GMAC brings benchmark, Cincinnati Bell, CEVA price; Psychiatric Solutions up on buyout buzz

By Paul Deckelman and Paul A. Harris

New York, March 10 - GMAC Financial Services came to market on Wednesday with a $1.5 billion offering of 10-year notes. The Detroit-based automotive and residential mortgage lender's mega-deal went home only modestly higher.

Apart from that benchmark offering, there were a pair of $625 million pricings, with Ohio telecommunications operator Cincinnati Bell Inc. bringing an upsized offering of eight-year senior subordinated notes late in the session, and before that, U.K. supply chain logistics company CEVA Group plc weighing in with an eight-year secured notes deal.

Also pricing on Wednesday were Whippany, N.J.-based fuels distributor Suburban Propane Partners, LP's upsized $250 million 10-year deal, and Irvington, N.J.-based consumer products company Prestige Brands, Inc.'s $150 million tranche of eight-year bonds.

Apart from the issues which actually priced, price talk was heard on McLean, Va.-based defense contractor Alion Science & Technology Corp.'s $300 million offering of four-year senior secured notes, which is expected to price on Thursday. Salt Lake City, Utah-based chemical concern Huntsman International LLC will host a Thursday conference call for would-be buyers of its 10-year senior subordinated deal. Dallas-based Nationstar Mortgage LLC was preparing to hit the road Thursday with a $250 million issue of five-year notes, which will price next week, while out of Europe French beverage maker Pernod Ricard SA announced plans for a six-year benchmark-sized issue of euro-denominated paper, price talk on which could emerge as early as Thursday.

In the secondary market, Psychiatric Solutions, Inc.'s bonds rose as much as 4 points as the Franklin, Tenn.-based provider of behavior health services was reported to be in talks with a would-be buyer.

Primary sees $3.15 billion

The hard-charging high-yield primary market saw an even handful of issuers, each bringing a single tranche, price a combined $3.15 billion face amount of junk, on Thursday.

Cash continues to pour into the asset class, accounts report.

One fund manager in the Midwest expects to hear a substantial inflow number on Thursday when AMG Data Services makes its weekly report on the cash flows for high-yield mutual funds.

However the market may be thinner than it appears from a distance, a buy-side source cautioned, adding that there is a touch of softness in the secondary market that likely betrays some selling into the formidable new issue calendar.

"People came back from the JP Morgan High Yield Conference feeling like things are okay, I think," the source said.

"But issuance has just been over the gates, here.

"And you get the feeling that they're just going to keep driving this thing."

GMAC sells $1.5 billion

GMAC Inc. brought Wednesday's biggest deal, a $1.5 billion issue of 8% 10-year senior unsecured notes (B3/B/B) which priced at 98.32 to yield 8¼%.

The yield printed on top of the price talk.

However, the deal appeared to "limp out," according to an investor who didn't play it, but who spotted the bonds at 98½ bid, 98¾ offered.

Deutsche Bank, Morgan Stanley, Bank of America Merrill Lynch and Citigroup ran the books for the quick-to-market sale.

GMAC, which has customarily issued into the high-yield market with bonds registered with the Securities and Exchange Commission, elected to go with the Rule 144A with registration rights and Regulation S format, this time around.

Proceeds will be used for general corporate purposes.

CEVA prices $625 million

Meanwhile CEVA Group plc priced an upsized $625 million issue of 11½% eight-year junior priority senior secured notes (Caa1/CCC) at 98.718 to yield 11¾%.

The yield printed on top of yield talk. The reoffer price came in line with discount talk of 1 to 2 points.

Credit Suisse was the sole bookrunner for the quick-to-market deal.

Proceeds will be used to refinance the company's dollar-denominated 10% and 12%, and the euro-denominated 12% notes due 2014.

The deal went well, according to an informed source, who noted that, as with some other recent deals, noteholders who were being taken out appeared eager to re-up on a name that is a familiar one in the high-yield neighborhood.

Cincinnati Bell massively upsizes

Elsewhere, Cincinnati Bell Inc. priced an upsized $625 million issue of 8¾% eight-year senior subordinated notes (B2/B-) at 98.596 to yield 9%.

The yield printed on top of yield talk. The reoffer price came in line with discount talk of 1 to 2 points. The amount was increased from $400 million.

Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities, Morgan Stanley, RBS Securities and Wells Fargo Securities were joint bookrunners for the quick-to-market deal.

Proceeds, together with cash on hand, will be used to redeem $375 million of the company's outstanding 8 3/8% senior subordinated notes due 2014, including accrued interest and the related call premium.

As with other recent deals, a "roll factor" played into the Cincinnati Bell deal, where investors being taken out of the old bonds were eager to get into the new ones.

For those who were not rolling out of the old paper, allocations were probably going to be pretty tough, the upsize notwithstanding, an investor said.

Suburban Propane a blowout

Also on Wednesday, Suburban Propane Partners, LP and Suburban Energy Finance Corp. priced an upsized $250 million issue of 7 3/8% 10-year senior notes (Ba3/BB-) at 99.136 to yield 7½%.

The yield printed at the tight end of the 7½% to 7 5/8% price talk. The size was increased from $225 million.

Bank of America Merrill Lynch and Goldman Sachs & Co. were joint bookrunners.

The deal was a blowout, sources said, and again a roll factor was cited, as the company was using proceeds to eliminate or reduce up to $250 million of its outstanding 6 7/8% senior notes due 2013.

And again, allocations were tough to severe.

One account reported putting in for $25 million and receiving a $1 million allocation.

Prestige Brands prices $150 million

Finally, Prestige Brands, Inc. priced a $150 million issue of 8¼% eight-year senior notes (B3/B+) at 98.564 to yield 8½%.

The yield printed on top of price talk.

Bank of America Merrill Lynch and Deutsche Bank Securities ran the books for the quick-to-market deal.

Proceeds, along with the company's new senior secured credit facilities and cash on hand, will be used to refinance its existing credit facility and its 9¼% senior subordinated notes due 2012.

Busy week for Bank of America

It has not escaped the notice of market watchers that it has thus far been a busy week for the Bank of America Merrill Lynch high-yield syndicate.

The desk served as left bookrunner on six deals over the past two days.

In addition to the Cincinnati Bell, Prestige Brands and Suburban Propane deals mentioned above, Bank of America has been left books on deals from Boise Paper Holdings LLC, MGM Mirage and Sonic Automotive, Inc.

Alion for Thursday

On Monday dealers were suggesting that the present week figured to be a "front-loaded" one, with the bulk of the primary's market business clearing by the Wednesday close.

However the final two sessions don't appear to represent all that much of a breather.

On tee for Thursday is Alion Science & Technology Corp.

The McLean, Va., technology solutions provider set price talk for its $300 million offering of senior secured notes due November 2014 (B1/B), on Wednesday.

The notes are talked with a 10% cash coupon and a 2% PIK coupon, to price at a discount, and to yield approximately 13% plus detachable warrants for 10% of the company.

The books close at noon ET on Thursday, and the deal is set to price after that.

Credit Suisse has the books for the debt refinancing.

Huntsman via Goldman Sachs

Meanwhile, Huntsman International LLC will host an investor call at 10:30 a.m. ET on Thursday for its $250 million offering of 10-year senior subordinated notes, according to an informed source.

Goldman Sachs & Co. has the lead on the debt refinancing deal, which is set to price on Friday.

Huntsman boards a busy Friday calendar.

Also on deck for the week's final session are Amsted Industries Inc., International Coal Group, Inc., Parker Drilling Co. and Sitel, LLC.

Pernod talk expected Thursday

Elsewhere, price talk is expected Thursday on French beverage distiller Pernod Ricard's benchmark euro-denominated offering of six-year notes (Ba1/BB+/BB+), according to market sources.

Barclays Capital, HSBC and Natixis Bleichroeder are joint bookrunners.

Proceeds will be used to help refinance loans used to buy the Absolut vodka brand in March 2008.

The whisper on the Pernod deal is euro mid-swaps plus 225 bps to 230 bps, according to a market source.

News is also expected Thursday on Stena AB's €150 million offering of 10-year senior unsecured fixed-rate notes (/BB+/), via Deutsche Bank Securities and JPMorgan.

The deal was whispered to be coming with a coupon in the vicinity of 8%, according to a market source.

The spread buzz, meanwhile, is euro mid-swaps plus 330 bps, according to a buy-sider in Europe who finds it a touch rich at that level.

Nationstar starts roadshow Thursday

One full roadshow was announced Wednesday.

Nationstar Mortgage LLC will begin a roadshow on Thursday for a $250 million offering of five-year senior notes (expected ratings B2/B).

Barclays Capital, Bank of America Merrill Lynch, Deutsche Bank Securities and RBS Securities are joint bookrunners for the debt refinancing and general corporate purposes deal from the Dallas-based mortgage lender.

And there are more names in the wings (and not too far back in the wings) sources advised Prospect News late Wednesday.

Among them are CKE Restaurants Inc. and Digicel.

The latter could be heading in with a large amount of bonds, according to a market source who expects either Bank of America Merrill Lynch or JP Morgan to lead the deal.

GMAC benchmark trades near issue price

A trader said that the GMAC's $1.5 billion bond deal "seems like it went pretty well," although he quoted the new 8% notes due 2020 around 98½ bid, 98¾ offered - not far above the 98.32 level at which the issue had priced earlier.

Another trader initially saw the bonds offered at 99, and then saw them at 983/4, before finally pegging them going home at 98½ bid, 99½ offered.

GMAC's existing 7½% notes due 2013 meantime were seen down nearly a point on the day, at just below the 101 mark.

Prestige pops in aftermarket

A trader saw Prestige Brands' new 8¼% notes due 2018 finishing at 100½ bid, 101½ offered - well up from the 98.564 level at which the $150 million issue had priced earlier.

Suburban Propane better

Before the Suburban Propane Partners deal priced, a trader indicated that the issue would likely be "a blowout."

Once the new 7 3/8% notes due 2020 went into the aftermarket, two traders separately said they saw the issue at par bid, 101 offered - up nearly a point from the 99.136 level at which the upsized $250 million issue had priced earlier in the session.

CEVA moves up

A trader said that CEVA Group's new 11½% junior priority senior secured notes due 2018 were finishing the day at 100¼ bid, 100¾ offered - versus the 98.718 level where the $625 million offering had priced earlier.

Another trader quoted the bonds at 100¼ bid, while a third saw them offered at 101, but without any bid side. The latter trader was a little puzzled by this, noting "I thought there would be more activity in CEVA," since it's a fairly large offering.

He said that "with the smaller deals -- $150 million, $200 million - sometimes you don't see them at all, but the larger ones you usually do." However, he declared that he had not seen any transactions involving CEVA.

Tuesday deals hold their gains

Among the deals which had priced during Tuesday's session, a trader said that the new MGM Mirage 9% senior secured notes due 2020 "shot right up" after they had priced and held onto those gains and even extended them in Wednesday's session, finishing at 102¾ bid.

A second trader saw the bonds at 102½ bid, 103 offered.

The Las Vegas-based casino giant had priced $845 million of the notes on Tuesday at par to yield 9%, and they had immediately firmed to levels above 102 bid, going home on Tuesday that way and remaining at those lofty levels on Wednesday.

He said Boise Paper Holdings, LLC/Boise Co-Issuance Co.'s new 8% notes due 2020 "were up [Tuesday], but they didn't do anything today," quoting the Idaho-based forest products firm's new issue at 99½ bid, par offered. The $300 million issue had priced Tuesday at 98.311 to yield 8¼%, and then had firmed to above the 99 mark when they were freed for aftermarket dealings.

He saw Charlotte, N.C.-based car retailer Sonic Automotive Inc.'s 9% senior subordinated notes due 2018 at 101½ bid, 102 offered, "grinding a little higher," after the $210 million deal had priced Tuesday at 99.299 to yield 9 1/8%, and then got as good as 101 3/8 bid, 101 7/8 offered after they were freed for secondary action later that same session. Another trader saw the bonds on Wednesday trading as high as 101 7/8 bid, before going out at 101¾ bid, 102 1/8 offered.

The trader saw Wayne, N.J.-based roofing products maker Building Materials Corp. of America's new 7½% notes due 2020 at 99¾ bid, 100¼ offered. The deal had priced on Tuesday at 99.135 to yield 7 5/8%.

Market indicators stay strong

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index add 1/8 point on Wednesday - the same as it did on Tuesday- to end at 99¼ bid, 99¾ offered.

The KDP High Yield Daily Index meanwhile edged rose by 13 basis points on Wednesday to finish at 71.83, after having edged up by 4 bps on Tuesday. Its yield came in by 4 bps to 7.91% after having tightened by 2 bps on Tuesday.

Advancing issues led decliners for a ninth consecutive session on Wednesday, by around a nine-to-five margin.

Overall activity, measured by dollar-volume levels, rose more than 19% from Tuesday's pace.

A trader characterized Wednesday's session as "pretty firm.

"The general theme is all the same stuff - this market is firm, clearly firm."

Markets go crazy for Psychiatric Solutions

Among specific names, a trader said that Psychiatric Solutions' 7¾% senior subordinated notes due 2015 "were up a bunch" on the news that the company might be bought out. The bonds were up by more than 4 points at one point in the day, pushing above the 102 mark, before finally going out around 101, which was still a 3 point gain, on volume of around $6 million.

Another market source quoted them going out around the 102½ level, calling it a more than 4 point gain on the day.

The bonds rose in tandem with the company's Nasdaq-traded stock, which jumped $5.09, or 21.29%, to end at $29 per share. Volume of 13.9 million shares was almost 15 times the usual turnover.

The bonds and shares had puttered along close to Tuesday's closing levels - but then jumped in the afternoon as the Wall Street Journal's online edition reported that the company is in talks to be acquired by private-equity firm Bain Capital, crediting its information to unidentified sources "familiar with the matter." The paper said that the firm was seeking around a 25% premium to its current market price, and that any deal would include the assumption of Psychiatric Solutions' outstanding $1.2 billion of debt, including the $220 million of 2015 bonds.

Boston-based Bain Capital had no comment on the report. Psychiatric Solutions - without naming specific names of any would-be buyers - confirmed Wednesday that it "has been approached by third parties in connection with a potential acquisition of PSI." It said that it has formed a special committee of its board of directors to consider possible responses to such overtures, and has retained Goldman, Sachs & Co. and Shearman & Sterling LLP as its financial and legal advisors, respectively.

Psychiatric Solutions further cautioned that there could be "no assurance that any transaction for a purchase of PSI will take place," and said that it expects to make no further comments unless and until it either enters into a definitive agreement for such a transaction or, alternatively, it determines that no such deal will be pursued.

Bon Ton better on numbers

A trader said that Bon-Ton Department Stores Inc.'s 10¼% notes due 2014 "moved up a lot" after the York, Pa.-based retailer issued favorable fourth-quarter numbers. He saw the bonds go out around 96 bid, 97 offered, versus levels around 92-93 on Tuesday. Volume was more than $20 million, making the issue one of the busiest names of the day in Junkbondland.

For the fourth quarter ending Jan. 30, Bon-Ton swung to a net income of $80.3 million, or $4.34 per share, versus a net loss of $87.7 million, or $5.22 per share, the year before.

While comparable store sale dropped 2.4% during the quarter, operating income improved by 67% to $101.4 million.

"We recognized early on the challenges we were going to face in 2009," commented Bud Bergren, president and chief executive officer, in the earnings release. "Initiatives were identified and implemented throughout 2008 and 2009 to improve our cost structure and better position the company for the weakened economy as well as for the longer term."

Like many other retailers who have struggled during the weak economy, Bon-Ton managed its inventory "conservatively," Bergren said, which helped the company improve gross margins by 350 basis points in the quarter and by 210 bps for the fiscal year.

A leap for Lyondell

From deep in distressed-debt territory came word that bankrupt Lyondell Chemical Worldwide Inc.'s 7 5/8% bonds due 2026 jumped more than 11 points to end at 39 bid, from previous levels below 28. "They were up a bunch," a trader said of the bonds, which had originally been issued by Millenium America Inc., which was later absorbed into Houston-based Lyondell; the latter company itself was later taken over by LyondellBasell AG.

However, he didn't see much activity in the company's other paper, such as its 10¼% notes slated to come due on Nov. 1, or its 9.80% notes due 2020, both of which stayed in the lower 80s. "I didn't see any trades today" in those issues. "All of the activity was in the 7 5/8s, the others didn't look like they traded."

A market source at another desk said that volume in the 7 5/8s was more than $7 million.

Lyondell, yet another trader declared, "was up big," - at least in terms of that '26 paper.

LyondellBasell, the parent company of Lyondell Chemical, recently filed its plan of reorganization. The plan follows a proposal made by an Apollo Management-led private equity group. The plan also rejected a takeover bid from India-based Reliance Industries.

On Wednesday, news reports said that the former head of LyondellBasell, billionaire Len Blavatnik, was seeking a 5% to 15% stake in the new reorganized company. To achieve this, his industrial holding company - Access Industries Holdings LLC - has committed to guaranteeing up to $800 million of a rights offering that is intended to add $2.8 billion to Lyondell's coffers.

"Access has believed in the combination of Lyondell and Basell from the outset and has remained supportive of the company throughout the reorganization, both through its active involvement on the board and its recent commitment to invest up to $800 million," Blavatnik said in a statement, according to BusinessWeek.

Lyondell is looking to emerge from Chapter 11 protection by April 30.

Select Medical slide subsides

A trader saw Select Medical Corp.'s 7 5/8% notes due 2015 in a context of 92-3, which he said "looks unchanged" from the levels seen on Tuesday, when the Mechanicsburg, Pa.-based hospital operator's bonds slid by around 4 points in heavy trading on a New York Times report that a Senate committee will probe patient deaths at long-term hospitals, with a particular focus on Select Medical, which criticized the story as "inaccurate, misleading and sensationalistic." He said that within that context, the bonds went out around 92 7/8, which he called up a point from the low Tuesday.

Unlike the heavy volume of activity seen Tuesday, he said that Wednesday's trading really wasn't that busy - "there were five or six trades of decent size. So it seems like it's found its level there, right around 92-93."

Financials seen firmer

A trader said that "some financials were up," including MBIA Inc.'s 14% surplus notes due 2033, which rose to 63-65, which he called "up a point or so" on the session. The Armonk, N.Y.-based bond insurer's paper "has been on a steady move. Over a week, I'd say they've come from the mid-50s to here," and in fact, he said, had begun the month at a 47-48 context on March 1, "so last week was a big week for them, but the last couple of days, they've been up a point or so each day."

On March 1, MBIA reported that it lost $242 million, or $1.16 per share, in the fourth quarter - less than one-fourth its year-earlier red ink of $1.2 billion, or $5.21 per share. And for the year, it got back in the black with a $623.2 million profit, or $2.99 per share, versus its 2008 loss of $2.7 billion, or $12.11 per share.

The trader said that Radian Group Inc. was "another name that was up," with its 5 5/8% notes due 2013 ending around 80-801/2, which he called "up a point or two, on good volume - and that's a name that normally doesn't have much volume."

He said that the rise in the Philadelphia-based bond and mortgage insurance operator's bonds was likely linked to the gain of 47 cents, or 4.23%, seen in its New York Stock Exchange-traded shares, which closed at $11.58, on volume of 5.3 million shares, or about 1½ times the norm, since "the stock was pretty strong today."

American International Group Inc.'s bonds "overall have been better" in the wake of the recent news that the troubled New York-based insurer is selling units so it can pay down some of its massive government debt, as well as gains in its shares, along with those of other bailed-out financial firms.

He saw "decent trading in some of them," with its American General Finance Corp. unit's 6.90% notes due 2017 at 78½ bid, which he called up a point, while AmGen's 4% notes due 2011 were also up a point at 96-97. "There wasn't active trading, but they were quoted there," he said. "They were better on the day."

U.S. Concrete crumbles on warning

A trader saw U.S. Concrete Inc.'s 98 3/8% notes due 2014 trading between 56 and 58 during the day, and going out in a 58-58½ market. He said that the bonds had "touched 60 [Tuesday], but when you average the last few days, between 56 and 60, 58 ½ seems pretty much neutral. He called the issue unchanged on the day, trading about 58 - unlike its Nasdaq-traded shares - which tumbled 13 cents, or 22.49%, to close at 45 cents per share, after the Houston-based cement company warned that "absent a successful restructuring, there is substantial doubt about our ability to continue to operate as a going concern," citing a severe erosion in its liquidity profile.

But another market source saw the company's bonds down a deuce on the day at 57½ bid.

-Stephanie N. Rotondo contributed to this report

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