Ford Credit drives by, inVentiv prices, Energy Solutions slates; Atlas Pipeline up on sale

By Paul Deckelman and Paul A. Harris

New York, July 28 - The parade of big high-yield deals continued on Wednesday, as Ford Motor Credit Co. LLC priced a an opportunistically timed and quickly shopped $1.25 billion offering of seven-year notes. It was the third billion-dollar offering in as many sessions this week, following mega-deals Monday from Vantage Drilling Co. and Tuesday from Air Canada, although the latter came split into three tranches. In trading the new Ford Credit bonds firmed a little from their issue price.

The day's other pricing came from inVentiv Health Inc., which sold $275 million of eight-year bonds as part of the leveraged buyout funding for the Somerset, N.J. pharmaceutical industry services provider. The new bonds moved up in aftermarket dealings.

Traders meantime saw gains in such new bonds that priced on Tuesday as Air Canada, Texas Industries Inc. and Aircastle Ltd.

Primaryside sources heard that Energy Solutions Inc. had begun a road show for a $300 million offering of eight-year notes announced by the Utah-based provider of various services to the nuclear power industry. Pricing is expected to take place next week.

In the secondary sphere, away from new deal activity, Atlas Pipeline Partners LP's bonds firmed 3 or 4 points on asset-sale news from the natural gas processing and transportation company.

Sprint Nextel Corp.'s bonds firmed after the wireless provider reported that it gained subscribers in the second quarter - the first time that has happened in three years.

Ford Motor Credit drives through

Wednesday's session saw two issuers, each bringing a single tranche of bonds, raise slightly more than $1.5 billion.

Both deals were oversubscribed and both priced at the tight end of the price talk, sources said.

Ford Motor Credit priced a $1.25 billion issue of 6 5/8% seven-year fixed-rate notes (Ba3/B-/BB-) at 98.485 to yield 6.9%.

The yield printed at the tight end of the 6.9% to 7% price talk.

Bank of America Securities Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Goldman, Sachs & Co. were the joint bookrunners for the quick-to-market deal, which the company brought to market for general corporate purposes.

A money manager, whose portfolio includes high-yield bonds, but who declined to play Wednesday's Ford Motor Credit deal, nonetheless commented that it was very well-received, and oversubscribed, with very good demand at the price talk.

InVentiv tight to talk

inVentiv Health priced a $275 million issue of eight-year senior notes (Caa1/B-) at par to yield 10%.

The yield printed at the tight end of the 10 1/8% area price talk.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse and Deutsche Bank Securities Inc. were the joint bookrunners for the LBO deal.

InVentive went very well, and was multiple times oversubscribed, according to a syndicate source, who added that the deal was anchored by accounts which played the bridge loan.

The order book contained a lot of top-tier high-yield accounts, the syndicate source added.

EnergySolutions starts roadshow

The clearing of the inVentiv deal on Wednesday emptied the dollar-denominated forward calendar, heading into Thursday's primary market session.

However, at least one drive-by deal could be announced on Thursday, according to a syndicate banker who declined to furnish an issuer name.

Meanwhile, EnergySolutions, Inc. and EnergySolutions, LLC began a roadshow on Wednesday for their $300 million offering of eight-year senior unsecured notes (B3/BB-).

The roadshow wraps up on Aug. 4. The deal is expected to price on Aug. 5.

JP Morgan, Credit Suisse and Citigroup are joint bookrunners for the debt refinancing deal from the Verona, Wis.-based low-level radioactive waste services business.

Best game in town

Slow growth in the U.S. economy tends to kindle very little joy among stock market investors.

However the present economic circumstances are well suited to playing high yield, according to a mutual fund manager whose portfolio includes both stocks and junk bonds.

"High yield is the best game in town because the economy is sluggish, but it still has positive growth," the manager said.

"That's all that high yield needs in order to hold its value, or to see some spread-narrowing," the source added.

"But in order to get equities going you need a big move in the economy."

Meanwhile, low and apparently slowing defaults and low-yielding U.S. Treasuries are also welcome to high-yield investors, the manager added.

New Ford bonds firm, a little

A trader saw the new Ford Motor Credit notes trading at 98¾ bid, 98 7/8 offered soon after the bonds priced at 98.485, "so they were up ¼ to 3/8 point," he said.

That rise was relatively modest by the standards of a junk bond market that has become used to seeing new deals - particularly large, liquid issues from well-known borrowers - gains as much as a point or two, or even more, when they cross over to the secondary arena.

However, the trader theorized, "Ford comes so often that they don't price those things to run up."

Another trader agreed: "Ford is in the market a lot - they have a ton of issues - and they kind of know how to price these things so they leave a little money on the table [for the aftermarket] but not give away the farm," unlike some other less regular issuers who may price their bonds too cheaply, sending them up in the secondary but cheating themselves out of some proceeds. "Ford doesn't have to do that."

New inVentiv improves

A trader saw the new inVentiv Health 10% notes due 2018 trading at 101½ bid, 102¼ offered on the break - well up from the par level at which the $275 million issue had priced earlier in the session.

Tuesday's new deals trade up

Among the issues which priced on Tuesday, a trader saw Texas Industries Inc.'s 9¼% notes due 2020 trading at 100½ bid, 100¾ offered.

That was slightly below the issue's earlier level of 100 5/8 bid, but still up from the par price at which the Dallas-based cement manufacturer had priced its $650 million offering, upsized from the originally announced $600 million, as a drive-by deal. Those bonds had come to market too late during Tuesday's session for any kind of secondary dealings then.

A trader saw Aircastle Ltd.'s 9¾% notes due 2018 get as tight as 100 7/8 bid, 101 offered, before coming in a little from that peak to trade late Wednesday at 100 5/8 bid. That was still well above the 98.645 level at which Aircastle, a Stamford, Conn.-based aircraft leasing company priced its $300 million deal on Tuesday to yield 10%, "so they traded up pretty nicely."

A trader saw Air Canada's new 9¼% first-lien senior secured notes due 2015 at 100 7/8 bid, 101 3/8 offered, "so they traded up well, very nicely." The Montreal-based air carrier had priced $600 million of the bonds on Tuesday at 99.025 to yield 9½%.

The trader meantime saw Air Canada's 12% second-lien senior secured notes due 2016 offered at 97 during the morning portion of the session, "but I didn't see a bid." That $200 million tranche - tacked on almost as an afterthought to Air Canada's big dual-currency offering of U.S- and Canadian-dollar debt - had priced on Tuesday at 96.16 to yield 13%. However, several traders on Wednesday said that they had not seen anything going on with the 12s, with one suggesting that it was "quasi-private, really private, and they put it away with just a few people."

The third leg of that three-part deal, the C$300 million of 10 1/8% first-lien notes due 2015, was likewise unseen on Wednesday, since "the only one anyone wanted to talk about [from Air Canada's new deal] was the 91/4s."

Vantage remains vibrant

A trader said that the new Vantage Drilling Co. 11½% senior secured first-lien notes due 2015 "traded up really nicely," quoting the issue trading down at 100 1/8 bid. That was below Tuesday's trading levels, which had had gotten as good as the 101 bid level, but was still well up from the 96.361 level at which the Houston-based offshore energy drilling company's $1 billion of bonds, upsized from the originally announced $960 million, priced on Monday to yield 12½%.

AMD backs off

But while most of the newly priced bonds were trending better, with some up multiple points from their issue price, a trader saw Advanced Micro Devices Inc.'s 7¾% notes due 2020 heading in the other direction. He quoted the Sunnyvale, Calif.-based semiconductor maker's new issue at 100¾ bid, 101 bid - down from peak levels of 101¾ bid, 102¼ offered.

"I don't know why those things weakened up," he said, "whether it was market reaction to bad news or what?"

However, the bonds were still better than where they had been on Monday, when the quickly shopped $500 million issue priced at par.

Market indicators turn mixed

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index down 3/8 point on Wednesday at 97 3/8 bid, 97 5/8 offered, after having been unchanged on Tuesday.

The KDP High Yield Daily index meantime lost 10 basis points on Wednesday to end at 72.34, after having risen 15 bps on Tuesday. Its yield rose by 2 bps on Wednesday to 8.09% after having come in by 6 bps on Tuesday.

But the Merrill Lynch High Yield Master II index showed a year-to-date gain of 8.277% - a new peak level for the year, eclipsing the previous mark of 8.126% seen on Tuesday.

Advancing issues led decliners for an 18th consecutive session on Wednesday, although their margin narrowed to seven to five from the eight-to-five ratio seen on Tuesday.

Overall activity, represented by dollar-volume levels, declined by about 17% on Wednesday, versus the nearly 52% jump seen on Tuesday.

A trader said that "it was a kind of busy day - yet not a busy day," with a fair amount of activity centered around the new deal names but not that much going on otherwise.

"Financials are up, Ford [Credit] came with their deal, and things are better," a second said. "They're all recovering nicely - GMAC, CIT, Ford."

"The market has a nice, firm tone," yet another trader said. "We're seeing things more on the bid side. There doesn't seem to be a lot of paper for sale."

While most of the day's activity was in the new issues, he said that in general, "bids are out there, and when a half-way decent offer comes along, it gets bought."

"People are sitting on a lot of cash."

Atlas up on asset sale

Among specific names, a trader saw Atlas Pipeline Partners' 8¾% notes due 2018 get as high as 100 3/8 bid, up from 97 bid at the opening, the first trade in the bonds in a week. By the end of the session, he said, the bonds had dipped from that peak to about 99¼ bid - still above their week-earlier levels.

Atlas Pipeline's 8 1/8% notes due 2015 were trading at 100¼ bid, up from 96 bid, 97 offered on Tuesday, and well up from 93¼ bid, 93½ offered a week ago.

He said the driver pushing the rise was the news that Atlas Pipeline, a Moon Township, Pa.-based natural gas processing and transportation company, had entered into a definitive agreement to sell its Elk City System property for $682 million to Enbridge Energy Partners , LP.

"Selling a big division will certainly make bonds go up," he counseled.

The transaction will eliminate virtually all Atlas' senior secured debt and significantly deleverage its balance sheet.

Atlas Pipeline's New York Stock Exchange-traded shares zoomed by $3.87, or $31.34, to end at $16.22, on volume of 6.88 million shares, more than eight times the norm.

Sprint runs up modestly

Sprint Nextel released its second quarter results, which showed the first total net wireless subscriber growth in three years.

A trader said the bonds were "pretty active" and about a point better, the 6.90% notes due 2019 ending around 953/4.

Another market source called the debt "up a little bit," seeing the 6% notes due 2016 at 94½ bid, 94¾ offered, versus 94 bid, 94¼ offered previously.

The source also saw the 6.90% notes at 95½ bid, 95¾ offered, which compared to levels around 94 on Tuesday.

For the quarter, the Overland Park, Kan.-based wireless telecommunications provider reported it had gained 111,000 net subscribers. However, it also lost 55,000 brand subscribers and 228,000 contract subscribers.

The second-quarter loss also widened to $760 million, or 25 cents per share. Sprint lost $384 million, or 13 cents per share, in the same quarter of 2009.

Revenue meantime fell 1% to $8.03 billion.

Dave Novosel, an analyst with Gimme Credit LLC, seemed upbeat about the earnings and related subscriber additions. But he was still concerned about overall trends in the wireless arena.

"Slowing growth in the industry suggests Sprint may have trouble boosting revenue in the near term," he said in an afternoon note to clients. "Weakness on the top line is also constraining overall margins, while leading to operating losses in the wireless segment."

Novosel noted that Sprint's "bright spots" were "excellent free cash flow and healthy liquidity."

A&P improves

A trader said that Great Atlantic & Pacific Tea Co. Inc.'s bonds "improved a lot today," building on the gains posted Tuesday by the bonds of the Montvale, N.J.-based supermarket chain operator.

He said that its 11 3/8% senior secured notes due 2015 gained 1½ to 2 points to around 67½ bid, 68½ offered, after having started the day around 65½ bid.

He also saw the company's 6¾% convertible notes due 2012 having moved u into the lower 50s, quoting those bonds at 52 bid, 53 offered, "up 3 or 4 points, on decent volume." He said the last big trade was around 52, "so they were bouncing."

CIT holds steady

A trader saw CIT Group Inc.'s bonds "just holding at their levels," referring to where the New York-based commercial lender's paper rose on Tuesday, buoyed by better-than-expected second-quarter earnings and by news from the company about its plans to repay $1 billion in first-lien debt and seek to refinance another $3 billion, with a new term loan facility expected to launch Thursday, according to market sources.

He saw CIT's 7% notes due 2013 at 98½ bid, its 7% notes due 2014 at 97, its 7% notes due 2015 at 96, its 7% notes due 2016 at 95, and its 7% notes due 2017 at 94, "holding their levels, which is good."

However, at another desk, a trader saw the CITs all down, with the 13s down the most, more than a full point, to end at 99 in brisk trading. He saw the rest down about ¼ point each, with the '14s around the 97 level, the '16s at 95¼ and the 17s at 941/4.

Stephanie N. Rotondo contributed to this report

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