Rent-A-Center prices eight-year deal, firms modestly; calendar builds rapidly; Penney's pops on loan

By Paul Deckelman and Paul A. Harris

New York, April 29 - Rent-A-Center Inc. kicked off the new week in Junkbondland by bringing a quickly shopped $250 million issue of eight-year notes to market, syndicate sources said.

Traders saw the rent-to-own operator's new deal firm a little from its issue price when the notes were freed for aftermarket dealings.

It was the only dollar-denominated, junk-rated pricing of the day from a domestic or industrialized-country issuer. French hospital and clinic operator Holding Medi-Partenaires did an offering of euro-denominated seven-year secured notes.

The syndicate sources did hear of a number of prospective new deals either having been formally announced or else just quietly surfacing on the radar screens.

LKQ Corp., a provider of re-manufactured auto engines and recycled transmissions, and Safway Group Holding LLC, a supplier of scaffolding to the construction industry, unveiled plans for new deals. LKQ's is a $500 million 10-year offering, Safway's a $540 million tranche of five-year secured paper.

Another upcoming deal heard to be starting a roadshow for marketing was information technology firm CompuCom Systems, Inc. with $250 million of eight-year notes, while chemical storage company LBC Tank Terminals Holding Netherlands BV was doing a $350 million 10-year deal.

Spanish engineering company Gestamp Funding Luxembourg SA, was also starting a roadshow for its €750 million-equivalent offering of seven-year U.S. dollar- and euro-denominated bonds,

Out of the busy European high-yield primary arena came word of other borrowers heard by sources to be hitting the road with prospective euro-denominated deals, including British ice cream maker R&R Ice Cream plc, German packaging producer Kloeckner Petaplast and German paper towel and toilet tissue manufacturer WEPA Hygiene Products GmbH.

British insurance brokerage Towergate Finance plc began marketing a sterling-denominated two-part offering of fixed and floating-rate notes.

Away from the new-deal arena, J.C. Penney Co. Inc.'s bonds remained in the spotlight on news that the underachieving department store operator has opted to shore up its liquidity position with a big bank loan, which caused one of its issues expected to be taken out as a consequence of that move to jump more than 30 points on the day and other issues to rise more modestly in sympathy.

Statistical secondary market performance indicators continued to push higher on the session.

Rent-A-Center tight

Rent-A-Center brought Monday's sole drive-by dollar deal, a $250 million issue of eight-year senior notes (Ba3/BB-), which priced at par to yield 4¾%.

The yield printed at the tight end of the revised 4¾% to 4 7/8% yield talk. Earlier talk was 4 7/8% to 5 1/8%.

The deal was going very well, according to a trader who was watching it.

J.P. Morgan and Goldman Sachs were the joint bookrunners.

The Plano, Texas-based rent-to-own operator plans to use the proceeds for general corporate purposes, including stock repurchases, and to repay its revolver.

LKQ launches 10-year deal

Away from Rent-A-Center, it was a news-heavy day in the primary market.

Chicago-based aftermarket parts manufacturer LKQ started a roadshow on Monday ahead of a planned $500 million issue of senior notes due 2023 (/expected BB-/).

An investor call is scheduled for 12:15 p.m. ET on Tuesday, and the issue is expected to price late during the present week.

BofA Merrill Lynch, Wells Fargo, RBS and Mitsubishi are the joint bookrunners.

Proceeds, together with a proposed term loan, will be used to repay a portion of the company's revolver and an existing term loan.

LBC starts Tuesday

LBC Tank Terminals Holding plans to start a roadshow on Tuesday for its $350 million offering of 10-year senior notes (expected ratings B3/B), according to a syndicate source.

The deal is set to price during the May 6 week.

RBC is the left bookrunner. BNP Paribas, Credit Agricole, DNB Nor and ING are the joint bookrunners.

Proceeds, together proceeds from a new term loan, will be used to repay the entire amount outstanding under the company's existing credit facilities.

The prospective issuer is one of the largest independent operators of bulk liquid storage terminals and the second largest independent chemical storage company in terms of global storage capacity.

CompuCom starts roadshow

CompuCom began a roadshow on Monday for its $250 million offer of eight-year senior notes (Caa1/CCC+).

The deal is set to price late in the present week.

J.P. Morgan, Citigroup, BMO, Jefferies and SMBC are the joint bookrunners.

The Dallas-based IT services specialist plans to use the proceeds to fund the acquisition of CompuCom by Thomas H. Lee Partners LP from Court Square Capital Partners.

Safway second-lien deal

Safway Group is marketing a $540 million offer of five-year senior second-lien notes in a deal that is set to price during the May 6 week.

Goldman Sachs, Wells Fargo, Morgan Stanley, Barclays and Lazard are the joint bookrunners.

Proceeds will be used to repay the company's second lien senior secured term loan in full and to repay a portion of its ABL credit facility.

Proceeds will also be made to make a distribution to the parent company to enable it to pay a dividend to its equity holders.

Proceeds will also be used for general corporate purposes.

Safway is a Waukesha, Wis.-based provider of scaffolding and access services for commercial construction, industrial and infrastructure applications.

Medi-Partenaires at tight end

The European primary generated a news volume on Monday that was, to say the least, extraordinary.

The explanation, according to a London-based sellside source, has to do with issuers attempting to complete transactions before doing so will require fresh sets of financial numbers.

After next week, the pace ought to ease, the sellsider said, but added that through the rest of the spring, European high-yield deal flow could continue on a three deal per week average.

France's Holding Medi-Partenaires priced a €385 million issue of seven-year senior secured notes (expected ratings B3/B) at par to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk.

Joint bookrunner Credit Suisse will bill and deliver. Credit Agricole and Natixis were also joint bookrunners.

The private hospital group plans to use the proceeds to refinance debt and shareholder loans.

Hellenic Petroleum upsizes

Hellenic Petroleum Finance plc upsized its offering of four-year non-callable senior notes to €500 million from €400 million.

Price talk was revised to 8% from 8¼%. Last week, the deal was being talked at 8½%.

The deal, which is playing to a €2.75 billion order book, according to a market source, is expected to price on Tuesday.

Alpha Bank, Credit Suisse, Eurobank, HSBC and NBG are the joint bookrunners.

HSBC will bill and deliver.

The Greek oil refiner plans to use the proceeds to refinance debt and for general corporate purposes.

Gestamp dual-tranche deal

Spain's Gestamp Funding (Gestamp Automacion SL) is starting a roadshow on April 29 ahead of a proposed €750 million-equivalent offering of seven-year senior secured notes, which is expected to come in dollar and euro denominations.

Deutsche Bank will bill and deliver, while BofA Merrill Lynch, Bakia, Barclays, BBVA Securities Inc., Caxia, Commerzbank, Itau, Santander and SG CIB are the joint bookrunners.

The Rule 144A and Regulation S notes will be non-callable for three years.

Proceeds will be used to refinance debt.

Kloeckner sets roadshow

German packaging company Kloeckner Petaplast has scheduled a roadshow ahead of a proposed €150 million issue of PIK toggle notes due Aug. 15, 2017.

Joint bookrunner Jefferies will bill and deliver. Goldman Sachs is also a joint bookrunner.

Proceeds will be used to partially refinance preferred equity certificates.

Bond Aviation sterling deal

Bond Aviation Group Ltd. began a roadshow on Monday for its £200 million offering of six-year senior secured floating-rate notes (expected ratings B2/B).

Joint bookrunner JPMorgan will bill and deliver. KKR and RBS are also joint bookrunners. The Staverton, England-based helicopter services provider plans to use the proceeds to repay debt.

Towergate in two tranches

Towergate Finance began a roadshow on Monday for a £396 million two-part notes offer.

The deal includes new five-year senior senior secured floating-rate notes, which come with one year of call protection.

In addition, Towergate plans to tap its 8½% senior secured notes due Feb. 15, 2018, which become callable on Feb. 15, 2014 at 106.375. The original £230 million issue priced at par in February 2011.

Global coordinator Credit Suisse will bill and deliver. Goldman Sachs and Lloyds TSB are also joint global coordinators.

Citigroup, JPMorgan and Morgan Stanley are joint bookrunners.

The Maidstone, England-based independent insurance broker plans to use the proceeds to refinance debt.

WEPA starts roadshow

Germany's WEPA Hygieneprodukte began a roadshow on Monday for its €250 million offering of seven-year senior secured notes.

Deutsche Bank and HSBC are managing the sale.

The Arnsberg, Germany-based manufacturer of toilet paper, napkins, kitchen towels, handkerchiefs and facial tissues plans to use the proceeds to refinance debt and to help fund the acquisition of Marsberger Kraftwerksgesellschaft.

Rent-A-Center rises

In the secondary market, traders at two different shops said that the new Rent-A-Center 4¾% notes due 2021 had moved up to 100½ bid, 101½ offered after they were freed for aftermarket dealings.

A third trader saw the bonds having tightened a little from there, to 100¾ bid, 101¼ offered.

The Plano, Texas-based rent-to-own operator's quick-to-market offering had earlier priced at par.

Resolute in retreat

A trader saw Resolute Forest Products, Inc.'s 5 7/8% notes due 2023 trading at 98½ bid, 99 offered. This was weaker, he said, than their initial aftermarket levels on Friday.

He said that Montreal-based paper and pulp manufacturer's $600 million issue - priced at 99.062 to yield 6% - weakened Monday from the 99 1/8 to 99½ bid context seen when the bonds had begun trading.

Noting the fact that the new deal from the company formerly and more familiarly known to some junk players as AbitibiBowater Inc. was failing to gain any aftermarket traction - unlike most of the recent new deals, which have been seen trading higher than their respective issue prices - he remarked, "They're certainly running contrary to what the rest of the market's been doing today."

Thursday deals mostly steady

Going back a little further, a trader saw Erickson Air-Crane Inc.'s 8¼% second-priority senior secured notes due 2020 hovering around 101¼ bid, 102¼ offered, which he said was "probably unchanged" from their late levels seen on Friday.

The Portland, Ore.-based provider of helicopter lift services had priced $400 million of those notes at par on Thursday, and they quickly gained altitude, having gotten as good as 102 bid, 102½ offered.

However, by Friday, the bonds "came off their highs," he said, to finish quoted around a 101 3/8 to 101¾ context.

"So they're off their highs, but still up from issue," he said.

He saw AES Corp.'s 4 7/8% notes due 2023 about unchanged from Friday's levels, quoting the bonds at 101 5/8 bid, 102 offered.

A second trader pegged the Arlington, Va.-based domestic and global power generator's bonds at 101¾ bid, 102 1/8 offered, calling the credit up¼ point on the day.

AES had priced $500 million of those notes on Thursday at par in a quick-to-marker transaction. The bonds initially clung to their issue price and ended the day at 100¼ bid, 100¾ offered. However, by Friday, they were seen trading at levels at or above 101½ bid, 102 offered.

CST Brands, Inc.'s $550 million of 5% notes due 2023 ended Monday at 102½ bid, 103 offered, one of the traders said, also largely unchanged from the end of last week.

The San Antonio, Texas-based gasoline retailer had priced its drive-by transaction on Thursday at par. The bonds quickly moved up to 1021/2-to-103 offered when they were freed and remained there on Friday and again on Monday.

A firmer market

A trader characterized Monday's market generally as "feeling somewhat quiet - but certainly with a stronger, former tone today."

That was evident from the behavior of statistical junk performance indicators, which were on the upside across the board for a fifth consecutive session on.

The Markit Series 20 CDX North American High Yield index was up by 17/32 of a point on Monday to end at 105¾ bid, 105 7/8 offered, its seventh consecutive gain. On Friday, it had risen by 3/32 of a point.

The KDP High Yield Daily index, meanwhile, rose by 13 basis points to 76.04, its fifth straight gain. The index had advanced by 11 bps on Friday. Its yield came in by 6 basis points to end at 5.18%, also its fifth straight narrowing, after having tightened by 9 bps on Friday.

And the widely followed Merrill Lynch High Yield Master II index posted its eighth consecutive advance on Monday, rising by 0.224%, on top of the 0.113% rise seen Friday.

That lifted its year-to-date return to 4.613% - its sixth straight new peak level for the year - from Friday's 4.379%, the previous peak.

J.C. Penney pops

Among specific non-new-deal issues seen in the secondary on Monday, J.C. Penney got a big boost as the company said it had inked a deal with Goldman Sachs for a $1.75 billion loan.

But part of what made the news so notable was how said loan would impact the company's 7 1/8% notes due 2023.

"It's the only deal that has language that says they can't layer debt on top of it," a trader said. As such, the company said in its loan agreement that it might use loan proceeds to "discharge" the bonds.

The company said it might also seek an amendment on the issue.

Whatever the company plans to do, the 7 1/8% notes jumped a hefty 30-plus points.

The first trader saw the issue hitting a high of 140 on Monday, ending in a 134¾ to 135 context. That compared to levels around 102 on Friday.

Another trader placed the issue in the mid-130s.

A market source said that the high-flying issue has probably been the busiest bond of the day, with over $22 million having changed hands on a round-lot basis, as well as considerable odd-lot dealings.

He quoted the notes finishing at 134¾ bid, more than 32 points above Friday's close.

The Plano, Texas-based retailer's other issues were also firming, though not nearly as much as the 7 1/8% notes.

The first trader said the other bonds were "up in sympathy," seeing the 5.65% notes due 2020 at 85 7/8, up nearly 2½ points. The 7.65% notes due 2013 rose 3 points to 991/2, while the 5¾% notes due 2018 gained 1¾ points, closing around 901/4.

The second trader placed the 6 3/8% notes due 2036 around 80 and the 7.4% notes due 2037 around 84.

Not everyone was excited to learn that J.C. Penney had acquired additional cash, however.

In an afternoon report published on Monday, Gimme Credit LLC analyst Carol Levenson noted that the company's management recently said its available $850 million in credit would be sufficient to cover its expenses. Then along comes the Goldman loan, which is said to be funding current needs.

Levenson pointed out that "it would be nice to know" what the company's needs actually are, adding that the company's debt has doubled in the last two weeks.

"Oh, and P.S., bear in mind that none of this would have been necessary if Penney had not embarked upon its great visionary transformation and lost 25% of its sales. The credit quality damage is nearly all self-inflicted," she wrote.

Stephanie N. Rotondo contributed to this review

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