Aircastle, upsized Air Canada, Texas Industries price; CIT firms on Q2 results, debt plans

By Paul Deckelman and Paul A. Harris

New York, July 27 - The high-yield primary market continued to bat out new deals at a brisk pace on Wednesday. Aircastle Ltd., a Stamford, Conn.-based aircraft leasing company, priced a $300 million issue of eight-year notes at the tight end of pre-deal market price talk. Those bonds firmed when they began trading in the secondary market.

One of Aircastle's customers, Air Canada, took to the skies with an upsized multi-tranche offering of senior secured notes totaling more than $1 billion equivalent. Besides the originally planned U.S. and Canadian dollar-denominated five-year first-lien notes - $600 million of the former and C$300 million of the latter - the Montreal-based carrier added a $200 million tranche of six-year second-lien paper.

Dallas-based cement manufacturer Texas Industries Inc. brought a quickly shopped, upsized $650 million issue of 10-year notes to market.

Primaryside players meantime heard talk out on InVentiv Acquisition, Inc.'s $275 million of eight-year notes, which is expected to price sometime Wednesday after the order books close at mid-morning.

New issues were slated by Ferro Corp., which is shopping a $250 million issue of senior notes around, although they probably won't appear until August, and United Kingdom-based International Personal Finance, doing a five-year euro-denominated deal which could price sometime this week.

Away from the new deals, CIT Group Inc.'s bonds firmed after the company reported considerably better-than-expected second-quarter results and revealed its plans at paying down or refinancing its high-coupon first-lien debt. Unisys Corp.'s bonds and shares rose on likewise favorable quarterly numbers.

Air Canada upsized, restructured

Three issuers priced $1.75 billion and C$300 million face amounts of high-yield notes in a combined five tranches on Tuesday.

In an upsized, restructured multi-tranche transaction, Air Canada priced $800 million and C$ $300 million of secured notes, on Tuesday, according to informed sources.

The airline priced a $600 million tranche of 9¼% five-year senior secured first-lien notes (B2/B+) at 99.025 to yield 9½%.

The yield printed at the tight end of the 9½% to 9¾% price talk.

JP Morgan and TD Securities were joint bookrunners.

Air Canada also priced C$300 million 10 1/8% five-year senior secured first-lien notes (B2/B+) at 99.046 to yield 10 3/8%.

The Canadian dollar-denominated notes priced on top of price talk which had them coming 7/8% behind the dollar-denominated notes.

TD Securities and JP Morgan were joint bookrunners.

Meanwhile, in a tranche added late in the marketing of the deal, Air Canada priced $200 million of 12% 5.5-year senior secured second-lien notes (Caa1/B-) at 96.16 to yield 13%.

JP Morgan ran the books.

There was no official price talk on the second-lien notes tranche, according to a market source.

The deal came to market as a $900 million equivalent two-part offering of five-year senior secured first-lien notes.

The Montreal-based airline will use proceeds from the first-lien notes to repay its term loan and for general corporate purposes.

Proceeds from the second-lien notes will be used for general corporate purposes.

Texas Industries upsizes

Meanwhile, Texas Industries priced an upsized $650 million issue of 10-year senior notes (B3/B) at par to yield 9¼%.

The yield printed on top of the price talk. The amount was increased from $600 million.

Bank of America Merrill Lynch, Goldman Sachs & Co., UBS Investment Bank and Wells Fargo Securities were the joint bookrunners for the quick-to-market deal.

Proceeds will be used for general corporate purposes, including the refinancing of the company's 7¼% senior notes due 2013 via a tender offer or by redemption.

Zero to 60

The Texas Industries deal illustrated how the high-yield primary market has gone "from zero to 60 overnight," to one debt capital markets banker who watched the Tuesday transaction from the sidelines.

"The upsizing shows that there was strong demand for that deal," the banker remarked.

"The company does not issue that frequently. So for them to come to market with a drive-by illustrates that accounts are looking to put money to work."

However, 9¼% is "a pretty attractive yield" on the Dallas-based cement company's paper, the sell-side source added.

Aircastle at tight end

Also on Tuesday, Aircastle priced a $300 million issue of 9¾% eight-year senior notes (Ba3/BB+) at 98.645 to yield 10%.

The yield printed at the tight end of the 10% to 10¼% price talk.

Citigroup ran the books for the quick-to-market deal.

Proceeds will be used to repay debt and for general corporate purposes, including the purchase of aviation assets.

inVentiv sets price talk

Meanwhile, inVentiv Acquisition set the stage for the mid-week session, as it talked its $275 million offering of eight-year senior unsecured notes (Caa1/B-) to price with a yield in the 10 1/8% area.

The books close at 10 a.m. ET on Wednesday, and the notes are expected to price after that.

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

International Personal Finance plans euro notes

Finally, International Personal Finance is expected to bring a euro-denominated offering of five-year notes (//BB+) to market before the end of the week, according to market sources.

Citigroup and HSBC will lead the deal.

Initial guidance is for a yield of 11% to 11½%, a market source said.

The deal was pre-marketed in April with guidance of 10% to 10½%, the source added.

Proceeds will be used to repay debt and/or to finance operations of subsidiaries.

The prospective issuer is a Leeds, United Kingdom-based international home credit business, with operations in Poland, Hungary, Romania, Czech Republic, Slovakia and Mexico.

New Aircastles gain altitude...

When Aircastle's 9¾% notes due 2018 were freed for secondary dealings, a trader initially saw them at 99 bid, up a little from the 98.645 level at which those bonds had priced earlier. He later on saw them firm further, to 100.25 bid.

A second trader quoted the new issue at par bid, 101 offered, while several others saw the bonds having ended around 100½ bid, 101½ offered

...while Air Canada taxis around

A trader quoted Air Canada's new 9¼%, U.S.-dollar denominated first-lien senior secured notes due 2015 at 99¼ bid, 100¼ offered, but said he had not traded any. In fact, he opined, with the deal having come to market fairly late in the day, "people were fed up about waiting for allocations, so many went home before getting any Air Canada or Texas Industries paper."

Several other traders said they had not seen the Canadian airline's bonds, although one quoted them initially as high as 100¾ bid, 101 offered.

Texas Industries' 9¼% notes due 2020 were also a no show in the aftermarket Tuesday due to the lateness of its pricing.

However, a market source saw the company's outstanding 7¼% notes due 2013 - the issue being tendered for with the proceeds of the new bond deal - up 3 points on the session to 102¼ bid.

Recent deals do well

Among recently priced issues, a trader said that the new Vantage Drilling Co. 11½% senior secured first-lien notes due 2015 had "a great pop," as they traded up to 100¼ bid, 100¾ offered - 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%.

A second trader quoted the Vantage bonds as high as 101 bid, 101¼ offered.

Another trader quoted the Vantage paper at 100¾ bid, 101 offered, noting that "they [new deals] are all 100¾ bid, 101 offered, - they all have better buyers. The market is firm, really rippin'."

A trader saw Advanced Micro Devices, Inc.'s 7¾% notes due 2020 at 101 bid, 101¾ offered, versus their par issue price seen on Monday, when the Sunnyvale, Calif.-based semiconductor manufacturer priced its $500 million offering.

He also saw the company's existing 8 1/8% notes due 2017 up 1/8 point at 104 3/8 bid, 105 1/8 offered.

However, another trader said that he had seen no trading in the AMD issue. quoting its last level as Monday night's 102 bid.

Market indicators mostly firmer

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index unchanged on Tuesday at 97¾ bid, 98¼ offered, after having gained ½ point on Monday for a second straight session.

The KDP High Yield Daily index meantime gained 15 basis points on Tuesday to end at 72.44, after having risen 20 bps on Monday. Its yield came in by 6 bps on Tuesday to 8.07%, after having narrowed by 8 bps on Monday.

Advancing issues led decliners for a 17th consecutive session on Tuesday, while their margin widened out to eight-to-five from the seven-to-five edge seen on Monday.

Overall activity, represented by dollar-volume levels, jumped nearly 52% on Tuesday, on top of the 23% rise seen on Monday.

But despite the increased activity level, a trader answered "no" when asked whether anything outside of the new deal market was really making a splash in Tuesday's proceedings. He said it seemed like it was all "new issues, new issues and new issues."

He did allow, however, that "other stuff was up. The market was better. Clearly there was a very firm tone."

Another trader said there was "not a whole heck of a lot" going on.

CIT sparkles on numbers, debt plan

Traders saw gains in CIT Group's bonds after the New York-based commercial lender reported better-than-expected second-quarter earnings - its second consecutive good quarterly showing since emerging from Chapter 11 near the end of last year - and told analysts on its conference call it plans to pay down another $1 billion of high cost first-lien debt and then meet with lenders this week to talk about refinancing the remaining $3 billion of that paper (see related story elsewhere in this issue).

A trader said that CIT's bonds "overall were up ¼ to 1 point, depending upon the issue." He saw its 7% notes due 2013 up ¼ point, to 99 bid, while its 7% notes due 2016 were a full point better at 95¼ bid. He also saw its 7% notes due 2017 better by ¼ point at 94½ bid.

Meanwhile, he saw its 10¼% notes due 2017 up ½ point at 103¾ bid.

A market source at another desk saw the 7% notes of 2017 at 941/4, but called them up ¾ point on very busy trading, while seeing its 2016 notes at 951/2, up 1½ points. Its 7% notes due 2014 gained 3/8 point to 97 3/8 bid, while its 7% 2015 notes gained more than a point to 961/2.

Unisys up on numbers

A market source saw Unisys's 12¾% notes due 2014 ending up 2½ points on the day at 115 bid. That followed the Blue Bell, Pa.-based information technology company's release of its second-quarter numbers, which showed that the company's net income shot up to $120.2 million, or $2.77 a share, from $38.1 million, or $1.02 a share, in the year-ago quarter.

L-3 trades around

Also playing the numbers game was New York-based high-tech defense contractor L-3 Communications. A trader saw its 6 3/8% notes due 2015 trade around 102½ bid in the early morning, and then ease a little to 102 bid, 102¼ offered on "large-sized activity for this name."

L-3 reported a small gain in second-quarter net income on slightly higher revenue - bit it cut its outlook for the 2010 fiscal year, citing debt retirement charges and the loss of a key contract.

Autos continue upside ride

Major automotive benchmarks continued to gain, helped by both the overall strong tone in the market and their own company-specific favorable news - General Motors Corp.'s decision to improve its competitive position by buying AmeriCredit Corp. for $3.5 billion, giving it an in-house auto loan operation like domestic arch-rival Ford Motor Co. has, and Ford's recent announcement of strong second-quarter earnings.

A trader saw GM's benchmark 8 3/8% bonds due 2033 up 3/8 point, quoting them at 37 7/8 bid, 38 3/8 offered. He saw Ford's 7.45% bonds due 2031 better by ½ point at 98¼ bid, 98 ¾ offered.

At another desk, Van Buren Township, Mich.-based auto components supplier Visteon Corp.'s 7% notes due 2014 tacked on 4 points to end at 94 bid.

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