumulative total up to $21.73 billion - its peak level for 2009 so far - versus about $21 billion even the week before, EPFR said.

While the EPFR junk figures most weeks point essentially in the same direction as AMG's, the precise weekly and year-to-date numbers almost always differ somewhat due to EPFR's inclusion of some non-U.S. funds in its universe. Any and all cumulative fund-flow totals, whether for AMG or EPFR, can include unannounced revisions and adjustments to figures from prior weeks.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they comprise less of the total monies floating around the high yield universe.

New deal activity eases

The primary market's news flow moderated somewhat on Thursday, with just two issuers pricing single-tranche deals for a combined face amount of $590 million.

The primary market is apt to start to quiet down ahead of next week's four-day Thanksgiving holiday weekend in the United States, a syndicate banker advised.

However December will see the primary market ramp right back up, the banker added.

"People are going to keep doing deals for as long as they can," the sell-sider said.

JohnsonDiversey prices tight to talk

On Thursday JohnsonDiversey, Inc. priced a $400 million issue of 8¼% 10-year senior unsecured notes (B3/B-) at 99.17 to yield 8 3/8%.

The yield printed at the tight end of the 8½% area price talk.

Goldman Sachs & Co. was the left lead bookrunner. Citigroup Global Markets Inc., Barclays Capital Inc., HSBC Securities and J.P. Morgan Securities Inc. were joint bookrunners.

Proceeds, together with new credit facilities, will be used to fund recapitalization transactions, including the repurchase or redemption of its outstanding senior subordinated notes, and to repay existing credit facilities.

Alliance Healthcare downsizes

Elsewhere Alliance Healthcare Services, Inc. priced a downsized $190 million issue of 8% seven-year senior notes (B3/B) at 98.69 to yield 8¼% on Thursday.

The yield printed on top of price talk.

Deutsche Bank Securities Inc., Barclays Capital Inc. and Morgan Stanley & Co. were the underwriters for the debt refinancing deal.

Koppers 'food fight' expected

One investor admitted to sitting out Thursday's deals in order to save cash for the Koppers Inc./Koppers Holdings Inc.'s $300 million offering of 10-year senior notes (B1/B), which is set to price on Friday.

The deal is apt to be a "food fight," advised the buy-and-hold buy-sider.

The notes were talked at the 8¼% area on Wednesday.

Goldman Sachs & Co., Bank of America Merrill Lynch, RBS Securities Inc. and UBS Investment Bank are joint bookrunners for the debt refinancing and general corporate purposes deal.

Cloud Peak restructures, sets talk

On Thursday Cloud Peak Energy Resources LLC and Cloud Peak Energy Finance Corp. set price talk for their $600 million restructured two-part offering of senior unsecured notes (/BB-/).

The restructured tranche of eight-year notes is talked at 8¼% to 8½%, including about 1 point of original issue discount.

The eight-year notes come with four years of call protection.

Previously the tranche had been structured with a seven-year tenor.

Meanwhile the 10-year notes tranche is talked at 8½% to 8¾%, also including about 1 point of original issue discount.

The 10-year notes come with five years of call protection.

Pricing is set for Friday morning.

Morgan Stanley & Co., Credit Suisse Securities and RBC Capital Markets Corp. are joint bookrunners.

Proceeds will be used to pay a distribution to Rio Tinto Energy America Inc., for general corporate purposes, including cash reserves for securing reclamation obligations, and for capital expenditures.

Easton-Bell talks restructured deal

Also setting talk for a restructured deal was Easton-Bell Inc.

Talk for its restructured $325 million offering of seven-year senior secured notes (B3//) was set at 10% to 10¼% on Thursday.

The notes are expected to price with 1 to 2 points of original issue discount.

Call protection has been decreased by one year. The notes will be callable in three years at par plus three-quarters of the coupon. Prior to the restructuring the notes were non-callable for four years.

Pricing is set for Friday morning.

J.P. Morgan Securities Inc. and Wells Fargo Securities are joint bookrunners for the debt refinancing deal.

Clearwire plays to high-yield crowd

Finally, Wednesday's massive Clearwire Communications LLC $1.6 billion issue of 12% six-year senior secured notes (B3/B+), which priced at 97.921 to yield 12½%, represented the first real high-yield deal that the Kirkland, Wash.-based wireless broadband services provider has done, according to a source close to the transaction.

"The company has been positioned toward the hedge funds and credit opportunity funds, historically," the banker said.

"They have always done big loan deals in the past.

"This one played to real high-yield guys, and it has been trading well."

The new Clearwire 12% notes due 2015 traded at 99 3/8 bid, on Thursday morning, up about 1 3/8 points from the issue price, the sell-sider said.

JohnsonDiversey jumps

When the new JohnsonDiversey 8 ¼% notes due 2014 were freed for secondary dealings, a trader saw the Sturtevant, Wis.-based commercial cleaning, sanitation and hygiene services provider's $400 million offering having gotten as good as 100½ bid, 100¾ offered - up more than a point from the 99.17 level at which it had priced earlier in the session. The new bonds held that higher level "all day," he said.

A second trader pegged the bonds at 100 bid, 101 offered.

Yet another market participant, though, saw them more in a 99 3/8-99 7/8 area, up only marginally from their issue price.

The new Alliance Healthcare Services issues, meantime, priced too late in the day for any kind of aftermarket activity.

Clearwire deal climbing

A trader saw Clearwire Communications' 12% senior secured notes due 2015 having moved up to 99½ bid, 99¾ offered on Thursday - well up from 97.921, where the massive deal - upsized from the originally announced $1.45 billion amount - priced late Wednesday to yield 12½%, "so they had a nice pop."

He said that the bonds "looked like they were fairly active." It was $1.6 billion in size, "so that was a pretty nice deal," he said.

At another desk, a trader saw the Kirkland, Wash.-based wireless broadband services provider's new bonds at 99¼ bid, 99¾ offered.

A trader at another shop said that early in the session, he had seen the bonds at 99¼ locked, but then they were trading around at a 99-99 3/8 context. "We didn't see anything after that initial flurry first thing this morning."

Commenting on the fact that the issue was relatively inactive despite its great size and liquidity, he said that "we're getting pretty good flow on all the names - but sometimes, the underwriter does a pretty good job of keeping everything in house."

Cascades offering on upside

A trader said that Cascades Inc.'s 7¾% U.S. dollar-denominated notes due 2017 were trading around 99½ bid in morning dealings, "and they held up," although he later saw the Kingsley Falls, Que.-based paper, packaging and wood products company's new deal in a 99-99¼ neighborhood.

"They didn't see much action," he said of the $500 million offering - upsized from the originally announced $300 million - which priced on Wednesday at 98.534 to yield 8%.

There meantime was no trace of the Canadian-dollar tranche of that two-part offering, which also priced on Wednesday.

TRW parked around issue price...

A trader said that TRW Automotive Inc.'s 8 7/8% notes due 2017 were mostly seen trading between 99 and 991/2; the Livonia, Mich.-based automotive components supplier priced its $250 million offering of those bonds on Wednesday at 99.292 to yield 9%. They priced too late that session for any kind of an aftermarket.

At another desk, a trader termed the credit's movements "interesting." He said that early in Thursday's dealings, "we saw them at 99 1/8-5/8 - and then literally, within 30 seconds, somebody came in and hit that 99 1/8 bid."

And that, he continued "was the last I saw of that."

...as is Graham Packaging

Also seen pretty much hanging around the same level at which they had priced previously were Graham Packaging Co. LP's 8¼% notes due 2017. A trader saw the bonds trading in a 98 3/8-98 5/8 context, just slightly below the 98.667 level at which the York, Pa.-based plastic packaging maker had priced the $253.4 million issue, slightly upsized from $250 million originally, on Wednesday, to yield 8½%.

A second trader saw the bonds get as tight as 98 3/8 bid, 98 5/8 offered, before going out at 98¼ bid, 98¾ offered.

"We never saw them get above their offering price."

Stonemor quoted higher

A trader saw Wednesday's smallest deal - Bristol, Pa.-deathcare concern Stonemor Operating LLC's 10¼% notes due 2017 - quoted at "a wide market" level of 98½ - 993/4. The bonds, he said, "never really tightened up to where it might trade, so I'm not sure what the real market is on that one."

Stonemor priced its $150 million of the bonds on Wednesday at 97.352 to yield 10¾%. The bonds had been seen late Wednesday bid at 981/2, though with no offer levels seen.

Antero holds above par...

A trader saw Antero Resources' 9 3/8% notes due 2017 get as good as 100½ bid, before going out at 100¼ bid, 101 offered .

The Denver-based independent oil and gas exploration and production company had priced its $375 million offering of those bonds - upsized from the originally announced $300 million and later, from the interim size of $350 million - last Thursday at 99.299, to yield 9½%.

...as does Landry's Restaurants

One of the traders saw Landry's Restaurants' 11 5/8% senior secured notes due 2015 at 101¼ bid, 102¼ offered, observing that "they kind of stayed up - I'm not really seeing anything trading, per se - but they're holding their own."

He noted that was in contrast with "some of these other issues that just price - and then it's 'get out of the way'."

On Tuesday, the Houston-based restaurant and gaming company priced its $406 million of the notes, upsized from the originally announced $390 million, at 98.427 to yield 12%. The new bonds jumped above the 101 bid mark in initial aftermarket trading that session, and have hung in at those higher levels ever since.

Market indicators mostly positive

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ¼ point on Thursday at 93¼ bid, 93¾ offered, after having been unchanged on Wednesday.

However, the KDP High Yield Daily Index was up 6 basis points on Thursday at 69.71, after having been unchanged during Wednesday's dealings. Its yield meantime narrowed by 1 bp on Thursday to 8.54%, after having come in by 7 bps the previous session.

In the broader market, advancing issues led decliners for a sixth consecutive session on Thursday, although their advantage narrowed to around an 8-to-7 margin, versus a 3-to-2 bulge seen on Wednesday.

Overall market activity, as measured by dollar-volume, plunged some 58% from Wednesday's pace.

A trader said that "all the new issues traded better today - but the rest of the market seemed like it was more down than up, even though we got some decent inflows in." He further characterized the market as "very confusing."

"It felt weaker," he said - "but some stuff did trade up. Certainly the new issues did - they were priced to sell."

Qwest volume is best

The trader said that Qwest Communications' short paper - its 7 7/8% notes due 2011 and its 8 7/8% notes due 2012 - was "very active," even though he noted that there was no fresh news out about the company that might explain investors' sudden interest in the paper. An estimated $40 million of the 2011 bonds and $35 million of the 2012s changed hands on Thursday, making those particular credits the top finishers among the most active issues, a market source said.

The trader theorized that the sharp rise in Quest activity may have been connected with the massive Clearwire deal which had priced during Wednesday's session. "Maybe holders of that bond bought Clearwire deal."

Another trader also thought that "people could be swapping out of positions" in Qwest "to make room for something else in that sector, as they rebalance their portfolios."

He saw the 7 7/8% notes due 2011 trading between 103 5/8 and 1041/4, which he called "maybe up 1/8 or ¼ point from the last couple of days," since the bonds had been ":trading pretty much in that range, give or take 1/8 or ¼ point, all week. It's just that you had a large amount of volume today."

He saw the 2012 bonds trading in a 1053/4-106 1/8 context , also "pretty much where they've been all week."

He said the '12s in particular have "had a lot of volume all week," including $30 million or so traded on Tuesday.

Aside from Qwest, he said, "there was nothing else that was really jumping out, nothing too exciting."

Bon-Ton better on lower loss

But Here and there, some movement was seen. A trader described Bon-Ton Department Stores Inc.'s 10¼% notes due 2014 were "something that moved up and [then] went down." He said the notes had "went on a round trip," getting up to 93 on "good-sized volume," and then ended around 921/2-93.

He noted, though that those levels were well up from where the bonds had traded previously, saying they had been "points lower than that" on Wednesday, closing in the high 80s, estimating that the bonds rose about 2½ points on Thursday," given a solid boost by the York, Pa.-based retailer's narrower third-quarter loss versus a year ago, as well as its projection for a smaller loss for the full year than it had previously predicted.

Bon-Ton said that its third-quarter net loss was $4.2 million, or 24 cents a share, versus a loss of $14.3 million, or 85 cents a share, a year ago.

It also projected a full-year a loss of $1.20 to $2.30 a share for 2009, versus its earlier projection, made a month ago, of between $2.50 and $3.70 per share of red ink.

CIT gains as holders back plan

From deep in the distressed-debt world, CIT Group Inc.'s bonds were higher, with its CIT Group Funding Corp. of Canada's 4.65% notes due 2010 up a point. A trader said that he wasn't sure why the credit was up, although the parent company did announce that it had gotten "substantially in excess" of the minimum support needed for its pre-packaged Chapter 11 plan from all classes of bondholders eligible to vote on it.

Another trader said that most of the CIT bonds "were just quoted higher," at 70-72, adding that he did not know how much actual trading had taken place, but reiterating that "they definitely quoted higher" by 1 to 1½ points.

He meantime said the 4.65% bonds of the former Canadian funding unit - now a re-named Delaware-domiciled subsidiary of the bankrupt New York-based commercial lender - were around a point higher in a 971/2-97¾ context.

"So the Canadians were up, and all the CITs were up. Some traded up - there were a lot of trades in those [4.65% bonds], and some were just quoted up."

GGP gains on lender accord

A trader said that General Growth Properties Inc.'s bonds, issued by its Rouse Co. unit, were mostly in the 90s, helped by the news that the bankrupt Chicago-based shopping center REIT had reached agreements with its lenders on restructuring about $9 billion in debt, which will let 170 of its corporate entities emerge from bankruptcy protection by the end of the year.

He saw the Rouse 5 3/8% notes due 2013 move up a point to 96 bid, on "some trading there," and said that "a lot" of its 7.20% notes due 2012 had traded at 99 to 991/2, which he called "up a couple of points from this morning," when the bonds started at 971/2.

He further saw the company's 8% notes that were supposed to have matured and been paid off back on April 30, trading at par, "also on good volume, up a couple of points."

Blockbuster blunders around

A trader said that that it looked like Blockbuster Inc. "traded up a little bit off the lows," with the Dallas-based movie-rental company's 9% notes due 2012 reaching 50 bid, up from prior levels in the mid-to-high 40s. "They drifted up all day," he said.

A second trader characterized the Blockbuster notes as having "moved up and down," on "a lot of volume," but no real news about the company. He saw most of the day's trades taking place between 49 and 50, "where most of the volume happened," with the bonds up 3 points on the session.

He saw the company's 11¾% senior secured notes due 2014 - some $675 million of which had priced on Sept. 17 at 94, to yield 15.21% -- at 93-94, although he didn't know how active they were or how that range compares with where the notes were on Wednesday.

Yet another trader said that the 9% notes "seemed to be kind of active," with about $12 million having changed hands on the session. He saw the bonds up a point in a context of 491/4-501/4. There was "a lot of volume, most of the trading," taking place right around 49¾ bid."

But at a different desk, a market source pegged the 9s more than 2 points higher at 51½ bid.

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