United Rentals, American Achievement price, rise; Omnova, Sabra await; funds up $347 million

By Paul Deckelman and Paul A. Harris

New York, Oct. 21 - United Rentals (North America), Inc. priced an upsized $750 million issue of 10-year senior subordinated notes on Thursday, high-yield syndicate sources said.

The Greenwich, Conn.-based equipment rental company's new bonds were seen to have firmed smartly when they were freed for trading.

That was also the case with Austin, Tex.-based school yearbook and class ring provider American Achievement Corp.'s $365 million of 51/2-year senior secured notes, traders said.

BWAY Parent Co., Inc.'s upsized $150 million offering of five-year PIK toggle notes was seen having moved up after the Atlanta-based maker of rigid plastic and metal containers priced its deal several points below par.

CNG Holdings, Inc. a Cincinnati- based provider of pay-day loans and other alternative financial services under the Check 'N Go name, came to market with a $60 million five-year offering that was not seen trading afterward.

All except American Achievement were opportunistically timed, rapidly marketed deals.

There were also two such quickie offerings in the non-dollar market - euro-denominated transactions from Canadian transportation equipment maker Bombardier Inc. and from Dutch broadband operator Ziggo Finance BV.

Away from the deals that actually came to market, price talk was heard on pending offerings from Omnova Solutions Corp. and Sabra Healthcare LP/Sabra Capital Corp. Both are expected to price on Friday.

Traders said the overall market had a firm tone to it, with, as one put it, names "grinding tighter." Statistical indicators also pointed northward.

And high-yield mutual funds, considered a key barometer of overall junk market liquidity trends, showed a net inflow of $347 million in the week ended Wednesday - their seventh straight weekly cash infusion.

Junk funds gain $347 million

And as things were winding down for the day, market participants familiar with the weekly AMG high-yield mutual fund flow numbers compiled by Lipper/FMI said that$347 million more came into those funds than left them in the week ended Wednesday.

This marked the seventh straight weekly inflow, following the $239.764 million cash infusion seen in the week ended Oct. 13, according to a Prospect News analysis of the figures provided by market sources. During that time, net inflows have totaled $4.178 billion, the analysis indicated.

The latest week's inflow brought the year-to-date cumulative total for the weekly reporting funds to $9.147 billion, up from the $8.8 billion seen last week, although still a little off from the 2010 peak level of some $9.246 seen in the week ended Oct. 6, according to the analysis.

Cumulative fund-flow totals may be rounded up or down and could include unannounced revisions and adjustments to figures from prior weeks.

Inflows have now been seen in 30 out of the 42 weeks since the beginning of the year, while there have been 12 outflows, the analysis indicated.

EPFR sees $616 million inflow

Another fund-tracking service - Cambridge, Mass.-based EPFR Global, whose methodology differs somewhat from AMG - meantime reported a $616 million inflow in the latest week, which followed a $773 million inflow the week before.

Reflecting the difference between the ways AMG and EPFR calculate their respective fund-flow totals, although the two services' numbers generally point toward the same trends - EPFR includes results from certain non-U.S. domiciled funds as well as the domestic funds - its year-to-date net inflow total now stands at some $24.9 billion, a new peak level for the year.

In a research note Thursday night, EPFR analysts said that with 10 weeks to go in the year, that total figure represents 78% of the 2009 full-year inflow total.

Analysts say the continued flow of fresh cash into Junkbondland - and the mutual funds represent but a small, though quantifiable, percentage of the total amount of money coming in - has fueled the sustained new-deal borrowing binge seen this year and last, as well as the robust secondary market.

United Rentals oversubscribed

The dollar-denominated market saw four issuers, each bringing a single tranche of notes, price a face amount of $1.325 billion on Thursday.

United Rentals priced an upsized $750 million issue of 10-year senior subordinated notes (Caa1/CCC+) at par to yield 8 3/8%, in the middle of the 8¼% to 8½% price talk.

Morgan Stanley & Co. Inc., Bank of America Merrill Lynch and Wells Fargo Securities were the joint bookrunners for the quick-to-market debt refinancing issue, which was upsized from $500 million.

The deal was oversubscribed at the $750 million level, according to a buyside source.

American Achievement tight

Meanwhile American Achievement priced a $365 million issue of 5.5-year senior secured notes (B3/B) at par to yield 10 7/8%, at the tight end of the 11% area price talk.

Goldman Sachs & Co. was the left lead bookrunner. UBS Investment Bank is the joint bookrunner.

Proceeds, along with proceeds from a new revolver and from preferred stock to be issued by indirect parent American Achievement Group Holding Corp., will be used to repay American Achievement's existing senior secured credit facility as well as to refinance its 8¼% senior subordinated notes due April 1, 2012, AAC Group Holding Corp.'s 10¼% senior discount notes due Oct. 1, 2012 and American Achievement Group Holding's 12¾% senior PIK notes due Oct. 1, 2012.

Proceeds will also be used to redeem or repurchase all American Achievement Intermediate Holding Corp. series A preferred stock and American Achievement Group Holding's preferred stock.

BWAY prices PIK toggle notes

Elsewhere, BWAY Parent priced an upsized $150 million issue of senior PIK toggle notes (Caa2/CCC+) at 97.00.

The notes feature a cash coupon of 10 1/8%, resulting in a 10.917% yield, and a PIK coupon of 10 7/8%, resulting in an 11.516% yield.

The PIK yield came slightly cheap to the 11½% yield talk. The reoffer price came at the cheap end of the 97 to 98 price talk.

Bank of America Merrill Lynch and Deutsche Bank Securities Inc. were the joint bookrunners for the quick-to market issue, which was upsized from $125 million.

Proceeds will be used to fund a distribution to equity holders.

Despite structure and a use of proceeds that market sources were characterizing as aggressive, the deal appeared to be well-received, according to a trader from a high-yield mutual fund who spotted the notes trading at 98¾ bid, 99¾ offered in the secondary, after having priced at 97.

Check 'N Go non-rated deal

CNG Holdings, Inc., the parent of Check 'N Go, priced a $60 million issue of non-rated 13¾% five-year senior subordinated notes at 94 to yield 15.551%.

There was no official price talk.

Jefferies & Co. ran the books for the general corporate purposes deal.

Bombardier at the tight end

The euro-denominated market saw activity during the Thursday primary market session, with two high-yield issuers pricing a combined €1.53 billion face amount, each with a single tranche.

Canada's Bombardier priced a €780 million issue of 6 1/8% 10.5-year senior notes (Ba2/BB+) at 99.0422 to yield 6¼%, at the tight end of the 6¼% to 6½% price talk.

Deutsche Bank Securities, BNP Paribas, Credit Agricole CIB, JP Morgan Securities LLC and UBS Investment Bank were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Ziggo drive-by

Meanwhile Dutch cable operator Ziggo Finance priced an upsized €750 million issue of seven-year senior secured notes (Ba2/BB) at par to yield 6 1/8%.

The yield printed at the wide end of the 6% to 6 1/8% price talk.

Credit Suisse and Goldman Sachs & Co. were the global coordinators and joint bookrunners for the issue, which was upsized from €500 million.

Deutsche Bank Securities, JP Morgan and Morgan Stanley were also joint bookrunners

Proceeds will be used to repay bank debt.

Talking the deals

Setting the stage for the Friday session, two prospective issuers circulated price talk on Thursday.

Omnova Solutions talked its $250 million offering of eight-year senior notes (B2/B) with an 8% area yield.

Deutsche Bank Securities is the left bookrunner.

Meanwhile Sabra Healthcare and Sabra Capital talked their $225 million offering of eight-year senior notes with an 8¼% area yield.

Bank of America Merrill Lynch, Citigroup Global Markets, Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

Pacnet starts roadshow

One new dollar-denominated deal, with an emerging markets aspect, rolled out during the Thursday session.

East Asian undersea cable network operator Pacnet began a roadshow on Thursday for its $300 million offering of five-year senior secured notes (B1//BB+).

The deal is set to price during the week ahead.

Credit Suisse, Barclays, DBS and Standard Chartered are leading the deal.

Proceeds will be used to repay debt as well as to fund capital expenditures and fund a dividend.

The company has headquarters in Hong Kong and Singapore.

United Rentals run up

When United Rentals $750 million of new 8 3/8% senior subordinated notes due 2020 were freed for secondary dealing after having priced at par late in the session and having upsized from the originally announced $500 million, a trader saw the new bonds initially break at 1001/2. But before long, he was quoting the issue first at 100¾ bid, 101¼ offered and, eventually, at 101¼ bid, 102 offered.

United Rentals, he opined, "looks like it went up and stayed bid."

A second trader also saw the bonds at that latter level late in the day.

At another shop, a trader described "busy trading" in the issue, seeing it go out at 101¾ bid, 102 offered.

And still another saw the new paper tighten to 101¾ bid, 101 7/8 offered.

"Everything moves up," one of the traders observed.

United Rentals' existing 7% notes due 2014 were meantime seen up some 1 5/8 points on the day at 102 3/8. Another market source saw those same binds get as good as 1023/4, though calling that only a 1¼ point gain.

The issue that's to be taken out using the new-deal process, its 7 ¾% senior subordinated notes due 2013, were unchanged at 101¾ bid.

American achieves after pricing

Another new deal seen doing well in the aftermarket was American Achievement's 10 7/8% senior secured notes due 2016.

A trader saw the bonds firm to 101¼ bid, 101½ offered versus the par level at which the $365 million issue priced.

A second trader quoted the bonds going home at 101¼ bid, 102¼ offered.

BWAY up from sub-par

A trader saw BWAY's new 10 1/8%/10 7/8% PIK toggle notes due 2015 at 98½ bid when the $150 million issue - upsized from the originally planned $125 million - broke into the secondary market.

That was up from the 97 level at which the bonds had priced to yield 11.516%

"It's just starting now," he said, "first thing out, right off the bat."

He noted that "it's a pretty big coupon" and speculated that "it could be marchin' higher."

A second trader said that he had not seen BWAY trading around and blamed its relatively small size for a lack of investor interest.

However, yet another trader quoted the new bonds as having ascended to as good as 99 bid, par offered by the day's end, a two-point gain.

Check 'N Go goes nowhere

Several traders said they saw no sign of CNG Holdings' 13¾% senior subordinated notes due 2015, which priced at 94 to yield 15.551%, and cited the deal's extremely small size by usual junk market standards.

"That could be the reason I'm not seeing any of them," one said. "Nobody quoted it."

He theorized that like many deals run by Jefferies & Co., "it just got shoved away" into private hands.

Accellent finally appears

A deal that priced on Wednesday, but which seemed to generate little or no investor interest at the time, according to traders who didn't even bother quoting it during Wednesday's session, Accellent Inc.'s $315 million of 10% senior subordinated notes due 2017, was finally seen trading around on Thursday,. However, there was not too much activity in the Wilmington, Mass.-based medical device manufacturer's new issue.

A trader saw the bonds at 99¾ bid, par offered, down slightly from Wednesday's par issue price.

At another shop, a trader saw the new bonds at 99¾ bid, 100¼ offered, straddling their issue price.

But another trader quoted them at par bid, 100½ offered.

Hanger just 'hung there'

A trader said that the new Hanger Orthopedic Group Inc. 7 1/8% notes due 2018 were trading at 100¼ bid, 100½ offered, around where the $200 million offering had traded on Wednesday after pricing at par.

Another trader pegged the new deal from the Austin, Tex.-based operator of orthotic and prosthetic patient-care centers at 100¼ bid, 100¾ offered.

The first trader noted, "It's a small coupon for Hanger," which is using the proceeds from the bond offering to fund its tender offer for its 10¼% senior notes due 2014.

"It's tough to go from 10¼% to 7 1/8% and have it run away," he declared, "so it kind of just hung there."

Market indicators improve

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index up 1/8 point on Thursday to 99 5/8 bid, 99 7/8 offered, after having advanced by ½ a point on Wednesday.

The KDP High Yield Daily index meantime rose by 11 basis points on Thursday to close at 74.22, after having gained 3 bps Wednesday. For a second straight session, its yield narrowed by 3 bps, ending at 7.27%.

The Merrill Lynch High Yield Master II index shot up by 0.102% on Thursday after having retreated by 0.028% on Wednesday. Its year-to-date return pushed up to 13.668% from Wednesday's 13.552% and set a new peak level for 2010, eclipsing the previous mark of 13.604%, recorded on Monday.

Advancing issues led decliners for a second consecutive session on Thursday. As had been the case on Wednesday, the margin of difference was not great - just a couple dozen issues out of the more than 1,400 tracked.

Overall activity, represented by dollar-volume levels, rose by 8% on Thursday, after having slid by 25% on Wednesday versus the previous session.

A trader said that there was "nothing crazy" going on. "Most stuff is just grinding higher."

He said he was "not seeing anything special. Everything is just grinding tighter and tighter."

Hexion higher

He did see that Hexion Finance Escrow LLC/Hexion Escrow Corp.'s 8 7/8% senior secured notes due 2018 "have been really busy," though he added that the Columbus, Ohio-based chemical company's paper was "not much changed, though."

He quoted the bonds right around par, which he said was "maybe up 3/8," though he had not seen any fresh news out on the company.

A market source at another desk saw the bonds "a little above par," with mid-afternoon trading volume topping $15 million, making it one of the busier high yield issues on the day.

Dynegy mixed on uncertainty

Elsewhere, Dynegy Inc.'s bonds were seen mixed, as investors continued to evaluate the company's latest statements on its pending buyout by the Blackstone Group.

A market source saw the Houston-based power generating company's 7¾% notes due 2019 down 1½ points at 65½ bid, but also saw its 8 3/8% notes due 2016 gaining 2 points to close at 79.

Earlier in the week, the company held an investor presentation in which it made its case for agreeing to Blackstone's $4.50-per-share offer. Dynegy stock, the company said, could fall 40% or more if the sale isn't approved by shareholders at a Nov. 17 meeting.

Additionally, the company said it had looked into selling off assets instead of being bought out, but that certain financial covenants made that impossible.

"Dynegy will continue to face significant challenges in the near- to medium-term that pose significant risks and operating limitations for Dynegy," the company said in a letter sent to shareholders on Oct. 19.

"If the Blackstone transaction does not close, Dynegy stockholders could lose significant and immediate value and face future dilution and further loss of investment."

As previously reported, some Dynegy investors - including Carl Icahn - have deemed the Blackstone bid as inadequate. Icahn recently disclosed that he had secured a nearly 10% stake in the company, seemingly in an effort to block the takeover.

Ford resumes upside ride

A trader said that Ford Motor Co.'s paper was 'looking better" after having eased over several sessions, with the No. 2 U.S. carmaker's 7.45% notes due 2031 up ¾ of a point at 111.

Another trader meantime saw the Ford long bonds gaining ½ a point to end at 110½ bid, 111½ offered.

He also saw Ford domestic arch-rival General Motors Corp.'s 8 3/8% benchmark bonds due 2033 gain 1/8 point to end at 34 5/8 bid, 35 1/8 offered.

Sbarro struggle continues

From deep in distressed-debt territory came word that Sbarro Inc.'s bonds continued to trade actively at the sharply lower levels to which the Melville, L.I.-based Italian-style quick-service restaurant chain operator's paper has fallen over the past week.

A market source saw the company's 10 3/8% notes due 2015 trading around between 29 on the low side and 35 on the high end, before going out around 34, unchanged from Wednesday, mostly on smallish odd-lot trades. There was one sizable trade, at 35, which put the bonds down multiple points from the previous round-lot level of 42.5.

Sbarro had fallen to 42.5 last Friday on several large-block trades from prior round-lot levels in the low 60s, although there was no specific fresh negative news out on the company, which has been struggling with reduced traffic at the shopping malls where the company runs some 450 outlets, as well as higher prices for cheese, the key ingredient in its Italian specialties like pizza and lasagna.

Stephanie N. Rotondo contributed to this report.

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