Cincinnati Bell, TransDigm, CEVA price; Alon, Venoco hit the road; CIT down on bankruptcy buzz

By Paul Deckelman and Paul A. Harris

New York, Sept. 30 - Cincinnati Bell, Inc., TransDigm Group Inc. and CEVA Group plc were heard by high yield syndicate sources to have successfully priced new deals on Wednesday, the latter transaction upsized modestly.

Meanwhile, two prospective deals emerged from the energy sector, as exploration and production company Venoco, Inc. announced plans for an eight-year bond offering, and was heard to have begun a short roadshow to market the deal to potential investors, with an eye towards pricing the deal by the week's end. Also hitting the road - although its marketing campaign will take place through most of next week - was refinery operator Alon Refining Krotz Springs, Inc., which is doing a five-year bond deal.

Price talk emerged on Buffalo-area supermarket operator Tops Markets LLC/Tops Holding Corp.'s upcoming six-year senior secured deal, which could price after the books close on Thursday morning.

In the secondary market, the new TransDigm issue firmed nearly 2 points versus its issue price, as did CEVA Group, although on not much volume. The days' other new deal, Cincinnati Bell, really didn't set the world on fire when the bonds were freed for trading, nor was there much activity in Tuesday's offerings from the likes of Windstream Communications and Elan Finance plc/Elan Finance Corp.

Outside of new-deal-related trading, CIT Group Inc.'s bonds were seen lower in active trading - particularly the really short paper maturing later this year - amid news reports that the troubled New York-based commercial lenders, racing against a Thursday deadline to present a restructuring plan, may give its bondholders the choice of either going along with a debt-exchange offer or a pre-packaged bankruptcy filing.

Cincinnati Bell at wide end

Three issuers, each bringing a single tranche, issued a combined $1.135 billion on Wednesday

Cincinnati Bell priced a $500 million issue of 8¼% eight-year senior notes (Ba3/B+) at 98.562 to yield 8½%.

The yield printed at the wide end of the 8¼% to 8½% price talk.

Morgan Stanley, Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities and RBS Securities were joint bookrunners.

Proceeds will be used for general corporate purposes, including debt repayment.

TransDigm taps 73/4s

Meanwhile TransDigm Group priced a $425 million add-on to its 7¾% senior subordinated notes due July 15, 2014 (B3/B-) at 97.125 to yield 8½%.

The deal priced on top of the 8½% area price talk.

Credit Suisse was the bookrunner.

Proceeds will be used to pay a dividend in the range of $7.50 to $7.70 per share and to make equivalent payments to certain holders of its options to purchase common stock under the 2006 stock incentive plan dividend equivalent plan.

The original $275 million issue priced at par on June 20, 2006. A previous $300 million add-on priced at 101 on Jan. 31, 2007 to yield 7.571%.

The issuer is a Cleveland-based designer, producer and supplier of aircraft components.

Ceva comes tight to talk

Ceva Group plc (Ceva Inc.) priced a $210 million issue of 11 5/8% seven-year senior secured notes (Caa1/CCC) at 97.127 to yield 12¼% on Wednesday, according to market sources.

The yield printed at the tight end of price talk of 12¼% to 12½%.

Credit Suisse ran the books for the general corporate purposes deal.

The issuer is logistics and supply chain management company based in Hoofddorp, the Netherlands.

Brief roadshow for Venoco

Venoco began a roadshow on Wednesday for its $150 million offering of eight-year senior notes.

Marketing wraps up Thursday. The notes are expected to price on Friday.

UBS Investment Bank is the left bookrunner for the Rule 144A/Regulation S with registration rights offer. BMO Nesbitt Burns, Credit Suisse and RBS Securities are joint bookrunners.

The notes come with four years of call protection.

Credit ratings remain to be determined.

Proceeds will be used to redeem the Denver-based oil and gas exploration and development company's existing 8¾% senior notes due 2011.

Alon starts roadshow

Alon Refining Krotz Springs started a roadshow on Wednesday for a $205 million offering of five-year senior secured notes (/expected BB/).

The deal is expected to price on Oct. 9.

Jefferies & Co. is the bookrunner.

Proceeds will be used to refinance the Louisiana-based refiner's existing term loan and for general corporate purposes.

TransDigm trades up

When TransDigm Group's new 7¾% senior subordinated notes due 2014 were freed for secondary dealings, a trader saw the issue having firmed to 99 bid, par offered, versus the 97.125 level at which the deal priced earlier in the session.

At another desk, a trader saw those new bonds even better, at bid levels around 991/4-991/2.

However, the company's existing 7¾% notes due 2014 lost a point to end at 99¼ bid.

CEVA circulates higher

A trader quoted CEVA Group's 11 5/8% senior secured notes due 2016 at 99 bid, par offered - well up from the 97.127 mark at which the offering had priced.

However, another trader said he "didn't see, or hear, boo on that; being that it's such a small issue, I'd have to assume that it's probably been put away."

Cincinnati Bell bonds go nowhere

But while TransDigm's new paper, and CEVA's seemed hot, Cincinnati Bell's 8¼% notes due 2017 were not. The Ohio-based independent telecommunications company priced that $500 million deal at 98.562 but when the bonds were freed to trade, a market source saw them straddling that price, quoting them at 98 bid, 99 offered.

Another trader at first saw them only offered at 99, with no bid seen, and later also saw them straddling issue, with "no real change."

Windstream seen little changed

A trader saw Windstream Communications' $400 million of 7 7/8% notes due 2017 offered in a 991/2-99 5/8 context. The paper priced Tuesday at 99.531 to yield 8 1/8%, and then moved up later that session to 99¼ bid, 99¾ offered.

Another trader did not see any dealings in the new Windstream bonds, although he did see the Little Rock, Ark.-based telecommunications company's outstanding 8 1/8% notes due 2013 trading around 103¼ bid, 104 offered.

He also observed that "it's interesting that for some names, you just never hear anything from them, once they've priced," while for other new credits, "I don't know if it's the 'sex appeal' of [the deal], but they just seem to be active all the time."

But for Windstream, he concluded, "aside from the older issues, we haven't seen anything" in the name.

Elan makes an appaearance

A trader said that "late today, we started seeing [Elan Finance] stuff offered out there," quoting the Irish drugmaker's new 8¾% notes due 2016 offered at 99; then a 98½ bid developed, and the bonds closed out trading around 981/2-98 7/8.

The company had priced $625 million of those bonds - upsized from the originally planned $600 million - on Tuesday at 98.71, to yield 9%, so "there was not really much happening there. It was kind of just orbiting the issue price."

He said "it seemed the name was kind of quiet - first an offering popped up out of the blue, and then, probably, the underwriter did a support bid - and then it just died out from there."

Another trader saw the bonds at 98 3/8 bid, 98 7/8 offered, in the Street.

One of the traders, speaking generally of the junk secondary's treatment of new-deal issues, and noting the absence of any issues that have gone screaming higher by multiple points on heavy volume, as was seen in a few issues earlier in the month, opined that the "market is starting to adjust to all of this new issuance coming into the marketplace. People are starting to grind these deals tighter, and they aren't running them up and chasing yield like they did with new issuance."

However, he added that "there are still a lot of deals that are priced to trade, and there are still a lot of deals which I'm sure they're going to try to bring tighter in the next couple of weeks."

Market indicators turn negative

Back among the existing bonds not connected with the new-deal market, a trader saw the recently rolled CDX Series 13 index down by ½ point on Wednesday to 91¾ bid, 92¼ offered. The market measure had also lost ½ point on Tuesday.

The KDP High Yield Daily Index retreated by 18 basis points on Wednesday to 69.02, after having gained 6 bps on Tuesday, while its yield widened by 8 bps to 8.40%, after having come in by 1 bp the session before that.

In the broader market, advancing issues trailed decliners by a seven-to-six ratio - breaking a winning streak of an amazing 19 straight sessions, dating all the way back to Sept. 2.

Overall market activity, as measured by dollar-volume levels, rose some 20% on Wednesday from Tuesday's pace.

A trader said that he didn't want to say "that things have felt kind of heavy - but it just seems like the acceleration going to the moon is starting to wear off., not just in the new issues, but also in the names you usually see a lot of activity in."

Another characterized the day as "a whole lot of nothing." He said that there was "not much going on, with the quarter's end and month's end, and Deutsche Bank's conference going on today" in Scottsdale, Ariz.

"A lot of companies are speaking out there," he said, -- and a lot of junk market players were out there to listen to them, including senior traders and other decision-makers, putting something of a damper on the activity back on the trading floors. "There are a lot of junior guys on the desks."

Therefore, "high yield was kind of stuck in there today" at recent levels, he said, adding that he "didn't see a lot of volume." Meanwhile, "the equity market was bouncing all over the place," before ending with the bellwether Dow Jones Industrial Average down 29.92 points, or 0.31%, at 9,712.28, and the broader Nasdaq and Standard & Poor's indexes both showing small percentage declines.

CIT suffers on Chapter 11 chatter

A trader called CIT Group Inc. "one of the names of the day, for sure," citing the various reports that the company may offer bondholders the choice of a "voluntary" debt exchange, which would see them take a substantial haircut on their bonds, or, a pre-packaged bankruptcy filing that would impose roughly the same terms.

He saw "a lot of volume" in the credit, with the most movement on the short end of the curve.

The shorter issues "obviously were where the most volume was." He saw the company's various issues of paper maturing this year all in the high 70s, or perhaps around 80, with, for instance, the 4 1/8% notes slated to mature on Nov. 3 "like 79ish - that's down 3 or 4 points." He saw the 6 7/8% due on Nov. 1 around that same level.

"They're all in the same range, and on a lot of volume. It's all on the news - there's a prepackaged bankruptcy going through [or] there's a swap - that's what it's all about."

"Right around 80 is where they're going out - but that's down 3 or 4 points."

He said that the somewhat longer issues, "were not down as much," with the 7 5/8% notes due 2012 in a 65-67 context, "about where they ended up [Tuesday]. They didn't have as much activity."

"The longer ones," he continued, "might be pretty much unchanged from [Tuesday], right around the mid-60s - but all of the activity is in the shorter paper."

CIT "was obviously the big story," another trader said, noting that "it seemed like there was a lot of action going around on it" and quoting the bonds as having been down as much as 4 points early in the session, a hole which the bonds never did managed to climb out of.

The trader noted the news reports indicating that bondholders might get as little as 60 cents on the dollar under the debt-exchange plan said to have been floated around, and added that "I'm sure they'll be jumping around all over the place over the next couple of days, as more comes out on that."

A third characterized watching CIT's bonds as "painful from the get-go." He estimated that the shorter paper was "wrapped around 80," and said the credit was "just so dicey."

Meanwhile, a market source at another desk, playing the contrarian, quoted a longer CIT piece, the 5% notes due 2015, as having actually moved up more than 3 points on the day to levels above 66, while CIT Group Funding Co. of Canada's 5.20% notes due 2015 gained more than ¼ point to the 78 level.

CIT's New York Stock Exchange-traded shares swooned by 99 cents, or 45%, to close at $1.21. Very heavy volume of some 566 million shares was more than five times the norm.

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