Standard Pacific sells; First Capital talks; Sprint, OPTI lose ground; Harrah's gets boost

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., Dec. 7 - Standard Pacific Corp. was the sole issuer in the high-yield primary on Tuesday. The company priced $675 million in two tranches in a quick-to-market deal.

FMG Resources Pty. Ltd. disclosed plans to price an $800 million issue, and First Capital Holdings, Inc. released talk on a $100 million offering of five-year bonds.

The secondary market traded in an upward fashion on Tuesday. Bonds were better bid for by at least a quarter of a point, a trader said.

"[Investors] are wrapping it up as we get closer to year-end," he said.

But even with all the strength in the market, it was still a tough environment to get things done in.

"Everything is up, and nothing is for sale," he said.

While most credits were up on the day, Sprint Nextel Corp. was dubbed the day's biggest loser as the company's debt dropped almost 2 points in trading. The losses came just one day after the company announced its plan to upgrade its network, leading some to wonder if Sprint one day hopes to shed its 4G network partner.

Harrah's Entertainment Inc., on the other hand, experienced a 3-point gain on the day. Traders said the bonds were very active, though there was "no particular news" out.

Along with Sprint, OPTI Canada Inc. was one of the day's few losers. The bonds slipped in trading after the company announced its 2011 capital expenditure program.

Among other market goings-on, papermakers like NewPage Corp. took advantage of the boost in the marketplace, as did Dex One Corp.

Standard Pacific drives by

Standard Pacific priced an upsized $675 million issue of senior notes (B3/B).

The first tranche, a $275 million add-on to the company's 8 3/8% senior notes due May 15, 2018, priced at 102.25 to yield 7.964%. The yield printed slightly inside of the 8 1/8% area price talk.

The company also priced a new $400 million issue of 8 3/8% 10-year notes at 99.154 to yield 8½%. The yield on the new 10-year notes printed on top of the price talk.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Credit Suisse and Deutsche Bank Securities were the joint bookrunners for the two-part deal, which was upsized from $650 million.

Proceeds will be used to prepay the company's term loan B, to settle an interest rate swap and to repay intercompany debt. Proceeds will also be used to purchase notes maturing in 2012, 2014 and 2015 via tender offers and to make consent payments.

Standard Pacific is an Irvine, Calif.-based homebuilder.

Fortescue returns

The forward calendar continued to build on Tuesday.

However, sellside sources said that for issuers intending to market their junk bonds by means of full investor roadshows and price them during the run-up to year-end, the window of opportunity has begun to narrow.

Australia-based FMG Resources (Fortescue Metals Group Ltd.) plans to price an $800 million offering of seven-year senior notes (B1/B/B+) on Thursday via JPMorgan.

Proceeds will be used to finance expansion activities and for other general corporate purposes.

Less than two months ago, on Oct. 27, the iron ore producer priced a $2.04 billion issue of five-year senior notes (B1/B/BB+) at par to yield 7%.

First Capital sets talk

Elsewhere, First Capital Holdings talked its $100 million offering of five-year senior notes (B3/B-) with a 12% coupon and at a discount to yield 12½%.

The Rule 144A-for-life offering, which is in the market via bookrunner Gleacher & Co., is set to price late in the present week or early in the week ahead.

Proceeds will be used to repay debt and for general corporate purposes.

The prospective issuer is Boca Raton, Fla.-based specialized commercial finance company.

Market gains strength

The secondary market was "up half a point to a point depending on what name it was," a trader said.

The CDX North American High Yield index moved up half a point to 101 9/16 bid, 101 11/16 offered. The KDP High Yield index meantime closed at 74.11, with a 7.37% yield. That reading compared with Monday's reading of 73.83, with a 7.44% yield.

The generally positive tone of the market helped recent new deals gain traction.

Hertz Corp.'s new $500 million issue of 7 3/8% notes due 2021 was "kind of hovering right around issue," a trader said, at par bid, 100¼ offered. Bumble Bee Holdings Inc.'s 9% notes due 2017 traded up to 102¾ bid, 103¼ offered, versus its par issue price on Monday.

AK Steel Holding Corp.'s $150 million add-on of 7 5/8% notes due 2020 was also somewhat better at par bid, 100½ offered.

"Aside from new issues, it was kind of random," a trader said.

Sprint: The biggest loser

Sprint Nextel debt was one of the few losers in an otherwise up day, according to traders.

One trader deemed the credit the day's "biggest point loser" as its 6% notes due 2016 dipped nearly 2 points to 96½ on $20 million plus traded.

However, he also saw the 8 3/8% notes due 2017 inching up slightly to close around 108 1/8, also on about $20 million traded.

Another market source saw the 6% notes declining a point to 971/2, while another called the paper "down a good point, point-and-a-half" at around 961/2.

The latter source also pegged the 8 3/8% notes around the 108 mark, calling that "active, but only up 3/8," while the 6 7/8% notes due 2028 finished half a point softer at 873/4.

On Monday, Sprint announced that it would spend up to $5 billion to upgrade its network and also planned to shutter its Nextel iDEN network by 2013. The upgrades would allow Sprint to incorporate 4G technology or other wireless technology into its own network while also compiling all of its various spectrums into a single base.

It is expected that the work will bring in at least $10 billion in savings.

The news is causing a few market players to wonder what will become of Sprint's Clearwire Corp. collaboration. Sprint currently relies on Clearwire for its 4G network.

"Over time, Clearwire may not be as important to Sprint as was formerly thought," wrote Gimme Credit LLC analyst Dave Novosel in an afternoon report to clients.

Sprint Nextel is an Overland Park, Kan.-based wireless telecommunications provider.

Harrah's gets a boost

While Sprint bonds were on the losing side of the street, Harrah's Entertainment's debt was on the winning side.

A trader said the 10% notes due 2018 jumped 3 points to end around 91. Another saw the issue opening around 88½ bid, 89 offered and closing around that 91 level, on "no particular news."

Last month, the Las Vegas-based casino operator canceled a planned initial public offering but went ahead with a name change. The company is now called Caesars Entertainment Inc.

Fitch Ratings gave the newly named company a mixed review, saying that while the company was "highly leveraged," it also had a "solid liquidity position."

Fitch gave the company a CCC rating with a stable outlook.

OPTI bonds drift lower

A trader said OPTI Canada bonds were "pretty active," though he noted that the notes had "drifted in" by the end of business.

He said the 8¼% notes due 2014 opened near 73½ but closed closer to 71 bid, 72 offered.

Another trader called the notes down half a point around 72.

On Tuesday, the Calgary, Alta.-based oilsands producer announced its 2011 capital program, which includes about C$150 million of capital expenditures. Of that number, C$122 million is expected to be used on the company's joint venture with Nexen Inc., the Long Lake Project.

At a credit conference last month, both Nexen and OPTI told conference attendees that production at the project would be less than previously estimated. However, OPTI also noted that its ability to post a profit would largely depend on how the project fared.

Additionally, OPTI has been considering its strategic options for the better part of the year.

Papermakers do well

NewPage was "definitely better," according to a trader, who pegged the 10% notes due 2012 at 62 bid, 62½ offered.

The 11 3/8% notes due 2014 were also "up some" around 94.

Another trader deemed the 10% notes 3 points better around 621/2.

Elsewhere in the paper and wood products realm, Bowater Inc.'s 6½% notes due 2013 climbed over 2 points to close at 35½ bid.

Dex debt trades up

A market source said Dex One's 12% notes due 2017 improved by more than 2 points to 621/4.

Another trader said most of the day's trades occurred between 61 and 62, although he saw 62 bid, 63 offered later in the day.

"The stock has been performing well," he said.

Dex One's stock popped over 15% in Tuesday trading. It ended at $7.28 (NYSE: DEXO), up from $6.26 on Monday.

Dex One is the new name of R.H. Donnelly Corp., which emerged from bankruptcy in February 2010. However, the yellow pages publishing business has yet to rebound, and there are still concerns about the Cary, N.C.-based company.

Last week, a market source told Prospect News that he had heard Dex One was considering merging with SuperMedia Inc., which operates Superpages.com. Given the stock's recent gains, it is becoming a widely held belief that a merger could occur and most likely before the company announces its earnings in February.

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