NeuStar, U.S. Foodservice price to cap $7.5 billion week; new NeuStar, SuperValu trade busily

By Paul Deckelman and Paul A. Harris

New York, Jan. 11 - The high-yield primary sphere finished out the first full trading week of 2013 with a pair of pricings totaling $688 million on Friday.

NeuStar, Inc., a provider of communications solutions, came to market with a $300 million offering of 10-year notes, a scheduled deal off the forward calendar. The new bonds were heard by traders to have firmed modestly, though on very busy aftermarket dealings.

There was also an upsized $375 million quick-to-market add-on offering to an existing tranche of bonds from U.S. Foodservice Inc. The bonds traded right around their issue price when they were freed.

The deals capped off a busy first full week of trading that saw some $7.5 billion of new U.S. dollar-denominated, fully junk-rated paper from domestic or developed-country issuers price in a dozen tranches according to data compiled by Prospect News - well up from the single $800 million tranche which priced in the holiday-shortened week ended Friday. New issuance was running around 12% ahead of the pace seen at this time a year ago, according to the data.

Traders saw continued firmness in recently priced offerings, including Wednesday's two-part mega-deal from Bombardier, Inc. and Thursday's offerings from energy credits Kodiak Oil & Gas Corp. and Rockies Express Pipeline LLC.

Away from the deals that have actually priced, syndicate sources heard that Zachry Holdings, Inc. a provider of engineering and other services to the energy industry, would begin shopping a $250 million seven-year offering around in the upcoming week.

In the non-new-deal secondary market, SuperValu Inc.'s bonds remained among the busiest credits, still riding the momentum from Thursday's announcement of a big asset-sale deal by the supermarket operator.

Statistical performance indicators were mixed on the session, and on the week as well.

US Foods upsizes

The Friday primary market saw a pair of issuers, each one bringing a single tranche of junk, raise $688 million.

US Foods, Inc. priced an upsized $375 million add-on to its 8½% senior notes due June 30, 2019 (expected ratings Caa2/CCC+) at 103.5 to yield 7.558%.

The reoffer price came at the rich end of the 103.25 to 103.5 price talk. The amount was increased from the planned $200 million.

Deutsche Bank, Morgan Stanley and KKR were the joint bookrunners for the quick-to-market debt refinancing deal.

NeuStar atop tightened talk

NeuStar priced a $300 million issue of 10-year senior notes (Ba3/BB-) at par to yield 4½%.

The yield printed on top of yield talk that was revised lower from earlier talk in the 4¾% area.

J.P. Morgan, Morgan Stanley and RBC were the joint bookrunners for the debt refinancing deal.

Zachry starts roadshow Monday

The Jan. 14 week will get underway to a well populated active forward calendar, which was filled out on Friday by announcements of deals which are coming in a variety of currencies, and from issuers from throughout North America and Europe.

Zachry Holdings plans to start a roadshow on Monday for a $250 million offering of seven-year senior notes (expected ratings B2/B+).

The deal is set to price late in the Jan. 14 week.

J.P. Morgan, Bank of America Merrill Lynch and Wells Fargo are the joint bookrunners for the debt refinancing.

Loxam to bring €300 million

French equipment rental company Loxam SAS plans to start a roadshow on Monday for its €300 million offering of seven-senior subordinated notes.

The deal size is not expected to grow, according to a trader, who added that Loxam's new bonds are expected to yield between 7% and 8%.

Joint bookrunner Deutsche Bank will bill and deliver. BNP Paribas, Credit Agricole, Credit Suisse, Natixis and SG are also joint bookrunners.

Proceeds will be used to refinance debt, fund acquisitions and for general corporate purposes.

Southern Pacific to roadshow

Southern Pacific Resource Corp. plans to begin a roadshow on Monday for a C$300 million offering of five-year senior secured second lien notes due 2018 (B+//), which are expected to price in the middle or late part of the week.

TD, RBC, Credit Suisse and BMO are the joint bookrunners.

The Calgary, Alta. energy exploration, development and production plans to use the proceeds to retire debt obligations under its existing $272.2 million second lien term loan facility, including a prepayment penalty of $2.7 million, and for general corporate purposes.

Voyage Care lines up two-parter

Voyage Care Bondco plc will begin a roadshow on Monday ahead of a proposed two-part £272 million offering of notes.

The deal consists of £210 million of five-year senior secured notes (expected ratings B1/B+/BB), which will be callable in two years at par plus 75% of the coupon.

J.P. Morgan, Goldman Sachs, Royal Bank of Scotland, Commerzbank and Lloyds are joint bookrunners.

In addition there is a £62 million offering of second-lien notes (expected ratings Caa1/CCC+/CCC+).

The second-lien tranche, which is coming via Goldman Sachs and JPMorgan, is expected to have a six-year non-call-three structure, and is not expected to be widely marketed, according to a trader.

Characteristic of a sterling-denominated deal, the larger, senior secured tranche is being driven by reverse inquiry, and is pretty much spoken for, the trader added.

The initial conversation is taking place in a low 7% yield context, the trader said, but added that it will almost certainly get done with a yield below 7%.

NeuStar up in heavy trading

When the new NeuStar 4½% notes due 2023 were freed for secondary dealings, a trader said that the credit "traded a ton," estimating that "we traded 100 [million] here - but that's not unusual."

He pegged the new bonds in a narrow range of par to 1001/4.

A second trader described the new deal as "a blowout."

At another desk, a trader saw the bonds move up to 100¼ bid, 100 5/8 offered.

U.S. Foods holds around issue

A trader said that U.S. Foodservice's new add-on deal was trading around 103½ bid, 104½ offered, around the 103½ price at which that upsized $375 million of paper priced during the afternoon.

Rockies Express rises

Looking at the deals that came to market on Thursday, a trader said that the Rockies Express Pipeline 6% notes due 2019 started the day trading a little below their par issue price, in a 99¾ to par context.

But after that, he said, the Houston-based natural gas pipeline operator's quickly shopped $525 million deal "got cleaned up and moved up," going out around 101 bid.

He said that "a bunch of those traded."

Kodiak holds gains

Thursday's $350 million of 5½% notes due 2021 from Kodiak Oil & Gas, "like a lot of names, continued to grind higher," a trader said, seeing the Denver-based energy exploration and production company's paper "trading up off the break," at 102½ bid, 102¾ offered.

That quick-to-market deal had priced at par on Thursday after having been upsized from an originally shopped $300 million, then had moved above the 102 bid level in initial aftermarket dealings.

A second trader, though, did not see any levels in the new deal.

But a third quoted them holding steady at that same 102½ bid, 102¾ offered.

Gildemeister parked higher

One of the traders also saw Automotores Gildemeister SA's 6¾% notes due 2023 little changed around the same 102 bid, 102¼ offered level seen on Thursday.

The Santiago, Chile-based automotive distributor had earlier priced $300 million of those notes at par in a quickly shopped offering.

Big deals hold gains

The big, liquid issues that priced earlier in the week were seen to have held their gains, or even improved upon them slightly, amid a generally firm junk market.

A trader saw Bombardier's 4¼% notes due 2016 at 103 3/8 bid, 103¾ offered.

That was up a little from the103 bid, 103½ offered level to which the Canadian aircraft and railroad equipment maker's $750 million issue had moved when it began trading on Thursday.

Those bonds had priced at par on Wednesday, too late for any aftermarket dealings at that time.

The other half of that deal - Bombardier's $1.25 billion of 6 1/8% notes due 2023 - also firmed a little on Friday, to 103 bid, 1031/4. After pricing at par on Wednesday, that tranche had moved up to 102¾ bid, 103 offered in Thursday's dealings.

The two-part drive-by deal was doubled in size to $2 billion total from the originally planned $1 billion offering. The Montreal-based company had actually shopped the deal around the market last November, but decided at that time to postpone it, citing less than optimum market conditions.

The other mega-deal sized offering for the week - MarkWest Energy Partners LP's $1 billion 4½% notes due 2023 - were "pretty firm," a trader said, at 101¾ bid, 102 offered, although another trader said he had not seen the issue on Friday.

Denver-based exploration and production operator Mark West and its MarkWest Energy Finance Corp. subsidiary had priced that big quick-to-market deal at par on Monday; it had moved up in the aftermarket to around a 101½ to 102 bid context.

SuperValu remains busy

Away from the new-deal arena, a trader said SuperValu's 8% notes due 2016 were ending around 99 3/8 bid, "so that's pretty much unchanged - they're holding their own [after Thursday's surge] and there were about $30 million trading today," making the issue one of the most heavily traded Junkbondland credits on the session.

"I'd say that was unchanged, but on real good volume."

On Thursday, the bonds had gone up by some 2½ points on volume of over $47 million in response to the news that the Eden Prairie, Minn.-based supermarket operator had agreed to a deal under which it will sell five of its store chains to an investment consortium led by Cerberus Capital Management LP. The syndicate will pay $100 million in cash and assume $3.2 billion of SuperValu's more than $6 billion of long-term debt and capital leases.

On Friday, the company's American Stores Inc. 8% bonds due 2026 were seen playing catch-up, quoted up as much as nearly 14 points at 108 bid.

Exide, Nokia move up

Apart from SuperValu, a trader said "the market was pretty firm."

He saw Milton, Ga.-based storage battery maker Exide Technologies' 8 5/8% notes in the upper 80s, having firmed to those levels from quoted levels earlier in the week nearer to 80 bid.

And he saw Nokia Corp.'s paper holding onto the gains notched earlier in the week on news.

A second trader saw the company's 6 5/8% 2039 ending up at 93 bid, 94 offered, noting that the Finnish cellphone maker's issue "is a long piece of paper." He said volume was about $13 million on Friday.

Among the shorter issues, he saw the company's 5 3/8% notes due 2019 finish at 97-98 bid, with about $17 million trading. He called it about unchanged.

Another trader said that the 2019s and the 2039s "had traded up earlier in the week on the news" that the company was projecting stronger fourth quarter earnings, helped by sales of its popular new Lumia smart phone.

Indicators mixed on day, week

Statistical junk market performance indicators were seen mixed on the session on Friday after several sessions of mostly gains, and were seen mixed on the week as well.

The Markit Series 19 CDX North American High Yield index turned lower for the fourth time on the week, dipping by ¼ point to end at 102¼ bid, 102½ offered, after having gained 3/8 point on Thursday.

The index also finished slightly off versus its closing level the week before on Friday, Jan. 4, when it stood at 102 3/8 bid, 102½ offered.

The KDP High Yield Daily Index was up by 3 basis points on Friday to 75.91, after having been unchanged on Thursday, breaking a string of seven consecutive upside sessions before that. Its yield was unchanged for a second straight session, at 5.49%.

Those levels compare favorably with the week-earlier index reading of 75.72 and yield of 5.58.

The widely followed Merrill Lynch U.S. High Yield Master II Index posted its ninth straight gain on Friday, rising by 0.083%, on top of Thursday's 0.105% advance.

That lifted its year-to-date return to 1.309%, a new peak level for the year so far, from Thursday's 1.225%, the prior peak level.

The index's yield to worst meantime continued to decline on Friday, coming in to 5.7478% - a new low for 2013 - from the previous low of 5.768%, recorded on Thursday.

Its spread to worst versus the comparable Treasury issues widened slightly to 489 bps Friday from Thursday's 485 bps, its tight level for the year so far.

The index posted a one-week gain of 0.60%, its eighth consecutive weekly rise. In the week ended Jan. 4, it rose 0.718%, with a yield to worst of 5.891% and a spread to worst of 497 bps.

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