Downsized Iasis prices, also Allison, Brown Shoe, new bonds firm; OPTI gyrates, Ford flies

By Paul Deckelman and Paul A. Harris

New York, April 27 - Iasis Healthcare LLC and Iasis Healthcare Corp. brought a downsized $850 million offering of eight-year notes to market late in the session on Wednesday, syndicate sources said, the biggest deal in a $1.5 billion junk session. But the hospital operator's notes came too late for aftermarket dealings.

Earlier in the session, automotive components maker Allison Transmission, Inc. priced $500 million of new eight-year notes at par.

At the same time, footwear retailer Brown Shoe Co. kicked in with an upsized $200 million tranche of eight-years at slightly below par. Both of those quickly-shopped deals - Brown an actual same-day offering - were heard by traders to have risen more than a point when they were freed for trading.

Syndicate sources heard that newspaper publisher Lee Enterprises Inc. had downsized and restructured its planned offering of senior secured notes, changing it from a two-part offering to a one-part deal by dropping a planned offering of second-lien notes, which will instead be done as bank debt.

Meanwhile, the forward calendar grew with the addition of prospective new deals from Shea Homes, Inc., Albaugh Inc., Milagro Oil & Gas Inc., Delphi Corp., Australia's TFS Corp., and Yonkers Racing Corp., the latter deal an add-on offering that may come this week.

Recent new deals from Building Materials Corp. of America, FelCor Escrow Holdings, LLC/FelCor Lodging LP and Univision Communications Inc. were seen trading slightly north of their respective issue prices - but Sanmina SCI Corp.'s transaction struggled to stay at its par issue price.

In the secondary market, OPTI Canada Inc. gyrated at lower levels in brisk trading after the Canadian energy company warned that its joint venture oilsands project will likely fail to meet this year's output target.

Ford Motor Co.'s bonds continued to firm smartly.

Iasis downsizes bonds

The primary market continued to generate a robust news volume on Wednesday.

Three issuers, each one bringing a single, dollar-denominated tranche of junk, raised $1.542 billion.

Meanwhile prospective new issuers continued to come aboard the new issue calendar.

Iasis Healthcare priced a downsized $850 million issue of 8 3/8% eight-year senior notes (Caa1/CCC+) at 99.277 to yield 8½%.

The yield printed at the wide end of the 8¼% to 8½% price talk. The amount was cut from $935 million.

Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. and J.P. Morgan Securities LLC were joint bookrunners.

In conjunction with the downsizing of the bonds by $85 million, Iasis upsized its seven-year term loan B by $90 million to $1.025 billion from $935 million.

Proceeds from the bond sale will be used to refinance bank debt, to fund a tender offer for the company's 8¾% senior subordinated notes, to repay its senior PIK loans and for general corporate purposes, including the proposed acquisition of St. Joseph Medical Center, future acquisitions and strategic growth initiatives, as well as potential distributions to equity holders.

Allison sees a big roll

Allison Transmission priced a $500 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7 1/8%, at the tight end of price talk which had been set in the 7¼% area.

Citigroup Global Markets Inc. was left bookrunner for the quick-to-market issue, with Barclays Capital Inc., Deutsche Bank Securities Inc. and UBS Investment Bank as joint bookrunners.

The Indianapolis-based automatic transmissions company plans to use the proceeds to fund a concurrent tender offer for its 11¼% senior notes due 2015.

The new deal saw considerable play from bondholders who were being taken out of the 11¼% notes and rolling into the new ones, a buy-side source said.

The deal was two- to three-times oversubscribed, the buy-sider added.

Brown Shoe upsizes

Finally, Brown Shoe priced an upsized $200 million issue of 7 1/8% eight-year senior notes (B3/B+) at 99.249 to yield 7¼%, at the wide end of the 7 1/8% to 7¼% price talk. The amount was increased from $150 million.

Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners for the quick-to-market deal.

The St. Louis-based footwear retailer and wholesaler plans to use the proceeds to fund a tender for its 8¾% senior notes due 2012.

Reverse inquiry helped to bring the Brown Shoe refinancing deal, according to an investor who reckoned that the order book was two-times oversubscribed.

Lee shifts second-lien debt

Lee Enterprises, Inc. downsized its offering of senior secured notes to $680 million from $1.055 billion, and shifted $375 million of seven-year second-lien notes into a seven-year second-lien bank loan on Wednesday.

The order books are closed for the remaining six-year first-lien notes (B3/B), which were upsized earlier in the week from $675 million.

The notes will be priced at par to yield 11%, according to the source.

The first-lien notes become callable in three years at par plus 50% of the coupon. However, a special call provision allows the issuer to redeem 10% of the first-lien notes annually at 103 during the non-call period.

The $375 million of seven-year second-lien loan comes with price talk identical to that of the previously contemplated second-lien notes: a 95 reoffer price with a 9% cash coupon and a 6% PIK coupon.

Credit Suisse (USA) Securities Inc. and Deutsche Bank Securities Inc. are the joint bookrunners.

The Davenport, Iowa-based newspaper publisher intends to use the proceeds to refinance substantially all of its existing debt, which is due in April 2012. As of March 27, 2011, remaining principal under Lee's credit agreement totaled $878.8 million, and the remaining balance on its Pulitzer notes totaled $147 million, which constitutes substantially all of its existing debt.

Shea Homes plans $750 million

The new deal calendar built substantially on Wednesday, and is apt to continue to do so, sources say.

Shea Homes LP and Shea Homes Funding Corp. began a roadshow on Wednesday for a $750 million offering of eight-year senior secured notes.

The deal, via bookrunner Credit Suisse (USA) Securities LLC, is set to price during the week ahead.

The Walnut, Calif.-based homebuilder plans to use the proceeds to refinance debt and for general corporate purposes.

Albaugh roadshow Thursday

Elsewhere Albaugh will begin a roadshow on Thursday in Los Angeles for an offering of up to $300 million of seven-year senior notes (expected ratings B3//BB-).

The deal will be presented to both high-yield and emerging markets accounts.

J.P. Morgan Securities LLC is the global coordinator. Citigroup Global Markets and Wells Fargo Securities LLC are the joint bookrunners for the debt refinancing.

Ankeny, Iowa-based Albaugh is a producer and distributor of off-patent (generic) chemicals used for crop protection in the United States, Argentina, Brazil, Mexico and Europe.

Milagro unveils deal

Milagro Oil and Gas will begin a roadshow on Thursday for a $250 million offering of five-year senior secured notes.

Credit Suisse (USA) Securities LLC and Wells Fargo Securities LLC are the joint bookrunners for the debt refinancing.

Yonkers Racing plans tap

Yonkers Racing plans to price a $100 million fungible add-on to its 11 3/8% senior secured notes due July 15, 2016 (current ratings B1/B+) before the end of the week.

Credit Suisse Securities (USA) LLC and Merrill Lynch are the joint bookrunners.

The Yonkers, N.Y.-based horse racing and gaming company plans to use the proceeds to repay its 13¼% senior subordinated notes due 2013, repurchase common stock warrants issued in connection with those notes, and for general corporate purposes.

The original $225 million issue priced at 97.095 to yield 12% on July 13, 2009.

TFS plans roadshow

Australia's TFS Corp. plans to begin a global roadshow on Monday in Singapore for its $175 million offering of seven-year senior secured notes.

Global Hunter Securities, Clarkson Capital Markets and Knight Securities are leading the deal.

The Nedlands, Western Australia-based owner and operator of sandalwood plantations plans to use the proceeds to fund land acquisitions and for general corporate purposes.

Allison issue improves

When Allison Transmission's new eight-year deal was freed for secondary dealings, a trader said that the Indianapolis-based automotive transmission manufacturer's offering traded as high as 101¼ bid, 101 5/8 offered, up from their par issue price.

However, after that, he said that market participants were starting to hit bids, first at 101¼ and then at 101, pushing the bonds off their peak.

Another trader a little later on was quoting the bonds at 100¾ bid, 101 offered.

Brown Shoe shines

A trader saw Brown Shoe's drive-by offering of 2019 bonds trading at par bid, 100½ offered, and then saw them having firmed a bit more to end at 100¼ bid, 101 offered. That was up about a point from the 99.249 level at which the St. Louis-based footwear retailer had priced its upsized offering.

Tuesday deals steady to firm

Among the deals which came to market on Tuesday, a trader said that Building Materials Corp. of America's 6¾% mega-deal due 2021 got as good as 100¾ bid, 101 1/8 offered - well up from the 99.106 level at which the Wayne, N.J.-based roofing supplies manufacturer priced its $1 billion of new notes to yield 6 7/8%.

A second trader saw the bonds at 101, and later at 100 7/8 bid.

Also clinging to the high side was Irving, Tex.-based lodging company FelCor's $525 million of 6¾% senior secured notes due 2019; a trader said that from where he sat the bonds were holding steady at the same par level which they had had priced on Tuesday.

A second trader said that the FelCor bonds at one point were offered at 101.

He saw them trading in a par to 100½ range.

However, by the late afternoon, he was seeing them offered at 100 1/8, "so that didn't go anywhere - there was nothing too special going on.

"It didn't move much."

Actually moving a little lower on the day was Sanmina-SCI's $500 million offering of 7% notes due 2019.

The San Jose, Calif.-based electronic manufacturing services provider's deal priced at par, but then did not go into the secondary market on Tuesday.

On Wednesday, a trader said that the bonds "traded down early in the day, but then they came back." However, he saw them move back down again after that.

He quoted the issue as having initially eased a little to a 993/4-99 7/8 context, and then moved back up to their par issue price.

But they couldn't stay above water, and were seen late in the day in a locked market at 993/4.

Univision eases

Monday's $600 million drive-by deal from Los Angeles-based Spanish-language media company Univision Communications was seen by several traders at around a 100¼ bid level, down from where they had been on Tuesday, though still above their par pricing level.

One of the traders said that the bonds had come down from a 1001/2-100¾ context at which they had traded on Tuesday.

He said that the bonds had traded in a locked market at 100½ for much of Tuesday.

Consolidated still strong

Going back a little further, a trader saw Consolidated Minerals Ltd.'s 8 7/8% senior secured notes due 2016 trading on Wednesday at 101 bid.

Last Thursday, the Australian mining concern had priced its $405 million deal - upsized slightly from the originally envisioned $400 million - at 99.5032 to yield 9%. Those bonds were seen having moved above the 101 bid level in Thursday's aftermarket dealings - and then having stayed there.

Indicators mostly firmer

Away from the new-issue realm, a trader saw the CDX North American Series 16 HY index up 3/16 point on Wednesday to end at 102 13/16 bid, 102 15/16 offered, after having gained ¼ point on Tuesday.

The KDP High Yield Daily Index meantime was up by 6 basis points on Wednesday to close at an even 76.00, after having gained 3 bps on Tuesday. Its yield tightened by 1 bp to 6.51%, after having come in by 2 bps on Tuesday.

The Merrill Lynch High Yield Master II Index rose for a sixth consecutive session on Wednesday, by 0.03%, on top of the 0.074% gain seen on Tuesday. That lifted its year-to-date return to 5.216%, a new peak level for the year, from 5.184% on Tuesday, the previous zenith.

Advancing issues led decliners, but their margin of victory was quite small, with a couple dozen issues separating the two groups, out of the more than 1,400 which were traded on Wednesday.

A trader called Wednesday's session "an odd sort of day," with a second saying there was "not much excitement there."

Bernanke briefing a non-event

Traders agreed that there was little or no direct impact on the junk market from Federal Reserve chairman Ben Bernanke's unprecedented press conference - believed to be the first such session with reporters by any chairman in the 98-year history of the Fed.

Bernanke cautioned that the central bank can't take additional steps to try to ease persistent high unemployment without the risk of escalating inflation - which would then force the Fed into a tightening mode, were that to happen.

While Treasury and investment-grade traders were hanging onto the Fed boss' every word, a trader said that Junkbondland was underwhelmed.

"Everyone was saying 'oh, let's see what the Fed has to say,' and we sat through that hour of excitement" - he was being ironic - "and that was pretty much it."

A second trader said that "most of the day, we were waiting for Bernanke to speak. Then he spoke, and [there were] all the goings on."

Yet another trader said that "obviously, it helped the equity market - but it didn't seem to affect our market, except that everything seemed to get quiet around the time he spoke, and since he spoke."

OPTI off on output warning

Among specific names in the secondary market, a trader said that "the big news today" was OPTI Canada, whose bonds gyrated at lower levels after the Calgary, Alta.-based oil-sands energy company reported its fiscal first-quarter earnings - and although OPTI showed a smaller first-quarter loss versus a year ago (C$27 million, or 9 Canadian cents per share, versus C$41 million, or Canadian cents per share a in the year-earlier period), it warned that it likely will not meet its 2011 previously announced production goal of 38,000 to 45,000 barrels of bitumen crude oil per day.

He saw OPTI's 8¼% notes due 2014 "down quite a bit at the opening," falling to 48½ bid from Tuesday's levels around 54 bid,, before coming back up to end at 52-52¼ bid, "a wide range on the day."

Despite the bounce off the early lows, he said the closing level was still down about 2 points on the day.

"It was all on numbers, their prospects, and how long it's going to take to get that thing [i.e. 35% owner OPTI and 65% owner Nexen Inc.'s joint-venture Long Lake, Alta. plant for extracting the thick, gooey bitumen from the ground and converting it into the more desirable light sweet crude] properly running."

A market source said that more than $20 million of the 81/4s had traded, making the issue one of the busiest of the day in the junk market.

OPTI, another trader said, "was the big dropper in the morning," with "a lot of activity first thing this morning" after the results, characterized by "crummy" production.

He too saw the bonds drop to 48½ from 54, only to come back to 52-53, "so that went on a wild ride today. It probably was the distressed bond of the day."

He said that "it all happened in the morning - I mean really early."

He said there was "real decent volume."

The trader also saw "some activity" in the company's 7 7/8% notes due 2014, which generally trade in tandem with, and sometimes right on top of, the 81/4s, "but not as much as the 81/4s. There was more action in the 81/4s."

He saw the 7 7/8s drop to 51-52 from prior levels at 54, "and that's pretty much where they traded all day, but on the other [the 8 /4s], there was more action," with the gyrations down to 48 ½ and then back up.

OPTI's Toronto Stock Exchange-traded shares meantime slid by 4 Canadian cents, or 12.28% on Wednesday, to end at 25 Canadian cents. Volume of 2.8 million shares was slightly above average.

Ford continues to cruise

In the autosphere, Ford Motor Co.'s 7.45% bonds due 2031 - which firmed smartly on Tuesday after the Number-Two U.S. carmaker reported its best first-quarter profit in 13 years - "did extremely well today," on Wednesday, a trader said, rising to 113 bid, 114 offered, up from 111 bid, 112 on Tuesday.

"It just keeps on doing better," he added. "It's made a big move in the last few days."

Dearborn, Mich.-based Ford - the only one of Detroit's traditional "Big Three" car manufacturers to have avoided tumbling into bankruptcy during the last few years - reported first-quarter net income of $2.6 billion, a $466 million increase from its profit in the first quarter of 2010.

Ford attributed the increase to its new fuel-efficient new products, continued investment in global growth and the strengthening of its core business.

The end of an era

Also on the automotive scene, a trader noted that Motors Liquidation Co.'s 8 3/8% bonds due 2033 - the big, liquid, very widely traded benchmark issue of the "old" General Motors Corp., as Motors Liquidation was known before the carmaker's 2009 bankruptcy reorganization - "have been liquidated" and will trade no more in the junk and distressed markets.

That follows Motors Liquidation's distribution of shares and warrants of the profitable "new GM" formed out of the reorganization to bondholders and other unsecured creditors to satisfy their claims.

"It's the end of an era," one market source said.

At another desk, a trader said that "it was done without a lot of fanfare. It seems like it was done pretty quietly."

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