AmeriGas prices 10-years, new Charter bonds active; First Data busy, AIG up on unit-sale talk

By Paul Deckelman and Paul A. Harris

New York, Jan. 5 - AmeriGas Partners, LP and AmeriGas Finance Corp. priced a $470 million offering of 10-year notes on Wednesday, continuing the newly revived momentum in the high-yield primary market.

It was the only new deal of the day. When the propane gas distributor's new deal was freed for trading, it firmed slightly.

The existing issue of AmeriGas bonds that are to be taken out via a tender offer using the proceeds of the new deal was seen to have firmed to around that takeout level.

Traders meantime saw pretty active dealings in the gigantic new eight-year issue that Charter Communications Inc. brought to market late in the session on Tuesday, too late for any real secondary activity that day.

They also saw Regal Entertainment Group's' add-on offering that priced Tuesday continuing to hold the bulk of the 1½ point gain it notched in initial aftermarket dealings.

In the secondary market away from the new deals, statistical indicators were mostly positive.

First Data Corp.'s were seen trading actively around, although there was little change in the credit-card transaction processor's levels.

Bonds of American International Group Inc. and such units as its American General Finance Corp. were mostly better, with some issues building on gains seen Tuesday after the disclosure that AIG had gotten several offers for its Taiwan insurance subsidiary.

AmeriGas prices at tight end

The Wednesday session was a comparatively quiet one in the primary market, with two issuers - each one bringing a single four B-rated, dollar-denominated, par-pricing tranche - issued a combined $670 million.

The names were ultra-familiar to the high-yield universe.

AmeriGas Partners, LP and AmeriGas Finance Corp. priced a $470 million issue of senior notes due May 20, 2021 (Ba3//BB+) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6 5/8% price talk.

Credit Suisse, J.P. Morgan Securities LLC, RBS Securities, Wells Fargo Securities and Citigroup were the joint bookrunners for the quick-to-market issue.

The Valley Forge, Pa.-based retail propane marketer will use the proceeds to fund a tender offer for its 7¼% senior notes due 2015 and to repay its revolver.

The AmeriGas deal went well, according to a syndicate source.

There was a healthy "roll factor," meaning investors who will be taken out of the 7¼% paper, via the tender, were eager to "roll" into the new 6½% notes due 2021.

Unlike Tuesday's transaction from Regal Entertainment, the AmeriGas deal was not driven by reverse inquiry, the syndicate source said.

"People were probably not surprised when the [AmeriGas] deal was announced," the official remarked, adding that the issuer was waiting for the right market.

With its high quality credit ratings, the AmeriGas notes' 301 basis points spread to the 10-year Treasury was a factor in the execution, the syndicate source added.

The lately advancing yield of the 10-year Treasury, which moved about 80 basis points higher from mid-November to mid-December - and gained 10 bps in yield on Wednesday - has created some headwinds for high-rated deals like AmeriGas, the official said.

Stats ChipPAC at tight end

Wednesday's other issuer, Singapore's Stats ChipPAC Ltd. also brought a high-rated issue of bonds.

The semiconductor company priced a $200 million issue of notes due March 31, 2016 (Ba1/BB+/) at par to yield 5 3/8%, via Deutsche Bank.

The yield printed at the tight end of the 5 3/8% to 5½% price talk, which had been downwardly revised from initial talk of the 5 5/8% area.

Proceeds will be used to help prepay in full the remaining $234.5 million outstanding under the company's $360 million senior term loan facility obtained in May 2010.

UCI kicks off $250 million

Only one new offering took a place on the active forward calendar during the mid-week session.

UCI International, Inc. began marketing a $250 million offering of eight-year senior notes (B3/CCC+).

An investor roadshow will be conducted through the middle part of the week ahead.

Credit Suisse, HSBC and Nomura Capital Markets are joint bookrunners for the acquisition financing.

Heavy volume ahead

Wednesday's relatively light primary market activity notwithstanding, the dealers continue to look for $25 billion to $30 billion of January issuance.

Bank of America Merrill Lynch and JP Morgan are each expected to be left bookrunner on as many as 15, say sources on both the buy-side and the sell-side.

And other dealers acknowledge a building backlog of transactions to be rolled out.

"Right now we're doing some traffic management for next week," one official conceded.

The fact that Wednesday's activity remained light failed to surprise this syndicate banker who spoke to Prospect News just after the East Coast close.

Equity futures were off heading into the New York open, which caused some people to wait a day, the official commented.

A lot of people have deals that will launch on Thursday and Friday, and that will be marketed via roadshows, the sell-sider added.

Pent-up demand

The fact that high-yield investors presently have a lot of cash which needs to be put to work is widely known among the dealers, a debt capital markets banker acknowledged on Wednesday.

Some of the accounts headed into the holidays long cash, sources say. Those accounts are eager now to get that cash invested.

In addition, cash flows turned decidedly positive heading into year-end, the banker added.

Also some people were on the sidelines during the last couple of weeks of 2010 - at least some of them using up vacation time - as evidenced by a shallower buyer-base for a number of last year's later deals, the sell-sider observed.

"Right now there is some pressure to get invested," the banker stated.

New AmeriGas up slightly

When the new AmeriGas 10-year issue was freed for secondary dealings after pricing earlier Wednesday, a trader saw the Valley Forge, Pa.-based retail propane marketer's bonds trading around 100¼ bid, up slightly from their par issue price.

AmeriGas, said another trader, "came at par but they didn't do much."

He quoted the new bonds "wrapped around" 1001/4, "up slightly, but not a really big move there."

At another desk, the bonds were seen at 100 1/8 bid, 100 3/8 offered.

Existing AmeriGas up on tender

A trader saw AmeriGas' existing 7¼% notes due 2015, which are to be taken out using the proceeds from the new deal, as having moved up by between 1 and 1½ points on the news of the tender offer for those bonds.

He saw the debt had moved up to 104 bid, just over the total consideration, equivalent to 103.95, which the company will pay to holders tendering their bonds before the offer's consent deadline at 5 p.m. ET on Jan. 19. The tender offer is scheduled to expire at 11:59 p.m. ET on Feb. 2.

The trader said that they had been trading "around 103 and change" before that, although a market source at another desk noted that on a strictly round-lot basis, the new bonds had moved up from a 102½ level seen in mid-December, the last prior large-block transaction in those bonds.

Another trader quoted those bonds at "a very tight" 104-104.10 range.

More than $9 million of the bonds traded on Wednesday, making it one of the more active high yield names.

Investors chasing Charter

A trader said that the new Charter Communications 7% notes due 2019 "traded a ton," although he saw only a little upside movement in the St. Louis-based cable operator's $1.1 billion issue,

He said the new deal "really didn't do anything, though they traded a bunch." He quoted the Charter bonds at par, versus their Tuesday pricing level of 99.246, which yielded 7 1/8%.

A second trader saw "a lot of trading" in the new paper in a range between 99¼ and par; then later in the day, he said that "they kind of ground higher later in the afternoon" to finish in a par, 100¼ context.

Regal add-on holds gains

A trader said that Regal Entertainment Corp.'s new 9 1/8% notes due 2018 were "straddling 106," the level to which the Knoxville, Tenn.-based theater operator's $100 million add-on deal had moved after it priced at 104½ on Tuesday, to yield 8.107%.

A second trader saw those bonds trading on Wednesday in a 1053/4-106¼ context.

"That was an add-on," he said, "so basically, they gave people 1 point to 1½ points to play the add-on.

He noted that the add-on and the original $275 million of the bonds which were sold last summer "are absorbed into the one Cusip."

Cemex offering seen better

Cemex SAB de CV's new mega-deal was seen to have firmed to 101 bid; the Mexican building products company's $1 billion offering of 9% notes due 2018 had priced Tuesday at par.

At another desk, a trader quoted it at 100.70 bid, 101 offered.

The deal was mostly marketed to players in emerging markets issues, although there was some interest from high-yield accounts.

Secondary signs mostly firm

Away from the new-deal arena, a trader saw the CDX North American Series 15 HY index down by 1/8 point on Wednesday - after having been up by the same amount Tuesday. He saw the index closing at 103 3/8 bid, 103 5/8 offered.

The KDP High Yield Daily index meantime rose by 4 basis points on Wednesday to go out at 74.71, on top of the 9 bps advance on Tuesday. Its yield came in by 1 bp, after having tightened by 4 bps on Tuesday for a second straight session.

The Merrill Lynch High Yield Master II index rose by 0.85% on Wednesday after having gained 0.22% on Tuesday. That lifted the index's year-to-date cumulative performance to 0.622% from 0.537% on Tuesday. The index had finished 2010 with a total return of 15.190%.

Advancing names topped decliners for a seventh straight session on Wednesday, and held a seven-to-five edge over them, a little narrower from the eight-to-five lead seen in the previous two sessions.

Overall activity, represented by dollar-volume levels, rose by 23% on Wednesday, after having jumped by 50% on Tuesday from the previous day's level.

A trader said that he "didn't notice anything going crazy, or off, or anything."

Despite the higher volume figures, another trader said that "what slowed everything today," in terms of limiting the kind of up or down movements, "was Treasuries dropping so hard."

This followed two pieces of news which would seem to indicate that the U.S. economy is improving. First, the Institute for Supply Management's index of economic activity in the service industries and other non-manufacturing sectors expanded in December at its fastest pace since May 2006 - seen as a sign that the nascent recovery has spread beyond manufacturing to the rest of the economy which the index covers, including such areas as retailing and financial services. The index's rise to a reading of 57.1 from November's 55.0 - anything above 50.0 is considered improving - was considerably greater than the small gain forecast by most economists.

The payroll processing company ADP Employer Services meantime reported that the economy added 297,000 jobs in December - about triple what economists were looking for, and the biggest rise since the company began publishing such statistics in 2001. While some on Wall Street expressed skepticism about the ADP number, noting the company had sometimes been wrong previously in its assessments - there were some economists who upped their estimates of the growth in non-farm payrolls for December that the Labor Department will report on Friday. Stocks strengthened, with the bellwether Dow Jones Industrial Average bouncing back from its early decline to finish up 31.71 points, or 0.27%, at 11,722.89, while the broader Standard &Poor's 500 index closed at its highest point in more than two years, up 6.36 points, or 0.50%, to go out at 1,276.56.

While stocks were sizzling, Treasuries were fizzling, with the yield on the government 10-year issue and the 30-year long bond each ballooning upward by 13 bps on the session, to end at 3.46% and 4.54%, respectively.

The trader said that with the 10-years down a point on the day and the 30-years off more than 2 points, "that sort of slows people up."

First Data busily unchanged

A trader said that one of the most notable names he saw as First Data Corp., even though the Atlanta-based credit-card transaction processing company's bonds were seen unchanged, with no fresh news out.

"They were very, very active," he said. "Call them incredibly active"

He saw the three series of 2021-2022 bonds which the company recently issued in an exchange offer busy, but little changed, with the new 8¾% and 12 5/8% cash-pay notes both at 95 bid, 96 offered, and the 8¾% PIK notes at 96 bid, 97 offered., all on "very heavy volume."

AIG active on sale revelations

Traders saw some activity in the bonds of troubled insurance giant American International Group Inc., which got a boost, presumably, from the disclosure that AIG has received expressions of interest from several potential buyers looking to purchase its Taiwanese insurance subsidiary.

One trader noted that the New York-based insurer's 6.40% notes due 2020 was trading at 104 bid, which he called down ½ point on the day - but he noted that AIG paper had risen solidly on Tuesday.

He saw AIG's International Lease Finance Corp. 8 7/8% notes due 2017 at 110½ bid, which he said was up 1¼ points versus Tuesday, although he said that they "weren't that active." He said that the most active AIG paper were the parent company's 6.40s and 5.45% notes due 2017, which gained 1/8 point to 101¾ bid.

AIG unit American General Finance Corp.'s 6.90% notes due 2017 were little changed at 841/2. Over $15 million of those bonds changed hands, mostly in round lots.

The trader also saw American General's 5.40% notes due 2015 up almost 1 point at 83¼ bid, while its 5.85% notes due 2013 were "very active" at 94 bid, although it was only up ¼ point.

But he said that "for the most part, the paper was unchanged to up 1/8 or 1/4," while reiterating that most AIG issues had risen 1 point or more on Tuesday, when the Securities and Exchange Commission released the contents of a mid-November letter from AIG, indicating was offered as much as $3 billion for its Taiwan- based unit Nan Shan Life Insurance Co.

AIG is in the process of shopping that company, and other assets considered non-core, planning on using the proceeds to help whittle down its huge debt to Uncle Sam, who pumped in billions of dollars of bailout money during the 2008-2009 financial crisis, on the assumption that a collapse of the big insurer would have had disastrous effects upon an already shaky financial industry.

Elsewhere in the financials, a trader said the various 7% bonds of CIT Group, Inc. are "all above par, so it doesn't mean much to me any more."

The New York-based commercial lender's several series of 7% notes due anywhere from 2013 to 2017, issued as part of the exit funding when it emerged from Chapter 11 in late 2009 - had been firming over the last several session on last Thursday's announcement that CIT would redeem $500 million of the 2013 notes, or a little less than a quarter of the $2.1 billion outstanding amount, at a price of 102 on Jan. 31.

Autos spin wheels after gains

In the autosphere, a trader said that Motors Liquidation Co.'s benchmark 8 3/8% bonds due 2033 - which had firmed solidly in Tuesday's dealings after affiliated carmaker General Motors reported strong year-over-year sales gains for December and for all of 2010 - were trading around 36 bid, 37½ offered, which he called unchanged on "not a lot of activity."

A second trader said that while the bonds issued by the former GM "were definitely up [Tuesday] on the higher sales figures, they were unchanged on Wednesday in a 35 to 36 zone, "all of them."

He meantime saw Ford Motor Co.'s bonds, which had also firmed on Tuesday on better sales numbers for the Number-Two domestic car maker, also unchanged, with its 7% notes due 2015 at 108 bid.

Yet another trader saw Ford's 7.45% bonds due 2031 unchanged at 107½ bid, 108½ offered, while seeing the GM long bonds at 36½ bid, 37½ offered, likewise steady.

Paper parade continues

A trader said that Catalyst Paper Corp.'s bonds moved up, with the Richmond, B.C.-based paper manufacturer's 11% senior secured notes due 2016 up 1 point on the day to around 97½ bid, 98½ offered.

He saw its 7 3/8% notes due 2014 trading between 78 and 80, with "not much trades there."

Catalyst, he said, "has moved up steadily over the last couple of days."

He meantime saw Catalyst sector peer NewPage Corp.'s 11 3/8% senior secured notes due 2014 around the same 951/2-96 bid range where the Miamisburg, Ohio-based coated-paper manufacturer's bonds had already been, labeling them unchanged on the day.

OPTI Canada active

A trader said that OPTI Canada's bonds remained pretty much within their recent ranges seeing the Calgary, Alta.-based oil-sands energy company's 7 7/8% senior secured notes due 2014 staying around a 711/2-72½ range, on "some trades today, but not much."

He also saw the company's 8¼% notes due 2014 saw "a lot more activity," ending at 72¼ bid, 72¾ offered, which he called unchanged to down ½ point.

At another desk, a market source said the latter bonds were ending at 72 13/16 bid, which he called a loss of 11/16 on the session.

However, another market source, while quoting the bonds ending at 72½ bid, called that up nearly a point on a strictly round-lot basis. He noted that large-block activity in the credit was brisk, with over $27 million having changed hands by the end of the day, putting the OPTI issue onto the high yield most-actives list.

A&P mostly inactive

A trader said that he "didn't see much of" Great Atlantic & Pacific Tea Co.'s bonds during Wednesday's session.

He said that its 5 1/8% convertible notes slated to come due on June 15 and its 6¾% converts due 2012 were just "hanging around" 33 bid, 35 offered, levels which he called unchanged. Despite their convertible status, those two issues trade at low levels typical of plain old senior unsecured junk bonds because the underlying stock of the bankrupt Montrose, N.J.-based supermarket operator is considered all but worthless in a restructuring scenario.

He meantime saw the company's 11 3/8% senior secured notes due 2015 at 92 bid, 94 offered, "pretty much where I'd had them" previously. He said there was "not much" activity in either the 11 3/8s or the converts on Wednesday.

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