Regency drive-by prices, rises; GM, WCA slate deals; Eagle Rock awaited; new Chrysler bonds off

By Paul Deckelman and Paul A. Harris

New York, May 23 - The high-yield primary market started off the new week at a little more of a relaxed pace than Friday's action-packed session, which saw over $2 billion of new paper price to top off one of the busiest weeks this year in Junkbondland.

Regency Energy Partners LP priced a quickly shopped $500 million issue of 10-year notes. When the natural gas company's new issue was freed for secondary dealings, the bonds firmed modestly.

There was also a $60 million add-on offering from Norcroft Cabinetry, also a drive-by. Traders did not see an aftermarket in the smallish deal.

British issuers House of Fraser (Funding) plc, an arm of the retailer, and gaming operator Gala Coral Group, Ltd. weighed in with a pair of sterling-denominated bond sales, the latter a two-part transaction combining senior secured and unsecured notes.

The forward calendar grew with the addition of prospective deals from General Motors Finance Co. Inc., WCA Waste Corp. and French electrical products manufacturer Rexel SA, the latter a euro-denominated deal.

Meanwhile, price talk was heard on Eagle Rock Energy Partners LP's eight-year deal, which could price as soon as Tuesday after an early afternoon closing of the order books.

Recently priced deals were mostly seen a little softer than the levels at which they had already been trading. Several traders saw last week's huge two-part deal from Chrysler Group LLC as having given up the modest gains both tranches of the carmaker's new bonds had notched when they began trading on Friday, easing to around or slightly under par.

Traders saw the overall market down a half-point to 1 full point, with statistical performance measures reflecting that. While much of the trading was either in new issues or in higher-rated "crossover" paper, the purely junk NewPage Corp. remained an active issue.

Regency drives by

Executions in the high-yield primary tended to come a bit wider than has been the custom in recent weeks.

Of a combined five tranches, two came in the middle of price talk, two came at the wide end of price talk and one came well wide of talk.

In the dollar-denominated market, which saw just $560 million of issuance in two tranches, Regency Energy Partners and Regency Energy Finance Corp. priced a $500 million issue of 10-year senior notes (B1/BB-) at par to yield 6½%.

The yield printed at the wide end of price talk, which had been set in the 6 3/8% area.

Morgan Stanley & Co. Inc., RBS Securities Inc., Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC were the joint bookrunners for the quick-to-market bank debt refinancing deal.

Norcraft taps 10½% notes

Meanwhile Norcraft Cos., LP and Norcraft Finance Corp. priced a $60 million add-on to their 10½% senior secured second lien notes due Dec. 15, 2015 (B3/B-) at 104 to yield 9.397%.

The reoffer price came on top of the price talk.

UBS Investment Bank ran the books for the quick-to-market debt refinancing deal.

Norcraft realized substantial interest saving with the add-on notes that priced to yield 1.48% less than the original $180 million issue, which had priced at 98.37 to yield 10 7/8% on Dec. 2, 2009.

Gala wraps downsized bonds

The sterling-denominated high-yield saw a burst of activity on Monday with two issuers pricing a combined three tranches totaling a face amount of £875 million.

England's Gala Coral priced a downsized £625 million two-part high-yield deal. It included an upsized £350 million tranche of senior secured notes due Sept. 1, 2018 (B2/B+/BB-), which priced at par to yield 8 7/8%.

The secured notes tranche was upsized from £250 million. The yield printed at the wide end of price talk, which had been set in the 8¾% area.

In addition, Gala Coral priced a downsized £275 million tranche of 11½% eight-year senior unsecured notes (Caa2/CCC+/CCC) at 97.468 to yield 12%.

The tranche was downsized from £400 million. The yield printed 37.5 bps beyond the wide end of price talk, which had been set in the 11½% area.

Credit Suisse AG and Barclays plc were the global coordinators among a syndicate of banks that included Deutsche Bank AG, Goldman Sachs International, Morgan Stanley and HSBC.

The overall size of the bond transaction was decreased from £650 million, while the term loan B was upsized to £825 million from £800 million.

The Nottingham, England-based gaming and off-track betting company plans to use the proceeds to repay its senior secured bank loans.

House of Fraser £250 million

Meanwhile England's House of Fraser priced a £250 million issue of 8 7/8% senior secured notes due Aug. 15, 2018 (expected ratings B2/B+) at 99.9458 to yield 8 7/8%.

The yield printed in the middle of the 8¾% to 9% price talk.

Deutsche Bank AG and Barclays were the global coordinators and joint bookrunners. HSBC and Lloyds TSB were joint bookrunners.

The London-based department store group plans to use the proceeds to refinance bank debt and for general corporate purposes.

General Motors roadshow

Heading into three-day holiday weekends in the United States and England, primary market activity could slow somewhat, according to syndicate bankers on both sides of the Atlantic.

Nevertheless, at Monday's close, the calendar contained $3.37 billion and €800 million of business expected to price before Friday's close.

And during the Monday session, the calendar continued to build.

General Motors Finance started a roadshow on Monday for its $500 million offering of non-callable seven-year senior notes.

J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. are the joint physical bookrunners for the general corporate purposes and debt refinancing deal.

WCA Waste eight-year deal

Elsewhere, WCA Waste started a roadshow on Monday for its $175 million offering of eight-year senior notes, which are set to price on Thursday.

Credit Suisse Securities (USA) LLC is the bookrunner for the debt refinancing deal.

Rexel launches €500 million

Paris-based electrical equipment company Rexel began a brief roadshow for its €500 million offering of seven-year senior notes (//BB-).

The deal is expected to price on Tuesday or Wednesday.

BNP Paribas, HSBC and SG CIB are the joint global coordinators and joint bookrunners for the private offering. Credit Agricole CIB, ING and Natixis Bleichroeder are joint bookrunners.

The company plans to use the proceeds to enhance its financial flexibility and extend its debt maturity profile.

Eagle Rock talks eight-years

Finally, Eagle Rock Energy Partners talked its $300 million offering of eight-year senior notes (B3/B-/) with an 8¼% to 8½% yield on Monday.

The order books close at 1 p.m. ET on Tuesday.

Wells Fargo Securities LLC is the left bookrunner. Bank of America Merrill Lynch, BNP Paribas and RBS Securities Inc. are the joint bookrunners.

New Regency bonds rise

When Regency Energy Partners' new 10-year notes were freed for secondary dealings, a trader saw the Dallas-based midstream natural gas company's new issue at 100 3/8 bid, 100 5/8 offered.

That was up from the par price at which the $500 million deal had come to market.

Traders, meantime, saw no dealings in the new Norcroft Finance Corp. add-on to its 2015 secured bonds, owing to its relatively small size at $60 million.

They also did not see any dealings in the Eagan, Minn.-based kitchen and bathroom cabinet-maker's existing 2015 bonds.

JBS trades near issue price

Looking at the deals priced on Friday, a trader said that JBS USA, LLC's 7¼% notes due 2021 were "up a little [versus their issue price], but not much."

He quoted the bonds at 98½ bid, 98¾ offered versus the 98.26 level at which the Greely, Colo.-based meat processing company had priced its $650 million offering to yield 7½%.

That deal had come to market too late in the session on Friday for any kind of aftermarket at that time.

A second trader said that he "did see JBS once or twice" and also pegged the new bonds at 981/2bid, 98¾ offered.

JBS USA, the domestic arm of Brazilian meat-packing giant JBS SA, priced its deal on Friday after downsizing the offering from the originally planned $1 billion and restructuring it to eliminate a proposed tranche of eight-year notes.

Connacher comes down

Traders saw both tranches of Friday's biggest deal, the $911 million-equivalent U.S.- and Canadian-dollar-denominated offering of second-lien senior secured bonds from Connacher Oil & Gas Ltd. having eased slightly from the par levels at which both halves of the Calgary, Alta.-based energy exploration and production company's transaction had priced.

One trader had heard the $550 million of U.S. dollar-denominated 8½% notes due 2019 offered at par, with no bid side seen. He did not see any levels in the C$350 million of 8¾% notes due 2018.

At another desk, a trader saw the U.S. dollar notes at 99½ bid, par offered, while the Canadian-dollar bonds were at 99½ bid, 100½ offered.

Kindred Health hit a little

A trader said that Kindred Escrow Corp.'s 8¼% notes due 2019 going home at 100¾ bid, 101 offered, down from the 101 bid, 101½ offered level at which the bonds had traded earlier in the session and down as well from Friday's late quotes of 101 1/8 bid, 101 3/8 offered.

However, the notes remained above the par level at which the company - a unit of Louisville, Ky.-based hospital and nursing-home operator Kindred Healthcare Inc. - had priced its $550 million deal earlier on Friday.

Xerium backs off

A trader said that Xerium Technologies, Inc.'s 8 7/8% notes due 2018 were "down slightly" in Monday dealings, at 100¾ offered. He did not see a bid side.

The $240 million issue from Xerium, a Raleigh, N.C.-based manufacturer of disposable products for the paper industry, had priced at par on Friday, and the new bonds got as good as 101 bid, 101¼ offered later that session when the bonds were freed to trade around.

Chrysler spins its wheels

Going back a little further, traders said that Chrysler's new bonds had given up the gains, which the Auburn Hills, Mich.-based No. 3 U.S. carmaker's humongous deal had notched in aftermarket trading on Friday when the megadeal was freed to trade.

Chrysler had priced a total of $3.2 billion of bonds: $1.5 billion of 8% senior secured notes due 2019 and $1.7 billion of 8¼% senior secured notes due 2021, both at par late in the day on Thursday. The much-anticipated deal had come to market too late in that session to trade, but moved up when the bonds were freed for dealings the following day.

The eight-year notes had pushed up to 100½ bid, 100¾ offered on Friday, while the 10-years had firmed to 100¾ bid, 101 offered.

But on Monday, a trader saw the eight-years at 99½ bid, 100 offered, while putting the 10-years at 99 5/8 bid, 100 1/8 offered.

A second trader declared later on Monday that "both tranches are now trading below issue."

He quoted the eight-years as going home at 99¼ bid, 99½ offered, while the 10-years were at 99 3/8 bid, 99 5/8 offered.

He attributed the fall in the new Chrysler bonds to a combination of a generally easier market, calling it "squishy" and adding that it was down 1 point on investor angst carried over from equities, which plunged on investor worries about Europe's debt problems.

The impact that another big new automotive-sector new deal - the one that GM is shopping - may have on sector investors in terms of over-saturation in the wake of the Chrysler behemoth of a deal was also a factor, as was the $1.25 billion offering that Ford Motor Credit Co. brought to market several weeks ago.

EMS bonds ease a bit

A trader said that the CDRT Merger Sub Inc. 8½% notes due 2019 "are still up there, but have started to come in a little."

The company - a unit of Greenwood Village, Colo.-based medical transportation provider Emergency Medical Services Corp. - priced $950 million of the bonds at par on May 13, and they moved up to 101½ bid, 101¾ offered in the aftermarket and stayed there through subsequent sessions.

The trader said that they continued to trade as high as 101½ bid, 102 offered last week, but on Monday had eased to 101 bid, 101½ offered because "everything in general was a little softer."

Longview Fibre hangs in there

Or perhaps not "everything..." One of the few recent new deals not in retreat on Monday was Longview Fibre Paper & Packaging, Inc.'s 8% senior secured notes due 2016. A trader on Monday quoted those bonds at 101½ bid, 102 offered.

That was up smartly from the 99.49 level at which the Longview, Wash.-based maker of corrugated cardboard packaging had priced its $450 million offering a week ago, on May 17, to yield 8 1/8%.

Those bonds had broken into the aftermarket later that session at 101 bid and had traded up to the 101½ bid area where they have since stayed.

Market measures head south

Away from the new deals, traders saw a lower overall market, with one estimating that it was down between a half-point and 1 full point.

Statistical measures of market performance bore that out. A trader saw the CDX North American Series 16 HY index fall by seven-sixteenths of a point on Monday to end at 101 13/16 bid, 101 15/16 offered, on top of the five-sixteenths of a point decline seen on Friday.

The KDP High Yield Daily Index meantime slid by 13 basis points on Monday to finish at 76.03, after having been up by 2 bps on Friday. Its yield rose by 5 bps to 6.49%, after having declined by 1 bp on Friday.

And the Merrill Lynch High Yield Master II Index retreated for the first time in three sessions, giving up 0.084% on the day, in contrast to Friday's gain of 0.012%.

That left its year-to-date return at 5.981% Monday, down from Friday's reading of 6.071%, the peak level for 2011 so far.

Paper names percolate

Among specific non-new deal secondary issues, a trader said that "obviously, paper continued to be active" on Monday, seeing NewPage Corp.'s 10% notes due 2012 "trading down below 40, briefly, before bouncing a little bit, but still closing weaker on the day."

A second trader said that aside from the new deals, most of the volume in high yield on Monday was on BBB- crossover names, "except for the occasional NewPage in there."

He saw more than $25 million of the Miamisburg, Ohio-based coated-paper manufacturer's 10% bonds trading around 413/4, "up or down half a point or a point, depending on what time of the day it was."

Yet another trader declared that NewPage "definitely was one of the active ones," seeing the bonds ending up somewhere around 41 or 42 bid on "a good amount of activity today."

He said that earlier in the day, "they were a little lower" than those closing levels, around 40 bid versus Friday's levels around a 42-43 context. There were "some trades around 40 as well," he said, before the bonds were seen going home around 1 point lower on the day versus Friday on "a good amount of volume."

He saw NewPage's 11 3/8% first-lien senior secured notes due 2014 were trading right around a 96-to-97 area, which he called unchanged to up a half point on the day.

"But there was some activity in that as well - decent-sized trades," even though he saw "a lot more [trading] in the 10s."

One of the traders said that other paper company names, including Edmonton, Alta-based Millar Western Forest Products Ltd. and Richmond, B.C.-based Catalyst Paper Corp. were "also weaker in sympathy."

Another trader saw the Catalyst 7 3/8% notes due 2014 staying around a 55-57 range, which he said was "about where they were on Friday." But he said the issue was "really just quoted, no real trades in that, but the quote was still 55-57, where they ended up on Friday, but on no real activity."

Harrah's gets hit

A trader saw the old Harrah's Entertainment Corp. 10% notes due 2018 down a point. He said that "the market in general is down, so you could go to Harrah's 10s, which is a good high-beta market bond" that acts as a bellwether.

"I don't think there's any news there," he said in quoting the bonds - now sometimes known under the Las Vegas-based casino giant's new name, Caesars Entertainment Corp. - as being "kind of wrapped around" a 923/4- 93½ context.

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