Resized CDW prices; Ameristar slates offering while existing bonds trade up; Fiat, Cemex price

By Paul Deckelman and Paul A. Harris

New York, March 29 - CDW Escrow Corp. priced a $725 million offering of eight-year notes on Tuesday, but not before high-yield syndicate sources first heard the deal had been radically downsized to $440 million from the $1.065 billion originally shopped around, only to be upsized later on.

The technology products and services provider's new issue came to market too late in the day for any kind of secondary trading.

The domestic junk bond market did see a new issue join the forward calendar, as Ameristar Casinos, Inc. began shopping around an $800 million offering as part of a broad refinancing effort that also includes a bank debt deal. Meanwhile, the gaming operator's existing 2014 notes being taken out via a tender funded from the deal proceeds were higher in heavy trading.

Away from those two names, primary-side activity was all non-U.S. originated, including the pricing of sizable deals from Italian carmaker Fiat SpA and Mexican building supplies provider Cemex SAB de CV as well as the slating of an offering by the South American unit of Greek shipping concern Navios South American Logistics Inc.

Apart from residual trading in recent new issues - last Thursday's NII Holdings, Inc. is still well bid for deal for instance - traders said that the secondary market remained quiet and featureless, with statistical measures seen pretty much unchanged to even off slightly.

In the primary markets, CDW returned to price its $725 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 8½%.

The reoffer price and coupon printed on top of the price talk.

The deal was upsized from the $440 million amount the company announced earlier on Tuesday, after having been decreased from the $1.065 billion amount, which the company postponed two weeks ago due to market conditions.

Prior to that postponement the notes were talked at 8½% area, so CDW's deal - albeit an ultimately downsized one - priced on Tuesday on top of the original price talk.

J.P. Morgan Securities LLC, Barclays Capital Inc., Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Morgan Stanley & Co. Inc. were the joint bookrunners.

The company plans to use the proceeds to fund the tender offers for its 11% notes due 2015 and its 11½% PIK toggle notes due 2015. The size of the tender offers will be decreased proportional to the ultimate downsizing of the notes issue to $725 million from $1.065 billion.

Fiat €1 billion drive-by

In Europe, Italy's Fiat priced a €1 billion issue of five-year senior notes (Ba1/BB/BB+) at par to yield 6 3/8%.

The yield printed at the tight end of the 6½% initial guidance.

Banca IMI, Barclays Capital, BNP Paribas, UniCredit and Credit Agricole CIB were the underwriters.

Navios roadshow

Navios will commence investor roadshows on Thursday for its $185 million offering of eight-year senior notes.

The Rule 144A with registration rights deal, which be marketed to both high-yield and emerging markets accounts, is expected to price on April 5 or April 6.

Merrill Lynch and J.P. Morgan Securities LLC are the joint bookrunners.

Proceeds will be used to repay debt, purchase barges and pushboats and for general corporate purposes.

The notes, which will be issued by the company in conjunction with special purpose vehicle Navios Logistics Finance (US) Inc., are expected to garner single B credit ratings.

The issuer is a barge and upriver port logistics concern with operations in South America. It was formed when Navios Maritime Holdings, Inc. acquired the operations from Horamar Group in early 2008.

Navios Maritime has headquarters in Piraeus, Greece.

Elsewhere in the realm of high-yield emerging markets corporates, Mexico's Cemex priced an $800 million issue of Libor plus 525 basis points floating-rate notes due Sept. 30, 2015 (/B/B+) at 99.001 on Tuesday.

Merrill Lynch, J.P. Morgan Securities LLC and RBS Securities, Inc. were the bookrunners for the quick-to-market debt refinancing issue.

And China's Fufeng Group Ltd. began roadshowing a dollar-denominated offering of five-year notes (expected ratings /BB/BB) via Citigroup and Deutsche Bank.

Verisk split-rated deal

Finally from the crossover space, Verisk Analytics, Inc. is planning a $350 million offering of 10-year split-rated senior notes (Ba1/BBB-/) on Wednesday via J.P. Morgan Securities LLC and Merrill Lynch.

Guidance is due out early Wednesday morning, a syndicate source said.

The Jersey City financial services company plans to use the proceeds for general corporate purposes, including debt repayment and/or acquisitions.

Inkia seen around

With so little going on for much of the day in the domestic high-yield primary market, some traders were even dipping into emerging markets territory and quoting the new deal of Peru-based power plant operator Inkia Energy, Ltd.

One trader said he saw a market in the company's 8 3/8% notes due 2021 at 99 7/8 bid, 101 1/8 offered versus the 99.169 level at which the $300 million offering priced.

Existing Ameristar gains

The news that Ameristar is doing a new deal and that the proceeds will be used to take out the Las Vegas-based gaming company's $650 million of 9¼% notes due 2014 helped to push the latter bonds up in solid-sized trading of nearly $25 million, making those bonds one of the busiest issues of the day in Junkbondland.

A trader saw the bonds moving up to 110 1/8 bid, which he called up 1½ points.

"That's pretty much trading whatever you want to call it - yield to call, yield to takeout, yield to tender," he said.

A second trader called the Ameristar paper "one of the big traders on the day," seeing the bonds having risen to the 110 1/8 bid level at which they will be taken out from 109½ bid earlier in the day before the company's announcement of its tender offer.

New NII bonds remain busy

Another busy issue on Tuesday - $20 million traded - was NII Holdings' new 7 5/8% notes due 2021.

The Reston, Va.-based provider of Sprint Nextel-branded wireless service to customers in Mexico and elsewhere in Latin America priced $750 million of the new bonds at par on Thursday, up from the originally announced $500 million.

That drive-by deal then proceeded to firm smartly in Friday's dealings, to about the 102 bid level. In Tuesday's action, a trader saw the bonds around 102½ bid, which he called a gain of around ¾ of a point on the session.

The new Nextels, as another trader called the bonds, were "trading a lot" on Tuesday, as had been the case on Monday when another roughly $20 million had changed hands, again placing the issue among the big junk traders.

"It's been pretty active since it came," he said, seeing the bonds on Tuesday at 101 7/8 bid, 102¼ offered.

Plains bonds stay near issue

A trader said that the new Plains Exploration and Production Co. 6 5/8% notes due 2021 were "still mildly active," trading in the 100 1/8 bid, 100 3/8 offered area, which he called unchanged to "a tiny bit softer."

The Houston-based oil and gas operator priced $600 million of those bonds, radically upsized from the originally announced $300 million amount, at par on Thursday in a drive-by deal. After that pricing, they were initially heard to have firmed to around 100 3/8 bid, 101 offered in the aftermarket, but then gradually came in to settle around current levels just a bit above issue.

Recent MEG Energy better

A trader said that MEG Energy Corp.'s 6½% notes due 2020 were trading around on Tuesday in a 101½ bid, 102 offered context.

The Calgary, Alta.-based oil-sands energy company's $750 million issue, upsized from the originally announced $500 million, priced at par on March 14 and then dropped from sight within a session or two.

Secondary indicators mixed

Away from the new deal world, a trader saw the newly rolled CDX North American Series 16 HY index up 1/8 of a point on Tuesday at 102 1/8 bid, 102¼ offered versus the unchanged reading the previous day, the first day of trading for the new series.

The KDP High Yield Daily Index meantime was down by 1 basis point on Tuesday to end at 75.65, after having been unchanged on Monday. Its yield was unchanged for a second consecutive session, at 6.73%.

The Merrill Lynch High Yield Master II index finally retreated Tuesday after nine straight sessions on the upside, easing by 0.011%, in contrast to Monday's 0.07% gain. That left its year-to-date return at 3.758%, down from Monday's 3.77%, the new peak level for 2011.

Declining issues pushed ahead of advancers on Tuesday for the first time after three straight sessions during which the upside movers had led. As had been the case in each of the previous three sessions, the winning margin was very thin. In this case, it came in at fewer than a dozen issues out of the more than 1,400 tracked.

Overall market activity, as measured by dollar-volume levels, rose by 34% on Tuesday, after having fallen by 16% on Monday from the prior session's levels.

A trader said that there was "not a whole heck of a lot going on" in Tuesday's dealings with no domestic deals having priced up to that point. The CDW offering would not finally appear until much later.

He said that there was no shortage of rationalizations people might cite to justify not trading.

"We're sitting here watching the radiation story, the earthquake story and it's spin the wheel - what country in the Middle East is falling today?"

He added that "it makes you wonder - the market is not really reacting to this stuff now," but it's there as a convenient excuse not to do anything.

On top of that, he said, "throw in basketball" with the televised college bracket having been whittled down to the fabled Final Four, including this year's sentimental favorite, the unexpected underdog giant-killer Virginia Commonwealth University.

"And month's end and quarter's end [...] and spring break." He jokingly even suggested that "people are still hung over from St. Patrick's Day," which was about two weeks ago.

A trader at another shop suggested that another thing stalling activity might be that "people are still spooked by the outflow number" reported on Thursday, when Lipper/FMI's AMG analytical services unit said that some $2.8 billion more left high-yield mutual funds in the week ended Wednesday - the largest outflow ever reported.

The figure came under attack from market participants, and even though the agency later put out a sharply downsized outflow figure - sources told Prospect News it was in the $677 million range - people were still not happy about that, saying a big outflow number just did not add up.

"Last week, things seemed a little heavy," one trader said, "but there was no sell-off. We didn't have people calling us up, looking to raise cash [by selling holdings]. There were no major sell-offs in anything."

Direct Buy trades busily

Reaching down into the depths of the distressed market to find something to talk about, a trader said that Direct Buy Holdings' 12% notes due 2017 "had some activity." He saw the bonds ending in a 76-77½ context on "a lot of quoting and activity today."

He said that the bonds of the Merrillville, Ind.-based home improvement and furnishings club "bounced around there," at levels between "76 and 78, 75 and 77, 75½ and 761/2, so a lot of activity, bouncing around, but it's virtually unchanged on the day."

A second trader, pegging the bonds at 76 bid, 76¾ offered, called that "the tightest market we've seen in a while."

Earlier in the month, that paper was savagely beaten down by investors to levels as low as the 60s from previous levels in the lower 90s following a conference call during which disappointing numbers were unveiled, along with the news of the abrupt exit of the company's chief financial officer.

Rite Aid retreats

Rite Aid Corp. bonds were mostly weaker ahead of a monthly sales report expected later this week and quarterly results expected next week.

A trader said the 7½% notes due 2017 were the day's "most active," calling them "relatively unchanged" around par.

However, the Camp Hill, Pa.-based drugstore chain operator's 9 3/8% notes due 2015 were slightly softer, bracketing 91, while the 9½% notes due 2017 fell a point to 883/4.

Another market source pegged the 8 5/8% notes due 2015 at 91 bid, down a point.

TXU paper seen active

A trader said that Energy Future Holdings Corp. - the Dallas-based utility company and merchant power operator formerly known as TXU Corp. - "was an active name today."

He said that it was "definitely widely quoted," seeing the TXU unit Texas Competitive Electric Holdings Co. LLC's 10¼% notes due 2015 ended at 57¼ bid, 58¼ offered, which he called a gain of 1½ points.

"That was the one that seemed to move the most," he pointed out. The company's other issues, however, were less traded and did not move. He said that EFHC's 6½% bonds due 20224 ended around 46, while its 10 7/8% notes due 2017 were unchanged around an 821/2-83 context, "so for whatever the reason, those 101/4s moved around a lot."

Also among the power names, a trader saw Dynegy Holdings 7¾% notes due 2019 ending around 77 bid, which he called unchanged, though on "moderate activity."

Auto names spin wheels

In the autosphere, a trader said that Motors Liquidation Co.'s benchmark 8 3/8% bonds due 2033 were "pretty much unchanged on not much volume at all, none to really speak of," locating the bonds at 29 bid, 29½ offered.

A second trader saw the bonds - issued when the company was still known as General Motors Corp., before its 2009 Chapter 11 reorganization and subsequent renaming - down 3/8 of a point at 29 bid, 30 offered.

He meantime saw GM domestic arch rival Ford Motor Co.'s 7.45% bonds due 2031 down ¾ of a point on the day at 107 bid, 108 offered.

Stephanie N. Rotondo contributed to this report

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