Beazer prices upsized deal, gains; market awaits restructured WOW!; Hologic hits the road

By Paul Deckelman and Paul A. Harris

New York, July 11 - Beazer Homes USA Inc. priced an upsized $300 million offering of six-year secured notes on Wednesday. The builder's deal was the only dollar-denominated junk deal to price during the session, the first this week which has seen under $1 billion come to market.

There meantime were pricings on a pair of non-dollar deals from overseas issuers - Fiat Finance & Trade Ltd. SA, a unit of the Italian carmaker, driving by with a €600 million four-year deal, and Swiss telecommunications operator Sunrise Communications International SA bringing a four-part offering of five-year fixed- and floating-rate paper denominated in euros and Swiss francs to market.

Back on the domestic front, price talk emerged on WOW! Internet Cable & Phone's $1.02 billion offering, now restructured into a two-part transaction that is expected to price on Thursday morning.

Medical diagnostic systems maker Hologic Inc. was heard by high-yield syndicate sources to be embarking on a week-long roadshow on Thursday that will allow it to pitch its $750 million offering of eight-year notes to potential buyers on both the East and West coasts.

Away from the new-deal realm, traders saw such recently beleaguered bonds as Patriot Coal Corp. and Radiation Therapy Services Inc. bouncing a little after taking their lumps in previous sessions.

But ATP Oil & Gas Corp.'s battered notes were seen continuing to move lower.

Beazer upsizes secured deal

Beazer Homes brought Wednesday's sole dollar-denominated deal, an upsized $300 million issue of senior secured second-lien notes due April 15, 2018 (B3/B/B+) which priced at par to yield 6 5/8%.

The yield printed at the tight end of price talk which had been set in the 6¾% area. The amount was increased from $275 million.

As price talk was circulating, a buyside source said that the deal appeared to be very well received by investors.

Credit Suisse, Goldman Sachs, Deutsche Bank and UBS were the joint bookrunners for the quick-to-market deal.

The Atlanta-based homebuilder plans to use the proceeds to refinance its second-lien notes due 2017. The additional proceeds will be used for general corporate purposes.

Sunrise prices four-part deal

In Europe, Switzerland's Sunrise Communications International priced CHF 896 million equivalent of senior secured notes, all of which mature on Dec. 31, 2017.

The deal included a €125 million add-on to the Zurich-based telecommunications company's 7% senior secured fixed-rate notes due Dec. 31, 2017, which priced at 105.5 to yield 5.808%.

The reoffer price came at the rich end of the 105 to 105.5 price talk.

The original €371 million issue priced at par in October 2010.

In addition, Sunrise priced a CHF 370 million tranche of fixed-rate notes at par to yield 5 5/8%.

The yield on that tranche printed at the tight end of yield talk which was set in the 5¾% area.

The transaction also included two tranches of floating-rate notes, including a €167 million tranche which was priced at par to yield Euribor plus 475 basis points, at the tight end of the Euribor plus 475 bps to 500 bps spread talk.

Meanwhile a CHF 175 million tranche was priced at par to yield Libor plus 550 bps, on top of spread talk.

Global coordinator and bookrunning manager Deutsche Bank will bill and deliver. BNP and UBS were also bookrunning managers.

ING, SG CIB and UniCredit were joint bookrunners.

The Zurich-based company plans to use the proceeds, along with CHF 200 million of cash on its balance sheet, to repay bank debt.

Fiat drives by

Italy's Fiat Finance & Trade priced a €600 million issue of global medium-term notes due Oct. 17, 2016 (Ba3/BB-/BB) at par to yield 7¾%.

The yield printed on top of the price talk.

Before coming out with official talk, Fiat appeared to be trying to get the deal done with a 7½% yield, according to a trader who added that there were more than €1.5 billion of orders for the €600 million offer.

Not long after pricing, the bonds took a dip, and were seen trading at 99¾ bid, par ¼ offered, before recovering to par 1/8 bid, par 3/8 offered, the trader said.

Wednesday's deal saw the cost of capital rise for Fiat. The company priced €850 million of five-year paper to yield 7% in mid-March of this year.

Bank of America Merrill Lynch, BNP, Citigroup, J.P. Morgan, Morgan Stanley and SG CIB managed Wednesday's quick-to-market deal from the Turin, Italy-based automobile manufacturer.

WOW! sets talk

Looking ahead to the Thursday session, WOW! Internet Cable & Phone set price talk for its $1.02 billion dual-tranche notes offer (Caa1/CCC+) on Wednesday.

A $700 million tranche of seven-year senior notes is talked with a yield in the 10¼% area, and is expected to price with a original issue discount of up to a point.

A $320 million tranche of 7.25-year senior subordinated notes is talked with a yield in the 13% area, and is also expected to price with an OID of up to a point.

In addition to the release of price talk, the deal has undergone covenant changes, a syndicate source said.

The order books closed on Wednesday. The notes are set to price on Thursday morning.

Credit Suisse, Morgan Stanley, RBC, SunTrust and Mitsubishi-UFJ are the joint bookrunners.

The deal had previously been in the market as single $1.02 billion tranche of eight-year senior notes.

Elsewhere Golf Town Canada Inc. and Golfsmith International Holdings, Inc. talked their C$150 million joint offering of five-year senior second-lien notes (B/DBRS B low) with a yield in the 9½% area.

The offering, a joint issue which has 70% of the deal being issued by Golf Town and 30% by Golfsmith, is set to price by the end of the present week.

Scotia, TD and BMO are the bookrunners.

Hologic to start roadshow

Hologic plans to start a roadshow on Thursday in New York City for its $750 million offering of eight-year senior notes (B2/BB).

The roadshow wraps up Wednesday, July 18, with pricing expected to take place after that.

Goldman Sachs has the books for the acquisition deal.

New Beazer bonds firmer

When Beazer Homes' new 6 5/8% senior secured second-lien notes due 2018 were freed for secondary dealings, traders saw the Atlanta-based builder's issue move up in the aftermarket.

One quoted the upsized $300 million issue at 100½ bid, 101 offered.

A second saw them at 100¾ bid, 101 offered, while yet another trader pegged them at 100¾ bid, 101¼ offered.

The quickly-shopped deal had priced at par after being upsized from an originally announced $275 million.

KB tender comes too late

Out of that same sector, a trader noted that Beazer's Los Angeles-based sector peer, KB Home, had announced plans to tender for $150 million of its outstanding bonds, with first priority to be given to its 5¾% notes due 2014, about $194 million of which are outstanding. It assigned second priority to its other two issues - its $170 million of 5 7/8% notes due 2015 and its $296 million of 6¼% notes, also due 2015.

However, he said that the announcement came too late in the session to have much impact on the company's bonds, suggesting there may be some market reaction on Thursday.

The 53/4s were seen trading on Wednesday around the 101½ area, versus the 104 total consideration price at which the company is offering to pay for those bonds if they are tendered by the early tender deadline at 5 p.m. ET on July 23.

The 5 7/8s were at par Wednesday, while the 61/4s were already around the 102 level at which the company will buy any of the latter two series that are tendered, up to the $150 million tender limit and subject to proration, should it not get $150 million of the 53/4s.

Tuesday's SBA firms up

Traders saw the new 5¾% notes due 2020 from SBA Communications Corp. trading at or above the 102 level on Wednesday, up a little from the levels they had reached after pricing on Tuesday.

One trader saw the Boca Raton, Fla.-based communications antenna tower operator's new issue at 102 bid, 102 1/8 offered, while a second trader said they were "wrapped around" the 102 level.

On Tuesday, the quick-to-market $800 million deal - upsized from an originally announced $650 million - had priced at par.

Then in the aftermarket, traders saw the bonds around 101½ bid, 102½ offered.

Eagle Rock holds around issue

Traders meantime said that Eagle Rock Energy Partners LP's new $250 million add-on offering of 8 3/8% notes due 2019 was trading around the 98.501 level at which the bonds priced on Tuesday to yield 8.666%.

A trader saw the Houston-based midstream natural gas company's quickly-shopped deal at 98 bid, 98¾ offered, while a second saw the bonds better, around 98 5/8 bid, 98¾ offered.

Market measures mostly better

Away from the new-deal arena, statistical market performance measures - after having turned mixed on Tuesday - reverted to Monday's form and were mostly better.

A trader saw the Markit Group CDX North American Series 18 High Yield Index unchanged on Wednesday to end at 96 5/16 bid, 96 9/16 offered, after having eased by 1/8 point on Tuesday.

But the KDP High Yield Daily Index gained 7 basis points on Wednesday to end at 73.66, after having eased by 4 bps on Tuesday, its first loss after eight straight advances. Its yield came in for a 10th consecutive session, declining by 2 bps for a second straight day to end at 6.39%.

And the widely followed Merrill Lynch U.S. High Yield Master II Index made it an even dozen days on the upside Wednesday, gaining 0.082%, on top of Tuesday's 0.131% rise.

That lifted its year-to-date return to 7.94% from Tuesday's 7.852% finish.

Wednesday's reading also set yet another new 2012 high for the index, eclipsing the old mark, set just on Tuesday. The index is thus at its highest point since the end of 2010, when it returned 15.19%.

Battered names seen better

Among specific names, traders saw some of the bonds which have recently been under pressure come off the lows they hit this week and regain a little ground.

For instance, a trader said that Radiation Therapy's 9 7/8% notes due 2017 "were hanging right around a 60 level," after the bonds traded during the session between 60 and 61 bid.

He said "I'd call it up a point or so off their bottom, though on very little trading," with maybe $3 million bonds having changed hands.

On Tuesday, those bonds had fallen about 6 points, finishing in a 58-to-60 context, also on fairly light trading. That in turn followed a 9-point nosedive on Monday by the Fort Myers, Fla.-based radiation oncology services provider's bonds to around the 65 bid level from the lower 70s earlier.

Those losses had been precipitated by the news that the Centers for Medicare & Medicaid Services - the government body that sets Medicare and Medicaid reimbursement rates for providers - released its preliminary 2013 rate schedule on Friday - calling for sharp cuts in the amount that Washington will pay companies such as Radiation Therapy Services for providing radiation therapy services to Medicare patients.

Company officials blasted the procedure that the CMMS used to calculate its reimbursement rates during a late-Monday conference call.

Another credit seen improving after having taken its lumps - this one for a second straight session on the rebound - was the recently bankrupt Patriot Coal Corp.

"They bounced again, up a couple of points," a trader said.

"They bounced off the bottom," a second agreed, seeing the St. Louis-based coal producer's 8¼% notes due 2018 at 39 bid, 40 offered, about a 3-point gain.

Another trader said the bonds were active after "hitting the bottom [earlier in the week] and coming back up, finishing at 37½ bid, 38 offered.

Patriot had plunged into the lower 30s on Monday on the news that it had sought protection from its bondholders and other creditors via a Chapter 11 filing with the U.S. Bankruptcy Court in Manhattan; however, the bonds had risen back into the mid-30s during Tuesday's dealings.

A trader said they were just coming back after having been beaten down so much, although he also acknowledged that the fact that the bonds are now trading flat, or without their accrued interest, following the filing, helped to boost the paper's nominal price by a couple of points..

ATP slide continues

But not all of the beaten-up names were recovering on Wednesday - case in point was ATP Oil and Gas' 11 7/8% second-lien senior secured notes due 2015, which were seen having lost yet another point or so, on top of losses racked up on Monday and Tuesday.

A trader said that the Houston-based offshore energy exploration and production company's bonds had dropped as low as 43 bid on Wednesday, well down from their recent highs around 50, and finishing up at 43¾ bid, 44¾ offered.

A second trader called the bonds down a point on the day at 44 3/8 bid, on volume of between $7 million and $9 million.

Market sources said that the bonds, and the company's recently battered shares, have suffered as investors remain nervous about the company's liquidity situation - specifically, how it plans to finance a big coupon payment coming due in the fall on its nearly $1.5 billion of bonds - and are also skeptical of company projections and predictions on increasing its oil and gas output (see related story elsewhere in this issue.)

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