Deal calendar builds amid quiet market; Delphi down after Friday surge

By Paul Deckelman and Paul A. Harris

New York, April 10 - High yield primaryside players saw ample calendar-building activity on an otherwise quiet day Monday. While no deals were seen to have priced by the close, word filtered through the market that Residential Capital Corp. will bring a junk-rated tranche of notes to market as part of the General Motors Acceptance Corp. subsidiary's upcoming $3 billion mega-financing.

Smaller futures deals were also heard regarding such issuers as Mariner Energy Inc., Ainsworth Lumber Co. and Affinion Group Inc. Price talk was meantime heard on Cendant Car Rental Group's upcoming billion-dollar-three-part offering.

In the secondary market, Delphi Corp. bonds - which had firmed solidly on Friday after a bankruptcy judge okayed its planned offer of early-retirement buyouts to thousands of it workers - came down from those highs and pretty much gave up those gains.

At mid-day a market source said that junk was weaker despite modest strength in the stock market as well as the Treasury market.

The source added that automotive names, led by Delphi Corp., were dragging the market lower.

Meanwhile in the primary market Residential Capital Corp. (ResCap), the mortgage-lending arm of General Motors Acceptance Corp., checked in with a $3 billion bond offering that will include a high-yield tranche of three-year floating-rate notes (Ba1/BB+/BB+).

And Burlington Coat Factory Warehouse Corp. completed a $380 million transaction that was downsized and restructured.

Burlington adds discount notes

The only transaction to be completed during the Monday session was Burlington Coat Factory Warehouse Corp.'s downsized, restructured $380 million two-parter (expected ratings Caa1/CCC+).

The Burlington, N.J., retailer of branded apparel priced a downsized $305 million issue of 11 1/8% eight-year senior notes at 98.070 to yield 11½%. The senior notes priced wide of the 11% area price talk. The tranche was downsized from $375 million.

The company added a $99.309 million tranche of eight-year discount notes that priced at 75.522 to yield 14½%. The issue generated $75 million of proceeds.

Banc of America Securities, Bear Stearns and Wachovia Securities were joint bookrunners for the LBO deal which had been downsized to $375 million from $500 million, with $125 million shifted to the term loan.

ResCap to sell high-yield floater

The market also heard that Residential Capital Corp. (ResCap)'s $3 billion bond offering, now in the market, will include a high-yield tranche of three-year floating-rate notes (Ba1/BB+/BB+).

The transaction will also include investment grade seven-year senior fixed-rate notes and floating-rate notes.

Pricing is expected to take place during the middle part of the present week.

Bear Stearns & Co., Citigroup, Credit Suisse and JP Morgan are joint bookrunners for the bonds which are being sold in order to repay all domestic borrowings from GMAC.

Talk on Avis Budget three-parter

Cendant Car Rental Group (Avis Budget) produced price talk on its three-tranche offering of high-yield notes (Ba3/BB-) on Monday.

The New York City-based operator of the Avis and Budget car rental businesses talked its $250 million tranche of eight-year floating-rate notes at Libor plus 250 to 275 basis points.

Meanwhile the company talked its $375 million tranche of eight-year fixed-rate notes at the 7¾% area, and its $375 million tranche of 10-year fixed-rate notes at the 7 7/8% area.

Pricing is expected on Tuesday.

JP Morgan, Deutsche Bank Securities, Wachovia Securities, Banc of America Securities and Citigroup are joint bookrunners for the debt refinancing.

Ainsworth to price $75 million on Tuesday

Ainsworth Lumber Co. Ltd. is talking its quick-to-market $75 million offering of seven-year senior floating-rate notes (B2/B+) at Libor plus 400 basis points, and expects to price the deal early Tuesday.

Deutsche Bank Securities has the books for the construction financing from the Vancouver, B.C., forest products company.

Mariner, Affinion in the market

Elsewhere a roadshow starts Tuesday for Mariner Energy, Inc.'s $250 million offering of seven-year senior notes (expected ratings B3/B-), via Lehman Brothers and JP Morgan.

The Houston-based independent oil and gas exploration, development and production company will use the proceeds to repay debt.

Also heard to be in the market is Norwalk, Conn., direct marketer of membership, insurance and package enhancement products, Affinion Group.

The company is expected to price a $350 million offering of senior subordinated notes due Nov. 17, 2015 during the present quarter via Credit Suisse and Deutsche Bank Securities.

Proceeds will be used to repay the company's senior subordinated bridge facility.

Secondary quiet

Traders saw no activity in recently priced bonds on Monday. In fact, they didn't see much activity, period.

"I should have gone on vacation," one of them quipped - and in fact, a fair number of people were absent at the start of what promises to be a very quiet week, due to the plethora of religious holidays that have schools in many areas closed for spring vacation and market participants deciding to take a little family time. Easter Week began on Palm Sunday, and will wind down to an abbreviated session on Thursday and a full market close on Good Friday. Meantime, Passover begins on Wednesday night, further thinning the ranks.

He said that the market "was heavy," with most issues down at least half a point to a point pretty much across the board. "A lot of the go-go names were either a little softer, generally on a spread-type basis, or were just non-existent today."

He saw the retailing sector and the gaming sector each off a little, and said that in general, the market was off "at least half a point to a point, unless there was some sort of news-specific issue."

"It was just pretty darn quiet with not a lot of volume," another trader observed.

Delphi reverses Friday gain

About the only real feature he saw was Delphi, whose bonds were down about three points on the day, "giving back all of Friday's gains," as they finished at 62 bid, 63 offered.

That, in turn, "caused most of the other auto parts guys, Visteon and the like, to go about a point lower across the board."

Another trader saw Delphi's bonds, such as its 6.55% notes due 2006 and its 7 1/8% notes due 2029, dip as low as 62 bid, 63 offered, before coming slightly up from that nadir to finish at 63 bid, 64 offered, which he called down three points from Friday's levels.

The bonds had firmed on Friday on the news that, as expected, judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing Delphi's restructuring, had given the company the green light to proceed with its buyout plan, which is to be funded by the bankrupt Troy, Mich.-based auto components company's former parent, General Motors Corp. Besides funding Delphi's buyouts to up to 13,000 of the latter company's 34,000 hourly workers, GM will also accept transfers of up to 5,000 additional Delphi employees back to GM, which owned Delphi until the latter's 1999 spin off.

But all is not well in Delphi-land, despite the buyout agreement with GM, which the United Auto Workers union has also signed off on. Delphi said it needs more help from GM and the UAW in cutting its heavy labor costs, inherited from GM, and after months of negotiations filed motions with the bankruptcy court at the end of March asking the court to allow it to void its union contracts and unprofitable supply contracts that it has with GM, still its largest customer. The union has threatened a strike if Delphi tries to void the labor agreements.

GM steady

Neither the good news about the judge permitting the buyout plan to go forward nor the continued bad news about the labor situation had much impact on GM's bonds on Monday, with its benchmark 8 3/8% notes due 2033 seen little changed around 70.25 bid, 71.25 offered, and GMAC's 8% notes due 2031 around 92 bid, 93 offered.

Elsewhere in the automotive area, a trader saw GM rival Ford Motor Co.'s 7.45% notes due 2031 down a quarter at 71.25 bid, 72.25 offered, and saw its Ford Credit financing subsidiary's 7% notes due 2013 unchanged at 87.25 bid, 87.75 offered.

Dana weak

The trader saw Dana Corp.'s bonds all down ¾ point to a full point across the board, in line with a generally easier automotive area. The bankrupt Toledo, Ohio-based parts maker's 6½% notes due 2008 fell to 78.25 bid, 79.25 offered, its 5.85% notes due 2015 were at 73.75 bid, 74.75 offered, while its 7% notes due 2028 lost a point, at 74.75 bid, 75.75 offered.

Dura Automotive Systems Inc.'s bonds were little changed on the session, its 9% notes due 2009 steady at 48.5 bid, 50.5 offered, while its 8 5/8% notes due 2012 continued to hover around 83.325 bid, 84.425 offered.

During a presentation at Morgan Stanley's annual Automotive Conference in New York, Dura's chief financial officer, Keith R. Marchaindo, said that the Rochester Hills, Minn.-based maker of transmission shift levers, door modules, window systems and other component parts has adequate liquidity - especially since it did a $75 million bank facility add-on last month - faces no serious debt maturities before May 2009 when $524 million of 9% notes are slated to come due, and is proceeding on schedule with a global restructuring plan that he and chief executive officer Larry Denton announced in early February (see report elsewhere in this issue).

Spectrum higher

Apart from the automotive names, traders saw Spectrum Brands Inc.'s bonds up about two points on the session, taking back a little bit of the ground lost over the previous two sessions after the Atlanta-based maker of Rayovac batteries, Remington electric shavers, and other consumer products warned last week that its earnings would be sharply below its previous guidance and Wall Street analysts' projections.

A trader saw the company's 8½% notes due 2013 as having rallied to 85 bid, 86 offered, up 1½ points on the day, while its 7 3/8% notes firmed to 81 bid, 82 offered, up about two points. However, both bonds remain about eight to 10 points below where they were in the middle of last week, before the lowered guidance.

A trader said that the news that Cablevision Corp. plans to issue a $10 per share dividend to its stockholders had little impact on the Bethpage, N.Y.-based cable operator's bonds, since the $3 billion dividend - which will likely be financed with debt - had been widely expected and was "baked in" to current price levels, at around 97 for both its 6¾% notes due 2012 and its 8% notes due 2012.

Another trader, though, saw its 7 7/8% notes due 2018 down a point at par bid, 101 offered, although its 8 1/8% notes due 2009 were at 103 bid, 103.25 offered, down just ¼ point on the day.

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