Trico, Talecris, Superior Plus deals price, Trico firms smartly; Sinclair up; Tronox tops out

By Paul Deckelman and Paul A. Harris

New York, Oct. 16 - A trio of new deals - led by Trico Shipping AS and also including Talecris Biotherapeutics Holdings Corp. and Superior Plus LP, rounded out a busy, though holiday-shortened week in the high yield primary arena Friday.

Both Trico and Talecris, along with the Lions Gate Entertainment, Inc. offering price late Thursdau, were quoted by traders as having firmed in the secondary, although the Trico offering - which came at a sizable discount to par - did the best in the aftermarket, jumping to well above the par level when it was freed for trading. That left market participants to debate whether investors just found the offering attractive, or the deal itself was priced way too low, or else some combination of the two.

Among recent new deals, Sinclair Television Group Inc.'s new senior secured notes were heard to have moved up a point or so from the level at which they priced on Thursday, while the Hunt Valley, Md.-based TV station group's outstanding bonds were also better.

With the new-deal forward calendar greatly reduced by the week's activities - which saw eight domestic, dollar-denominated deals having a total face value of about $4 billion pricing - MDC Partners Inc. announced plans to sell $200 million of seven-year notes.

Apart from new-deal related names, traders saw continued brisk activity in Tronox Worldwide LLC's bonds - although the solid upside ride which that issue has lately been on seemed to have run its course.

Talecris upsizes

Three issuers combined on Friday to price $1 billion and C$150 million of junk. Each one brought a single tranche.

Talecris Biotherapeutics priced an upsized $600 million issue of 7¾% seven-year senior unsecured notes (B1/BB) at 99.321 to yield 7 7/8%.

The yield printed at the tight end of the 8% area yield talk. The issue price came rich to the discount talk of 1 to 2 points.

Morgan Stanley & Co. Inc., Goldman Sachs & Co., Wells Fargo and Citigroup Global Markets Inc. were joint bookrunners for the debt refinancing deal.

Trico beats talk

Trico Shipping priced a $400 million issue of 11 7/8% five-year senior secured notes (B1) at 96.393 to yield 12 7/8%.

The debt refinancing notes came 12.5 bps lower than the 13% to 13¼% yield talk, and rich to the price talk of 4 to 5 points of original issue discount.

Barclays Capital Inc. ran the books.

Superior plus oversubscribed

Superior Plus priced a C$150 million issue of seven-year senior unsecured debentures (/BB-//DBRS: BB) at par to yield 8¼% on Friday, an informed source told Prospect News.

Scotia Capital ran the books.

Proceeds will be used to repay existing debt under Superior LP's syndicated bank credit facility and expand Superior LP's access to capital which can be used for acquisitions, working capital and/or general corporate purposes.

The deal was approximately 1.5-times oversubscribed, according to an informed source, who added that the deal was very well distributed with 37 institutional accounts participating, representing a variety of investor classes.

Murray Energy starts Monday

Murray Energy Corp. will start a roadshow on Monday for its $440 million offering of six-year senior secured notes (/B+/).

Goldman Sachs has the books for the Rule 144A for life deal.

Proceeds, together with available cash, will be used to repay all of the debt outstanding under the Pepper Pike, Ohio-based coal producer's existing credit facilities.

Boise to price Friday

Boise Inc. plans to price $300 million eight-year notes next Friday, according to a market source.

JP Morgan, Barclays Capital and Bank of America Merrill Lynch will be joint bookrunners,

Proceeds will be used to repay term loan borrowings.

The prospective issuer is a Boise, Idaho-based manufacturer of packaging and paper products.

Trico is triumphant - but why?

When the new Trico Shipping 11 7/8% senior secured notes due 2014 were freed for secondary dealings, the bonds shot right up on the break, with several traders quoting them at 101¾ bid - multiple points better than the 96.393 level at which that $400 million issue had priced earlier in the session to yield 12 7/8%.

"They [investors] loved the deal," said one trader, who quoted the bonds at 101¾ bid, 102¼ offered, "and they loved the coupon," which came in at a fat 11 7/8%.

However, a second trader said that the market had been waiting for the deal to come and when it did, "it was underpriced at issue and traded up drastically" to 102 bid. "It was definitely mispriced on issue," he said.

He opined that the underwriters "clearly didn't price it correctly," and suggested that they "were behind the large gains."

The first trader ventured "how do you think [the issuer] feels in a situation like that? I'm not sure if sometimes, the issuer feels it got ripped off if the bonds trade up by 5 points the first day. It's funny, isn't it?"

But he said that in situations where a new bond does extremely well right out of the box, "You always get that" - suggestions from some traders that the underwriter(s) priced a bond too low.

Yet another trader - drawing on his experience as a former investment banker - said where to price such a deal "is always a delicate situation - you want to make sure the deal has enough juice in it to get people interested in it and get it done. You have to walk a fine line. You've got to make it so the investors want to play in it, but at the same time" price the deal sufficiently rich to deliver the desired proceeds to the issuer.

"Is this one of these [situations] where every year, or twice a year, the company is coming back to the market to issue more paper? You've got to leave a little bit of juice on there so that next time they come around they're welcome."

Pricing the bonds a little on the cheap side "makes the deal a little bit easier to sell."

Seeing Trico having shot above par from its mid-96 pricing level, he added "that's a nice profit for the day" for anyone who got the bond right out of the chute and rode it upward.

Talecris bonds trade up

A trader said that the new Talecris Biotherapeutic Holdings 7¾% notes due 2016 was also a good gainer in the secondary market, moving up to 101¾ bid, 102 offered.

"That bond just jumped up," he said - although the rise was not as dramatic as the Trico deal's - from the 99.321 level at which the Research Triangle Park, N.C.-based biotechnology company had earlier priced its offering.

"We saw it pop up right away after it priced," another trader said. "We saw a 101 bid, right out of the box," although he said he had not seen an offer level after that.

Yet another trader saw the bonds ending at 101 bid, 102 offered.

Lions Gate gets a round of applause

A trader saw Lions Gate Entertainment's $236 million issue of 10¼% senior secured second priority notes due 2016 "trading all day" in a 971/4-98 range, up from the 95.222 level at which the Vancouver, B.C.-based film and television producer priced its deal - upsized from $200 million originally - to yield 11¼% late on Thursday. Terms emerged Friday.

After trading in that context, he said, the bonds got even better at the end of the day, finishing at 98¼ bid, 98¾ offered.

"They caught some lightning at the end of the day," he observed.

Sinclair strengthens after bond deal

In another show business-related name, a trader saw the new Sinclair Television Group Inc. 9¼% second-lien senior notes due 2017 as having firmed to 99¼ bid, 99¾ offered, well up from the 97.264 level at which company had priced its $500 million bond issue late Thursday - upsized from $430 million originally - to yield 9¾%.

"I saw it quoted a lot," he offered.

He meantime saw the company's outstanding 8% notes due 2012 trading at 96 bid, which he called up a point, but said that compared with the new deal, "there was not a lot of trading in those. I am sure there was a lot more trading in the new issue."

A market source quoted the Sinclair 8s up nearly 3 points at just above 96 bid.

A trader noted that earlier in the month, the 8s had been trading around a 93-94 context and going back a little further, had closed out September in the mid-to-high 80s, "so that's slowly been working its way upward."

Market indicators mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index unchanged on Friday at 94¼ bid, 94½ offered, after having lost ¼ point on Thursday. The market measure showed a gain on the week from the 93 bid, 93½ offered level at which it had ended the previous Friday, Oct. 9.

Meanwhile, the KDP High Yield Daily Index rose by 8 basis points on Friday to end at 69.50, after having risen by 4 bps in Thursday's dealings. Its yield narrowed by 1 bp to 8.63%, after having come in by 3 bps the day before. The index stood at 69.09, with a yield of 8.75%, the previous Friday.

In the broader market, advancing issues fell behind decliners by a narrow margin of several dozen issues, breaking a two-session winning streak.

Overall market activity, as measured by dollar-volume levels, fell about 16% from Thursday's pace.

A trader said that "junk was fairly firm, even though stocks were weaker."

Equities - whose strong rise the previous two sessions had lent a helping hand to Junkbondland - were seen in retreat on Friday in reaction to a big quarterly loss for Bank of America Corp. and a substantial drop in profits at General Electric Co. The bellwether Dow Jones Industrial Average - which on Wednesday had pushed above 10,000 for the first time in more than a year and which had extended that gain on Thursday - fell back below that psychologically magic mark on Friday, ending at 9,995.91, down 67.03 points on the day, or 0.67%, with broader indexes like the Nasdaq Composite and the S&P 500 also pointing lower.

Upward bias for junk

Despite stocks having wimped out, the trader saw strength in a variety of junk issues. For instance, he said, "there's something going on - and I can't figure it out," with Warner Music Group Corp.'s bonds. "They're up strong."

He quoted the New York-based recorded music giant's 9½% notes due 2016 going "up, up and up,:" gaining 2 to 3 points on Friday at 106¾ bid, 107¼ offered, while its zero-coupon notes "went from 95 to 98 in a heartbeat. I don't know if it's the [strong] market or [any] news."

He saw Mueller Water Products Inc.'s 7 3/8% notes due 2017 up 2 or 3 points at 89 bid, on the news that Anvil International, LP - a wholly owned subsidiary of Mueller, an Atlanta-based manufacturer of water infrastructure and flow control products - had entered into an a definitive agreement to sell certain of the assets of Seminole Tubular Products, its plumbing fittings business, to John Maneely Co. Financial terms of the agreement were not disclosed. He noted that the bonds are normally thinly traded, even though there are $420 million outstanding, but said they went up "like a rocket" Friday on the news.

Tronox trajectory levels off

A trader once again saw "a lot of volume" in Tronox Worldwide's 9½% notes due 2012, seeing them ending in a 64-65 context, which he said was "down a little bit" on the day, and below the day's highs around 66-67 reached earlier in the session.

He said the bonds were ending a point lower on the day, "but there was a lot of volume." As to the factors behind the bankrupt chemical pigments manufacturer's recent surge - which has lifted those bonds nearly 30 points, from the levels in the upper 30s they held pre-news on Oct. 7, when it released positive financial projections for the next several years - he noted that "their 8-K [filing with the Securities and Exchange Commission] did come out today, which might have something to do with it."

In that filing, Tronox - which is currently restructuring under Chapter 11 - announced a Friday meeting with its bondholders. At that session, Tronox told the bondholders that it is interested in talking with any of them who may want to participate in the funding of a stand-alone plan of reorganization.

The company said it may need to raise equity or other capital in addition to its proposed exit financing to fund plan obligations.

As previously reported, the Oklahoma City-based maker of chemical pigments recently entered into a $415 million "stalking horse" agreement with affiliates of Huntsman Corp. for the proposed sale of substantially all of Tronox's assets.

A source at another desk saw Tronox's bonds as being among the most actively traded, with nearly $20 million having moved by mid-afternoon. He quoted the notes at 65½ bid, although that was down from the 66¼ level seen Thursday, when Tronox was also among the busiest issues.

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