Kinder Morgan, Hertz, AK Steel drive-bys lead $2.5 billion session; Citadel, Bumble Bee price

By Paul Deckelman and Paul A. Harris

New York, Dec. 6 - Citadel Broadcasting Corp. and Bumble Bee Acquisition Corp. combined to price slightly more than $1 billion of new high-yield bonds on Monday, syndicate sources said. But those scheduled forward-calendar deals - $400 million for Citadel and $605 million for Bumble Bee - took a back seat to a quartet of opportunistically timed, quickly shopped surprise offerings that lifted the day's new-deal tally to some $2.5 billion.

Kinder Morgan Finance, a unit of the eponymous Houston-based energy pipeline, transportation and storage company, came in with an upsized $750 million offering of seven-year notes.

Another big deal came from vehicle rental giant Hertz Global Holdings, which priced $500 million of 10-year notes.

There was a pair of smallish add-on deals: an upsized $100 million from Ann Arbor, Mich.-based auto parts maker Affinia Group Inc. and $150 million from more well-known junk issuer AK Steel Corp.

The new Citadel and AK Steel deals were seen by traders to have firmed solidly in the aftermarket, while Kinder Morgan and Bumble Bee traded more closely around their respective issue prices. Hertz and Affinia priced too late for any secondary dealings.

The calendar continued to build, with First Capital Holdings, Inc. and, in the European market, Norway's Sevan Marine ASA announcing likely upcoming deals. Syndicate sources also heard Hunter Defense Technologies Inc., Atkore Industries and Aurora Diagnostics, LLC, shopping deals around. Road shows started for deals by ConvaTec Healthcare and Novelis Inc, with pricing seen Thursday and Friday, respectively.

Traders saw secondary market prices for established bonds meantime mostly firmer, including the recently robust Realogy Corp., whose bonds have been gaining in response to news of its exchange offer, and Harrah's Entertainment Inc.

Funds lost more than thought

But there was a sobering note, as Lipper/FMI, which compiles the weekly AMG high yield mutual fund flow numbers, considered a reliable barometer of overall market liquidity trends, announced that it had revised upward the size of the outflow from the weekly reporting funds which was reported on Thursday, and by a considerable amount.

It said that the outflow in the week ended this past Wednesday was $1.15 billion - much larger than the $723 million figure which had circulated in the market on Friday afternoon. The company blamed a calculation error tied to the Thanksgiving holiday break the previous week, which saw fixed-income markets in the United States closed on Thursday, Nov. 25 and open for but an abbreviated, sparsely attended session the following day.

The larger outflow figure - the third straight weekly cash loss by the funds - would seem to indicate a somewhat greater weakening of investor interest in the junk, with more money than initially thought being pulled out of the funds and heading into other investment categories, including equity, which has been boosted lately by some recent signs of economic revival.

The latest outflow follows the $86.97 million cash loss seen the previous week, ended Nov. 24, and a $723 million hemorrhage in the week ended Nov. 17.

According to a Prospect News analysis of the figures, it was the first time back-to-back-to-back outflows over three straight weeks have been observed since the week ended June 9, which was actually the final week of an outflow binge which went on for six weeks, dating back to early May.

However, inflows have still been seen in 33 out of the 48 weeks since the beginning of the year, while there have been 15 outflows, the analysis indicated.

Over the latest three weeks, the losses from the funds have totaled $1.959 billion, according to the analysis of the upwardly revised outflow figures.

The latest week's outflow brought the year-to-date cumulative total for the weekly reporting funds down to $10.47 billion from the previous week's $11.624 billion and down as well from the $12.434 billion recorded in the Nov. 10 week, the peak inflow level for 2010, according to the new analysis.

Kinder Morgan upsizes

In the primary market Kinder Morgan Finance priced an upsized $750 million issue of 6% eight-year senior secured notes (Ba1/BB/BB+) at 99.993 to yield 6%.

The yield printed at the tight end of the 6 1/8% price talk. The amount was increased from $600 million.

Citigroup and Barclays Capital priced the issue.

Proceeds will be used to refinance debt.

Bumble Bee at the tight end

Bumble Bee Acquisition Corp. in conjunction with Bumble Bee Foods LP priced a $605 million issue of seven-year senior secured notes (B2/B) at par to yield 9%.

The yield printed at the tight end of the 9% to 9¼% price talk.

J.P. Morgan Securities LLC, Wells Fargo Securities, Barclays Capital Inc. and Jefferies & Co. were the joint bookrunners.

Proceeds will be used to help fund the leveraged buyout of the company by Lion Capital LLP from Centre Partners Management LLC.

Hertz brings $500 million

Hertz Global Holdings priced a $500 million issue of 10-year senior notes (B2/CCC+/BB-) at par to yield 7 3/8%.

The yield printed in the middle of the 7¼% to 7½% price talk.

JP Morgan, Barclays Capital, Bank of America Merrill Lynch and Deutsche Bank Securities managed the quick-to-market sale.

Proceeds will be used to repay debt.

AK Steel taps 7 5/8% notes

AK Steel priced a $150 million add-on to its 7 5/8% senior notes due May 15, 2020 (expected ratings Ba3/BB) at 99.375 to yield 7.718%.

The reoffer price came rich to the 99.25 price talk.

Bank of America Merrill Lynch, Credit Suisse, JP Morgan, Morgan Stanley, UBS Investment Bank and Wells Fargo Securities were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Affinia upsizes

Affinia Group priced an upsized $100 million add-on to its 9% senior subordinated notes due Nov. 30, 2014 (B3/CCC+) at par to yield 9% on Monday, according to market sources.

The size was raised from $75 million.

J.P. Morgan Securities LLC and Barclays Capital led the deal.

Proceeds will be used to fund the $24 million buyout of the company's non-controlling interest in its Affinia-MAT 50/50 joint venture, Moody's said, and to repay $49 million of outstanding borrowings under the company's asset-based revolving credit facility.

Novelis markets $2.5 billion

Meanwhile, the forward calendar built on Monday.

Novelis began a roadshow on Monday in New York and New Jersey for its $2.5 billion two-part offering of senior notes (expected ratings B1/B+).

The tranche A notes will mature in 2017, and will come with three years of call protection. The tranche B notes will mature in 2020, and will come with five years of call protection. Tranche sizes remain to be determined.

Citigroup Global Markets Inc. is the left bookrunner for the Rule 144A and Regulation S with registration rights deal. J.P. Morgan Securities LLC, Bank of America Merrill Lynch, RBS Securities and UBS Investment Bank are the joint bookrunners.

Proceeds will be used to help refinance approximately $2.5 billion of existing debt and return $1.7 billion of capital to parent company, Hindalco.

CovaTec to sell $1.87 billion

ConvaTec Healthcare will market $1.87 billion equivalent of new high-yield notes through Thursday.

The deal is expected to include $1.18 billion equivalent of eight-year senior notes, which will come with four years of call protection, and are expected to be offered in dollar and euro denominations.

The offering is also expected to include $690 million of seven-year senior secured notes, which will come with three years of call protection.

J.P. Morgan Securities LLC and Goldman Sachs will lead.

Proceeds will be used to refinance substantially all of the company's debt under its existing senior secured and mezzanine facilities.

Hunter Defense for Friday

Hunter Defense Technologies is expected to price a $250 million offering of seven-year senior secured notes on Friday.

JP Morgan, Bank of America Merrill Lynch and RBS Securities are joint bookrunners.

The notes, which are in the market via HDT Worldwide, LLC and HDT Finance, will come with four years of call protection.

Proceeds will be used to repay existing debt and to fund a dividend payment.

Aurora to raise $230 million

Aurora Diagnostics plans to price $230 million of seven-year notes during the present week.

Morgan Stanley, Barclays Capital and UBS Investment Bank are joint bookrunners

Of the proceeds, $129 million will be used to repay bank debt, $30 million will be used to complete a pending acquisition, and $65 million will be used for general corporate purposes, including working capital.

First Capital launches $100 million via Gleacher

First Capital Holdings, Inc. plans to price a $100 million offering of five-year senior notes (B3/B-) during the Dec. 13 week.

Gleacher Securities is running the books for the deal.

Proceeds will be used to repay outstanding debt of FCC Holdings, LLC and its subsidiaries, and for general corporate purposes.

Activity pace picks up

A trader said the barrage of new-deal news - pricings, deal announcements, roadshow schedules - was the dominant factor in Monday's market.

"It started out kind of quiet this morning, then things picked up a little bit."

He added that while he "wouldn't call it the busiest day of the year, but then again, it wasn't the slowest day of the year either.

Citadel a tower of strength

When Citadel Broadcasting's new eight-year notes were freed for secondary dealings, a trader saw the Las Vegas-based radio station owner's issue bid at 102, although he had not seen the offered side, "so it is up," since the bonds had priced at par.

Citadel is doing very nicely," a second trader said, quoting the bonds at 102¼ bid, 103 offered.

AK Steel seen strong

West Chester, Ohio-based steel manufacturer AK Steel's quickly shopped add-on issue to the 10-year bonds sold earlier this year were seen offered at 101 3/8, and a little later, trading at 99½ bid, 100½ offered.

However, late in the session, a trader saw them having moved up to 100¼ bid, 100¾ offered, versus their 99.375 pricing level.

"They priced it obviously at a discount to where the existings have been trading," yet another trader said. "I don't think you're going to see a ton of trading in the add-on, but it's a little cheaper, and I imaging the outstandings will grind back in to where they were."

Kinder Morgan moves up

A trader saw Kinder Morgan's new seven-year issue at 100¼ bid, 100 5/8 offered, versus the 99.993 level at which the issue had priced.

A little later on, he said that the bonds were trading into a 100¼ bid. "It looks like they're puking those things up there," he declared. "It left a boatload of them offered at 1001/4."

"They were right around issue on that one," a second trader said.

Bumble Bee better

A trader saw Bumble Bee's new seven-year secured notes at 100½ bid, versus the San Diego-based canned tuna fish titan's par issue price earlier on.

Later in the session, a trader at another desk was quoting them at about the 101 bid level. "I haven't seen a ton of them - but they're definitely a little better."

Friday deals do well

The new dollar-denominated deals that came to market on Friday were meantime seen to be doing respectably well, with Darling International Inc.'s 8½% senior notes due 2018 the standout - a bit of surprise considering the relatively small size of the deal and the decidedly unglamorous and certainly non-"go-go" nature of the Irving, Tex.-based company's business - providing rendering and recycling services to the food production industry.

A trader quoted the bonds at 103½ bid in the morning and said they got as good as 103¾ later on, leaving them at a 103½ bid. That was well up from the par level at which company priced its $250 million issue.

Another trader said that the gains had actually been pretty much racked up when the bonds broke on Friday, and they just stayed around those levels on Monday. The deal, he said was "priced right" to encourage buying.

The trader said the 8½% coupon was "pretty good," giving an incentive to buy the deal.

A trader saw Energy XXI Gulf Coast Inc.'s 9¼% notes due 2017 at 101½ bid, 102 offered, well up from the par level at which the Houston-based oil and gas company's $750 million issue - upsized from the originally announced $700 million - priced on Friday, though too late for any aftermarket dealings at that time.

"That traded well too," opined a second trader who pegged the bonds at 101¼ bid, 101¾ offered.

A trader saw CDW LLC/CDW Finance Corp.'s 8% senior secured notes due 2018 start the session trading at 100¼ bid, 100 3/8 offered area, but closing around 101 bid.

He said that it "looks like" the Vernon Hills, Ill.-based computer hardware, software and peripherals distributor's $450 million offering - upsized from the originally shopped $300 million - "got cleaned up a little bit and traded well towards the close."

The bonds had priced late Friday at par but did not trade at that time.

Clearwire holding gains

A trader saw Clearwire Communications' new add-on 12% first-priority senior secured notes due 2015 at 107¾ bid. That was up from the 107¼ bid, 108 offered level at which those $175 million of bonds from the Kirkland, Wash.-based mobile broadband Sprint Nextel Corp. unit had traded on Friday, and well up from the 105.182 level at which the add-on had priced on Thursday to yield 10 3/8%.

He meantime saw no activity in the other part of that $675 million two-part deal - the $500 million of new 12% second-lien senior secured notes due 2017. Those bonds had priced at par on Thursday and then had traded Friday at 103¼ bid, 103¾ offered, but were not seen on Monday.

Indicators remain firm

Away from the new-deal realm, a trader saw the CDX North American Series 15 HY index up by 1/8 point on Monday to end at 101 1/8 bid, 101 3/8 offered, after having been essentially unchanged on the day Friday.

The KDP High Yield Daily index meantime rose by 11 basis points on Monday to close at 73.83, after having gained 14 bps on Friday. Its yield declined by 4 bps on Monday for a second consecutive session, to close at 7.44%.

The Merrill Lynch High Yield Master II index rose by 0.197% on Monday after having gained 0.147% on Friday. That pushed its year-to-date return up to 14.038% on Monday from Friday's 13.814%, marking the first time the index has been above the 14% level since Nov. 22. However, it still remains down considerably from the 2010 peak level of 15.602% recorded on Nov. 9.

Advancing issues topped decliners for a fourth consecutive session on Monday, holding a winning edge of better than seven to six, versus the less-than six-to-five margin seen on Friday.

Overall activity, represented by dollar-volume levels, rose by 5% on Monday after having fallen by 27% on Friday from the previous session's levels.

But a trader said that apart from new-deal dealings, things were sort of slow and sleepy on Monday.

"You really didn't see any meaningful volume [on Trace] start kicking in till mid-to-halfway through the day."

Realogy still rallying

Among specific non-new-deal issues, a trader saw Realogy's bonds continuing to firm, or at least hold the gains they notched last week on the news of the Parsippany, N.J.-based real estate company's exchange offer for its current bonds.

He saw its 10½% notes due 2014 right around 96 to 961/2, which he called up another ¾ point, on top of the earlier gains.

He said that he had not seen any trading in the company's 11%/11¾% toggle notes due 2015 "in a few days. The 101/2s seemed to be a little more active." He saw the 11s quoted in a range of 95 to 97.

He meantime saw the company's 12 3/8% notes due 2015 at 93½ bid, 94 offered, which he said was up about a point on the day.

Dynegy doesn't move

The trader said that Dynegy Holdings Inc.'s bonds "have been pretty quiet," with the 7¾% notes due 2019 settling in at the levels under 70 bid to which they moved after the recent news that company shareholders had rejected the $5 per share takeover offer for the Houston-based power generating company from New York-based investment firm The Blackstone Group.

He saw the bonds in a narrow 67 to 67½ bid band. "That's the quote," he said. "There was no activity to speak of. Just small trades." He called the levels up slightly.

OPTI Canada improves

A trader saw OPTI Canada's 7 7/8% notes due 2014 at 72 bid, 72½ offered, up around 1 point from 71 bid, 72 offered previously. "They had some activity," he said, "a decent amount [of volume]."

He also saw the Calgary, Alta.-based oil sands energy company's 8¼% notes around that same 721/2-73 area, on "some trades, though not much. It seems like the 7 7/8s were more active."

At another desk, the OPTI 7 7/8s were seen up 1¼ points at the 72½ bid level.

Gaming has a hot hand

A trader said that "casinos had a good day," although he saw no specific news that would give the gaming paper a boost.

He saw Harrah's Entertainment Inc. paper up between 1 and 2 points pretty much across the board, quoting the Las Vegas-based gambling giant's 10% notes due 2018 up 2 points at 87½ bid, 88½ offered while its 6½% notes due 2016 were likewise up by a point or two at 77 bid.

At another desk, a market source estimated the 10s were up by 1½ points at 88 bid. However, Mohegan Tribal Gaming Authority's 7 1/8% notes due 2014 were seen finishing down a deuce at 68 bid.

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