Centennial, Concordia, ASAT price; HealthSouth up as defaulted convert paid off

By Paul Deckelman and Paul A. Harris

New York, Jan. 16 - It was a half-day session before a Monday holiday market close - but you wouldn't know from the continued pace of activity in the high yield primary sector on Friday - although activity was much slower than Thursday's astonishing pace.

Despite the abbreviated trading day ahead of the Martin Luther King Day holiday on Monday, new issues continued to price, with offerings - most of them upsized - seen from Centennial Communications Corp., Concordia Bus Nordic AB, New ASAT (Finance) Ltd. and from emerging markets issuers Excelcomindo Finance Co. BV and EON Bank. All told, it was another billion dollars-plus of new paper, on top of the better than $4.2 billion seen in the first four days of the week.

Secondary players, however, treated the day like the semi-holiday it was. Long before activity officially terminated at 2 p.m. ET, things had wound down, with few real trades seen. However, there was one piece of market-moving news; HealthSouth Corp. announced that it had lined up some new financing and had paid off a defaulted convertible issue which matured back in April but which was never paid at the time. That sent the bonds of the troubled Birmingham, Ala.-based provider of outpatient medical services up anywhere from one to three points, across the board.

As a postscript to Thursday's nine-deal, approximately $2.5 billion bash, Friday's abbreviated session offered up a low-calorie dessert. In the U.S. market, two dollar denominated issues totaling $475 million, in addition to a single European deal of €130 million priced before the mid-afternoon close.

All three issues that priced Friday were upsized, with two coming at the tight end of price talk and one pricing lower than talk.

As the shortened session drew to a close Prospect News inquired of one sell-side official whether the $396 million inflow to high yield mutual funds for the week ending Jan. 14, reported Thursday by AMG Data Services, would prompt the investment banks - already seen by some observers as "aggressive" with regard to many of the Jan. 12 week's transactions - to become even more aggressive.

"Pricing has already come in pretty tight," the official responded. "The Seminis add-on came at 109. Station Casinos came at 6½%. Vail came at 6¾%. All of them were drive-bys.

"And more than half of the deals that got done this week were upsized.

"You have to wonder how much more aggressive they can be."

In fact, an analysis of data compiled by Prospect News for the week of Jan. 12 shows that of the $5.090 billion that was issued in 20 dollar-denominated deals, 15 deals representing $4.179 billion were upsized.

That includes all three of Friday's transactions, although only two of the three were dollar-denominated.

Centennial, Asat, Concordia price upsized deals

Centennial Communications Corp., in conjunction with co-issuing entities Centennial Cellular Operating Co. LLC and Centennial Puerto Rico Operations Corp., completed the session's largest transaction.

The Wall, N.J.-based independent wireless company priced an upsized $325 million of 10-year senior notes (Caa1/CCC) at par to yield 8 1/8%, with Lehman Brothers and Credit Suisse First Boston running the books.

That yield was at the tight end of the price talk which had put the yield in the 8¼% area.

Meanwhile New Asat (Finance) Ltd. priced an upsized $150 million of seven-year senior notes (B3/B) inside of talk. The deal was increased from $125 million.

The semiconductor assembly, test and package design services company priced its notes at par to yield 9¼%.

Price talk on the Citigroup-led deal was for a yield in the 9½% area.

Meanwhile in Europe, Concordia Bus Nordic AB upsized its 5.5-year senior secured notes offering (B2/B-) to €130 million from €125 million.

The Stockholm, Sweden-based bus company priced its notes at par to yield 9 1/8%, with Goldman Sachs & Co. and JP Morgan running the books.

Price talk was for a yield in the 9¼% area.

United Agri parent, Head coming

UAP Holding Corp., the parent company of Greeley, Colo.-based United Agri Products, Inc., intends to raise $62.3 million of proceeds with a sale of 8.5-year senior discount notes on Tuesday.

Price talk on the four-year zero coupon notes is 10¾%-11%.

UBS Investment Bank will run the books on the deal, proceeds from which will be used to pay a dividend to equity sponsor Apollo Partners.

Also on Friday Rotterdam-based sporting goods firm Head NV announced in a press release that it will offer up to €125 million of senior notes (prospective B2).

Market sources say that although the tenor of the notes remains to be determined the deal is expected to launch during the week of Jan. 19 via bookrunner Citigroup.

Several market sources also told Prospect News, beginning early in the session, that Triton PCS was expected to show up with a $150 million drive-by deal. However no further developments were heard.

Also after Friday's close Prospect News learned that Petro Stopping Centers Operating Partnership LP plans to sell $215 million of senior secured notes via Banc of America Securities.

The consent solicitation for the El Paso, Tex.-based truck stop owner-operator's tender offer expires on Feb. 9. No precise timing on the deal or structural details were disclosed.

And although Moody's withdrew all of its ratings on Global Motorsport Group, Inc., citing the company's postponement of an $85 million five-year senior secured notes deal in late 2003, that offering, via Jefferies & Co., remains in the market, according to an informed source.

However, the source added, pricing is not imminent.

Don't be fooled by empty calendar

As the primary market enters the week of Jan. 19, only two deals, totaling $242.3 million, proceeds, are positioned as offering expected to be completed during the holiday-shortened four-session week.

In addition to the above-mentioned discount notes offering from UAP Holding, San Jose, Calif. plastic container manufacturer Portola Packaging, Inc. is expected to sell $180 million of eight-year senior notes (B2/B-). Price talk is 8½% area, with pricing expected on Tuesday.

When Prospect News suggested to a sell-side official, on Friday, that such a dearth of deals would seem to belie the phenomenal liquidity that is reported in the high yield asset class, the source said: "Don't worry.

"You saw what happened last Thursday: of the nine deals that priced, five or six were drive-bys.

"I don't see that stopping," the source added. "Guys are going to come to the market with short roadshows of one or two days, or with conference calls.

"The rates that we have been seeing will continue to attract issuers."

EON, Excelcomindo upsize in emerging markets

In emerging markets corporates activity Friday, EON Bank (Malaysia) priced an upsized $225 million of 5 3/8% 10-year lower tier II subordinated notes (Baa3//BB+) at 99.848 to yield 5.41%. The sale was increased 50% from the original size of $150 million.

The deal priced at a spread of 245 basis points, well inside of the 270-275 basis points price talk, via bookrunner ING.

An informed source commented that the there was in excess of $800 million in the investor book for the upsized issue.

New EON bonds were allocated to more than 80 buyers, with 65% going to investors in Asia, 30% to Europe and 5% to U.S. investors.

The principal buyer category was asset managers, according to the source.

Also in emerging markets corporates action, Friday, Excelcomindo Finance Co. BV priced an upsized $350 million of 8% five-year senior fixed rate bonds (B2/B+) at 99.495, to yield 8 1/8%. The offering was expanded from $250 million.

The Indonesian telecom company's deal, which was led by Morgan Stanley Dean Witter, Credit Suisse First Boston and UBS Investment Bank, came at the tight end of the 8¼% area talk, already reduced from the 8 3/8% area.

A market source told Prospect News that the book for the Excelcomindo deal was more than five times oversubscribed.

American Casino trades up

With trading having wrapped up early, none of the issues which priced Friday were seen having been freed for secondary trading.

Of the issues which priced earlier in the week, American Casino & Entertainment Properties LLC's new 7.85% senior secured notes due 2012, which had priced at par on Thursday, were seen at 101.25 bid, 102 offered, while rival casino operator Station Casinos Inc.'s new 6½% senior subordinated notes due 2014, which also priced at par on Thursday, were likewise heard in the 101.25 area.

Traders saw no further activity in the bonds of the third casino company pricing a deal on Thursday, Premiere Entertainment Biloxi, whose new 10¾% first mortgage notes due 2012 had rocketed skyward on the break after having priced at 98.684 to end above 106 bid.

Vail Resorts Inc.'s new 6¾% senior subordinated notes due 2014, which priced Thursday at par, were quoted at 101.375 bid on Friday.

Several traders saw Nalco Finance's zero-coupon/9% senior discount notes due 2014, which had priced Thursday at 64.235, continuing to hover around 64.25, "with more for sale, so that leads me to believe it was a little bit of a stinker," a trader opined.

He also observed that "some guys were circling back on Primus [Telecommunications Holdings Inc.]," whose 8% senior notes due 2014 priced at par on Tuesday. "They still pretty much work out at 101 to 101.5, no real change there."

Trading quiet despite inflows

The trader said that even though junk bond mutual funds had late Thursday seen a net inflow of $396 million in the most recent week, continuing the trend seen over the past few months of strong weekly cash infusions into the funds (seen as a proxy for liquidity trends in the overall high yield market), the inflow - the 16th in the last 17 weeks - "didn't do a whole hell of a lot. There's not much activity - not much going on here, that's the problem."

Other traders also lamented the generally sleepy tone of the session, which saw skeleton crews in at number of shops where nothing was expected to happen.

And for most of the session, nothing did. However, a bit after noon - by which time traders at some desks had already hung out the "see you Tuesday" signs - HealthSouth announced that it had refinanced its 3¼% convertible subordinated debentures due April 1, 2003 from the net proceeds of a new $355 million loan arranged by Credit Suisse First Boston.

The company said that with this refinancing, it is now current on all of its outstanding principal and interest payments due under its various borrowing agreements, and said that it intends to remain current on all upcoming payments.

HealthSouth further said that it "will seek to reach agreements with the holders of its other outstanding indebtedness, which may provide for increased interest rate provisions or other consent fees, consistent with the leverage ratios of the company."

HealthSouth bonds higher

The news - certainly a positive development for a company which was battered by accounting scandals and the resulting criminal investigations in 2003, on top of the investor angst caused by the missed convertible redemption - was heard to have pushed the company's bonds up solidly.

A market source saw HealthSouth's 6 7/8% notes due 2005 a point better on the day at 99.5, while its 10¾% notes due 2008 were two points ahead at 101.5, and its 8 3/8% notes due 2011 fully three-and-a-quarter points improved, at 100.75.

At another desk, a trader saw a similar pattern of movements, although he indicated that the bonds were actually trading a point or two ahead of the other market source's levels, seeing the 10¾% notes, for instance, as high as 102.75 bid, 103.75 offered, while 8 3/8s were at 101.75 bid, 102.75 offered post-news.

Apart from the flurry of late excitement generated by the HealthSouth news, "there was nothing going on," a trader said. "Secondary was completely dead."

For instance, after Juniper Networks Inc. completely blew through analysts' expectations for fourth quarter sales and profits late Thursday, the Sunnyvale, Calif.-based maker of broadband networking equipment's stock jumped over 30% Friday, and pulled the shares of many other tech names up, among them junkbonders Lucent Techologies Inc. and Nortel Networks Corp.

Lucent's New York Stock Exchange-traded shares ended up 14 cents (3.13%) at $4.61 on more than five times average volume, although they had surged as high as $5 earlier on first response to the Juniper news. Nortel's NYSE shares were up 49 cents (7.66%) to $6.89), on three times its average volume.

Even so, bonds of the two telecommunications equipment makers were little changed - mostly because they are already trading at such tight levels, with Lucent's benchmark 7¼% notes due 2006 heard unchanged at 104.5 bid, 105.5 offered. Its 6.45% bonds due 2029 were half a point better at 85.5. Nortel's 6 1/8% notes due 2006 were at 104 bid, 104.5 offered, "maybe three-eighths of a point cheaper," a trader suggested.

Also in the telecom area, little movement was seen among such wireless names as Nextel Communications Inc. and Western Wireless Corp., even though the financial media has been rife with speculation of the past few days that the telecom wireless sector will seen major consolidation, with AT&T Wireless seen as a likely acquisition by some other industry player; according to some reports, one of the industry players reported to be interested in acquiring it is Nextel. Other stories during the week saw Nextel as a possible acquirer of Sprint PCS. However, Nextel's benchmark 9 3/8% notes due 2009 were seen at 109.375, not much changed, a trader said, and its 7 3/8% notes were half a point better at 110.5. Western Wireless's 9 ¼% notes due 2013 were unchanged at 111.

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