Vendex, Polypore price deals; auto names see interest after decline

By Paul A. Harris

St. Louis, Oct. 1 - Sources reported a rather lackluster session in both the new issue and secondary markets as the week of Sept. 27 came to a close.

Two deals priced during the session, as Dutch retailer Vendex KBB NV completed a restructured €275 million at the tight end of talk.

And Polypore Inc. came away with $193 million of proceeds in a discount deal that was significantly restructured, and which came at the wide end of revised price talk.

"You have sort of seen the new issue calendar back off in the past few days," one market source commented late Friday.

"Right now we're in a market where no one really has any paper to sell and there's no real pressure on people to get invested."

Meanwhile in secondary action, one trader saw some distressed automotive names appear to be getting a little traction. And the bonds of distressed St. Louis cable TV company Charter Communications traded up.

On the lookout for bears

One capital markets buy-side source who took a minute Friday to speak with Prospect News commented that at present it's difficult to take a header on what the U.S. economy portends for the junk market.

"It's a weird Goldbricks world," said the source.

"Oil prices are going up. That should be inflationary. But magically oil prices are going to go up just enough to make the economy grow slowly so the Fed can stop at 2%.

"That's what the market is choosing to believe right now.

"Greenspan could be right about this," of course. "He's been known to be right.

"Conversely high oil prices could dampen consumer sentiment, which is not good for high yield."

Vendex finishes €275 million

Two new deals priced during Friday's session.

Victoria Acquisition II BV, a financing subsidiary of Dutch retail group Vendex KBB NV, sold €275 million of 10-year senior notes (B3/B) at par on Friday to yield 7 7/8%.

The Citigroup and ING-led acquisition deal came at the tight end of the 7 7/8%-8%. price talk.

Earlier in the week Vendex dropped a proposed floating-rate tranche without changing the size of the deal.

Meanwhile in the U.S. Polypore Inc. priced a significantly restructured discount note offering - a dividend funding deal that came at the wide end of the revised price talk.

Polypore sold $300 million of eight-year non-call-four senior discount notes (expected ratings Caa2/CCC+) at 64.453 to yield 11%.

The final structure had been changed from a 10-year maturity with five years of call protection.

The notes have a zero coupon for the first four years, after which the coupon steps up to 10½%.

The 10¾%-11% price talk had been outwardly revised from 10%-10¼%.

The Charlotte, N.C. filtration technologies manufacturer's sale, via JP Morgan, generated $193 million of proceeds.

B&G Foods to bring bonds, income securities

Price talk of 8%-8¼% emerged Friday on B&G Foods Holdings Corp.'s $200 million of seven-year senior notes (B2/B), which are expected to price on Tuesday, via Lehman Brothers.

The bonds are coming concurrent with an approximately $340 million offering of Enhanced Income Securities (EIS), and completion of the bond deal is contingent upon completion of the EIS offering.

Enhanced Income Securities are closely related to income deposit securities, a raft of which have been parked on the forward calendar for months.

The U.S. Securities and Exchange Commission and the Internal Revenue Service are both reported to be deliberating various issues having to do with these debt/equity deals.

The most recent headline news came last month when Seattle-based American Seafoods Group pulled its income deposit securities deal citing an overall weak IPO market.

Auto sector finds a bid

Friday's session in the secondary market proved to be largely uneventful, traders told Prospect News as the lights were going down for the weekend.

"It's been a pretty inactive day," one said.

"The market continues to be firm. There are still a lot of people out there looking to put money to work.

"Those core position names are still difficult to find. And there has been some trading back and forth where there is news."

Without citing specific levels the trader reported seeing some traction at long last in some automotive names.

"The weaker auto sector names, Collins & Aikman, Dura and Tower Automotive, have been declining for the past two weeks," the trader commented. "But they seem to have found a bid at the lower levels.

"Yesterday in the equity market the auto sector was up a couple of percent, which might have helped to stabilize it.

"The continuing rise in steel prices has kept pressure on the manufacturers, and the manufacturers that are further removed from GM, Ford and Chrysler have particular difficulty in passing along price increases for raw materials. So they're weaker.

"The larger guys are able to hold their own.

"You had Intermet file for bankruptcy. The problem they had was that the cost of raw materials was going up faster than they could pass along price increases."

Having said so, the trader reported seeing Intermet paper trading at 39 bid, 40 offered since the bankruptcy.

Another market source saw mixed numbers, Friday, in the automotive names.

Collins & Aikman's 12 7/8% notes traded at 92.50, the source said, up from Thursday's 91.50 close. The source spotted the 10¾% notes at par, unchanged, while the 93/4s at traded at 105.50, down from Thursday's 105.75.

Meanwhile the existing bonds of Dura Automotive traded down Friday, according to the source who cited the Dura 9% at 88, down from its 89.25 Thursday close, while the 8 5/8% traded down to 99 from 99.25 on Thursday.

And the Tower Automotive 12% bond was unchanged at 79, the source added.

Amkor comes around

Meanwhile, a trader said that semiconductor assembly and test services company, Amkor Technology Inc., which cut its third quarter guidance to a 3% reduction in revenues from the previous forecast of flat, got something of a lift on Friday, the trader said.

"They had been anticipating lower guidance, got it, and now the bonds have been trading up," the trader commented.

"Over the last couple of days the 7¾% bonds have traded up about four or five points."

A market source had Amkor's 10½% bond trading at 86.5, up from 85 on Thursday, while the 9¼% note was at 94.50 on Friday, from 93 on Thursday. Both the Amkor 73/4s and 7 1/8s were at 84 Friday, up from 81.50 on Thursday.

"They were all up a couple of points on the session," the source said.

Falling Treasury price crimping spread

A trader told Prospect News on Friday that one factor that has hampered the high-yield market is the recent sell-off in Treasuries, which early in the week had been yielding below 4% but by the end of Friday's session were yielding slightly over 4.19%.

"The problem that we had this week is that spreads are pretty tight," the trader commented. "And Treasuries have been down in price, two or three days in a row. That served tighten spreads even further.

"So it's kind of difficult for prices to rise materially while you're at these pretty tight spreads."

The new stuff

The new Graham Packaging LP Co. 8½% senior notes due 2012 (Caa1/CCC+) continued to firm in the aftermarket Friday, according to a trader who saw 102.75 bid, 103.25 offered.

The company priced the downsized $250 million issue earlier in the week as part of an overall $625 million deal, reduced in size because some of the borrowings were transferred to the bank market.

Meanwhile the new Denny's 10% notes due 2012 (Caa1/CCC+) held their own, the trader said, spotting the paper at 100.50 bid, 101 offered.

"They dropped down to par and recovered a little bit," the trader added.

Denny's Holdings Inc. sold $175 million of the paper on Wednesday.

Charter up, but no story

Finally on Friday a secondary market source told Prospect New that the paper of Charter Communications, the troubled St. Louis cable TV and broadband internet services company, had firmed.

However the source was at a loss to provide an explanation.

The Charter 8% notes due 2012 went to par at the close Friday from 98 on Thursday, the source said.

Meanwhile the 8¼% notes due 2007 were up "half a buck" to 91.50, while the 8 5/8s due 2009 went to 79 on Friday from 76.50 on Thursday.

The Charter 9.92% notes due 2011 traded up to 78 on Friday from 76.50 on Thursday.

And the zeroes of 2012 rose to 56.50 form 55.50.

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