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As bond market cools, Silverleaf Resorts withdraws offering of secured notes

Silverleaf Resorts terminated its $175 million offering of secured notes that was to support a dividend recapitalization, according to S&P, which cited a company statement. S&P withdrew a B- issue rating and 4 recovery rating. The B- corporate rating and stable outlook remain unchanged, according to S&P.

The cancellation is the third in the U.S. market as the early autumn rally deflates, equally the third postponement since early July, and notably the eighteenth pulled high-yield deal in the year to date, for a net $6.3 billion of shelved debt, according to LCD.

A roadshow kicked off two weeks ago for the seven-year (non-call three) transaction via sole bookrunner Deutsche Bank, according to sources. Proceeds from the debut deal were to be used to fund a dividend and to repay debt, sources said.

Dallas-based Silverleaf owns and operates 13 timeshare resorts in various stages of development in Texas, Missouri, Illinois, Georgia, Massachusetts, and Florida, as well as a hotel near the Winter Park alpine resort area in Colorado. Silverleaf was acquired by Cerberus Capital in 2011. – Staff reports

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Alpha Natural Resources notes price to yield 10%; terms

Alpha Natural Resources today completed an offering of senior notes via bookrunners Citi, Barclays, J.P. Morgan, Bank of America, and RBS, according to sources. Pricing came at the middle of talk and at the $500 million target size. The coal-mining concern intends to use the net proceeds from the SEC-registered offering to partially fund a tender offer for up to $350 million of the $659 million outstanding in 3.25% convertible notes due 2015. Excess monies back general corporate purposes, according to SEC filings. Terms:

Issuer Alpha Natural Resources
Ratings B+/B2
Amount $500 million
Issue senior notes (off the shelf)
Coupon 9.75%
Price 98.959
Yield 10%
Spread T+939
FRN eq. L+926
Maturity April 15, 2018
Call nc-life
Trade Sept. 28, 2012
Settle Oct. 11, 2012 (T+8)
Joint Bookrunners Citi/Barc/JPM/BAML/RBS
Co-Leads
Co’s.
Px talk 10% area
Notes w/ three-year equity clawback for 35% @ 109.75; carries T+50 make-whole call; w/ change-of-control put @ 101.

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European high yield bond prices slip in trading as sovereign concerns resurface

The average bid of LCD’s European high-yield flow-name bonds fell 74 bps over the past two trading sessions, to 98.72% of par, from 99.47 on Sept. 25, according to Bloomberg data. The average yield widened 29 bps, to 8.16%. The average bid is up 10.25 points in the year to date, having ended 2011 at 88.47, and is now 141 bps below its peak of 100.13, from Sept. 18.

Even while protests have erupted in Spain and Greece – leading investors to question whether politicians will have sufficient means to resolve the eurozone crisis – financial markets welcomed the release of an emergency budget by the Spanish government. Today, the FTSE 100 is higher and the iTraxx Crossover is four basis points tighter, at 562, as Spain outlined its plans to reduce its deficit to 4.5% of GDP next year, from 6.3% this year. However, 10-year Spanish government bond yields are nearly 10 bps wider so far today, around 5.97%, as investors wait to see if Moody’s will take a ratings action on Spain.

All constituents in LCD’s flow-name composite declined over the past two trading sessions, with high-beta credits hit the hardest. Labco fell 167 bps, to 96.19, Ineos slipped 160 bps, to 93.34, and Codere shed 121 bps, to 87.54.

The average spread for the composite widened by 32 bps, to B+763, or E+721, swap-adjusted.

LCD’s European high-yield bond flow name composite consists of Codere 8.25% notes due 2015; Labco 8.5% notes due 2018; HeidelbergCement 7.5% notes due 2020; Ineos 7.875% notes due 2016; Campofrio 8.25% notes due 2016; Edcon E+325 notes due 2014; Europcar 9.375% notes due 2018; Smurfit Kappa 7.25% notes due 2017; Unitymedia 8.125% notes due 2017; Ziggo 8% notes due 2018; Ardagh Glass 7.375% notes due 2017; and Wind Telecomunicazioni 7.375% notes due 2018. – Sohko Fujimoto

The data:

  • Bids decrease: The average bid of the 12 bond flow names fell 74 bps, to 98.72% of par.
  • Yields increase: The average yield to worst widened by 29 bps, to 8.16%.
  • Spreads increase: The average option-adjusted spread to Bunds widened by 32 bps, to B+763, or E+721, swap-adjusted.
  • Advancers: There were no advancers.
  • Decliners: All constituents declined, led by Labco, which fell 167 bps, to 96.19.
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Ryerson completes $900M high yield bond offering (tender offer)

Ryerson late yesterday completed a two-part offering via bookrunners Bank of America, J.P. Morgan, BMO, Jefferies, UBS, and Wells Fargo, according to sources. Terms for both tranches printed at the midpoint of guidance and at their target sizes. The Platinum Equity-controlled metals processor will use proceeds to fund tender offers underway for $103 million of floating-rate secured notes due 2014 and $369 million of 12% secured notes due 2015 at Ryerson and $483 million of 14.5% discount notes due 2015 at Ryerson Holding. Additional capital will be used to fund ABL repayments, according to the company. Chicago-based Ryerson processes and distributes carbon steel, stainless steel, and alloy steels in the U.S., Canada, Mexico, China, and India. Terms:

Issuer Ryerson
Ratings CCC+/Caa2
Amount $600 million
Issue secured notes (144A)
Coupon 9%
Price 100
Yield 9%
Spread T+837
FRN eq. L+822
Maturity Oct. 15, 2017
Call nc2.5
Trade Sept. 27, 2012
Settle Oct. 10, 2012 (T+8)
Joint Bookrunners BAML/JPM/BMO/Jeff/UBS/WF
Co-Leads
Co’s.
Px talk 9% area
Notes w/ 2.5-year equity clawback for 35% @ 109; carries T+50 make-whole call; w/ change-of-control put @ 101.
Issuer Ryerson
Ratings CCC/Caa3
Amount $300 million
Issue senior unsecured notes (144A)
Coupon 11.25%
Price 100
Yield 11.25%
Spread T+1,042
FRN eq. L+1,027
Maturity Oct. 15, 2018
Call nc3
Trade Sept. 27, 2012
Settle Oct. 10, 2012 (T+8)
Joint Bookrunners BAML/JPM/BMO/Jeff/UBS/WF
Co-Leads
Co’s.
Px talk 11.25% area
Notes w/ three-year equity clawback for 35% @ 111.25; carries T+50 make-whole call; w/ change-of-control put @ 101.
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Wolverine World Wide bonds price at par to yield 6.125%; terms

Boot maker Wolverine World Wide this afternoon completed an offering of senior notes via J.P. Morgan and Wells Fargo, sources said. Terms on the B+/B2 transaction were finalized at the tight end of guidance, and an early read from the gray market points to a gain of at least 1.5 points on the break. Proceeds support an acquisition of the Performance & Lifestyle Group business of Collective Brands, which include Sperry Top-Sider, Saucony, Stride Rite, and Keds brands. Financing for the transaction also includes a $550 million A term loan and a $350 million B term loan, and the company is also putting in place a new $200 million revolving credit facility. Terms:

Issuer Wolverine World Wide
Ratings B+/B2
Amount $375 million
Issue senior notes (144A)
Coupon 6.125%
Price 100
Yield 6.125%
Spread T+485
FRN eq. L+471
Maturity Oct. 15, 2020
Call nc4
Trade Sept. 27, 2012
Settle Oct. 12, 2012 (t+10)
Books JPM/WFS
Px talk 6.25% area
Notes
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High yield ETF outflows drag net weekly cash flow into negative territory

Data from EPFR Global show a $5 million cash outflow from U.S.-domiciled high-yield mutual funds and exchange-traded funds in the week ended Sept. 26, by the weekly reporters only. While that’s the first negative reading after a 15-week inflow streak totaling $13.7 billion, note that it’s comprised of a $62 million cash inflow to mutual funds against an ETF withdrawal of $67 million.

Regardless of intent – as money movement in ETFs may signal fast money at play – the net-negative reading drags the four-week trailing average down to positive $635 million, from positive $855 million last week.

It’s only the sixth weekly net withdrawal in the 39 weeks this year, for a net $25.4 billion year-to-date inflow, of which 36% is ETF infusions.

As for market momentum, total assets of the weekly reporter sample were $186.7 billion at the end of the observation period, versus $188.7 billion last week, for a net $2 billion decline, or roughly negative 1% on the week. Still, net assets are up 30% so far this year after an 18% gain in 2011, according to EPFR. – Matt Fuller

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Bristow Group notes (tender offer) price at par to yield 6.25%; terms

Bristow Group today completed an offering of senior notes via bookrunners Credit Suisse, SunTrust, Bank of America, Citi, J.P. Morgan, and Wells Fargo, according to sources. Terms were inked at the tight end of talk after a $50 million upsizing. Originally proposed as a two-part transaction, an eight-year tranche was dropped with funds shifted to the 10-year. Proceeds will be used to fund a tender offer for the $350 million outstanding of the company’s 7.5% notes due 2017 and for general corporate purposes. Total consideration under the tender is $1,041.50 per note, which includes a $30 premium for notes delivered by the early deadline. Bristow is a provider of helicopter services to the offshore oil-and-gas industry. Terms:

Issuer Bristow Group
Ratings BB/Ba3
Amount $450 million
Issue senior notes (SEC Reg.)
Coupon 6.25%
Price 100
Yield 6.25%
Spread T+471
FRN eq. L+465
Maturity Oct. 15, 2022
Call nc5
Trade Sept. 27, 2012
Settle Oct. 12, 2012 (T+10)
Joint Bookrunners CS/Sun/BAML/Citi/JPM/WF
Co-Leads
Co’s.
Px talk 6.25-6.5%
Notes w/ three-year equity clawback for 35% @ 106.25; carries T+50 make-whole call; w/ change of control put @ 101; 8-year tranche dropped; upsized by $25 million.
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TW Telecom bonds price tight to talk, at par, to yield 5.375%; terms

TW Telecom this afternoon completed an offering of senior notes via bookrunners Credit Suisse and Wells Fargo, according to sources. The BB-/B1 transaction was inked at the tight end of guidance following an upsizing to $480 million, from $400 million. Moreover, an early read from the gray market points to follow-on buying interest, with quotes at least one half of a point higher, sources note. Proceeds from the company’s return to market after 2.5 years will be used to refinance 2.375% convertible notes due 2026, with roughly $374 million outstanding. The wireline company was formerly known as Time Warner Telecom. Terms:

Issuer TW Telecom
Ratings BB-/B1
Amount $480 million
Issue senior notes (SEC registered)
Coupon 5.375%
Price 100
Yield 5.375%
Spread T+373
FRN eq. L+368
Maturity Oct. 1, 2022
Call nc5
Trade Sept. 27, 2012
Settle Oct. 2, 2012 (t+3)
Books CS/WFS
Px talk 5.5% area
Notes upsized by $80 million
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Shelf Drilling readies $475M bond offering, $75M loan backing Transocean deal

Jefferies is targeting early October to roadshow $475 million of senior secured notes for newly formed Shelf Drilling International, according to sources. The notes will adjoin a new $75 million term loan. Jefferies is arranging both issues, sources note.

Proceeds, along with $645 million of equity, will back Shelf Drilling’s $1.05 billion purchase of 38 drilling rigs from Transocean. Closing is expected in the fourth quarter.

Castle Harlan, CHAMP Private Equity, and Lime Rock Partners formed Shelf Drilling for the purchase, which establishes the platform company as an international shallow-water-drilling contractor. Shelf Drilling will own the world’s third-largest fleet of independent-leg, cantilever jack-up rigs.

The company will be based in Dubai and will drill throughout Asia, Africa, and the Middle East.

The $1.05 billion sales price comprises $855 million in cash and $195 million in seller financing. The seller financing is structured as preference shares issued by Shelf Drilling’s parent company to Transocean. – Kelly Thompson