The primary market was fairly active amidst general investor anxiousness surrounding interest rates and the April employment report. Here are some notable new issues.
* Polypore Inc. a manufacturer of micro-porous membranes and separators for the automotive, telecom, and medical industries, issued $225 million and E150 million of senior subordinated notes last Thursday. Both portions of the notes are due in '12 and both priced at par to yield 8.75%. Previous to the deal, price talk was at 8 3/4% to 9%. The company increased its dollar offering from $200 million in response to strong investor demand. The deal was led by J.P. Morgan Securities. Paul Ocenasek, portfolio manager at Thrivent Financial for Lutherans, participated in the deal and noted that while Polypore is pretty levered, it has a very large market share with its product present in 65% of all car batteries, a growing market in lithium batteries for cellular phones and modest growth in the medical industry, which means that it should produce good cash flow. The bonds are rated Caa1/B-.
* Cimpor Finance Co., a subsidiary of Portuguese cement manufacturer Cimpor, issued E600 million of 4 1/2% notes of '11 (BBB+). A syndicate official said the deal was upsized from E500 million. One investor said he chose not to participate because the subsidiary is not guaranteed by the parent. He noted that the so-called keep-well agreement, under which the holding company pledges to provide the subsidiary sufficient funds to meet its obligations in a timely fashion, was noteworthy in that it is not as strong as it looked at first sight and was worded looser than other similar arrangements. "There is too much structural subordination in the deal," the investor said. BNP Paribas and Morgan Stanley were the joint lead bookrunners on the transaction. It was priced at 70 basis points over mid-swaps, at the tight end of the 70-73 basis point range that had been anticipated.
* Primedia Inc., a New York-based publisher, planned to sell $275 million of senior floating-rate notes due in '10. Proceeds from the deal, managed by Banc of America Securities, will be used to repay debt under the bank credit facility as well as reduce outstanding senior debt and preferred stock. One high-yield investor noted that people aren't too happy that the company is using this deal to take out junior preferred stock owned by Kohlberg Kravis Roberts & Co. with senior debt.