Adelphia lower again in thin trading; downsized Icon Health prices; big April calendar expected

By Paul A. Harris

St. Louis, Mo., March 28 - Adelphia Communications Corp. generated about the only activity in high-yield trading Thursday as the market continues to process news of the company's off-balance sheet financial activity, reported during a Wednesday earnings call. The cable company's bonds were mostly seen a few points lower in thin trading ahead of the early 2.00 p.m. ET close ahead of the holiday weekend.

The Bond Market Association recommended a full close for Friday.

In the primary market, meanwhile, a downsized deal priced, another new issue was announced, and two more sources added their voices to the growing list of sell-siders forecasting vigorous growth in the primary market forward calendar in early April.

"I think you will not only see more deals being announced," one high yield syndicate source said, "they will be bigger deals than we have been seeing. Some of them will be over $500 million."

This official cited recent inflows, including the record-setting $2.336 billion of mutual fund inflows reported by AMG Data Services for the two-week period ending March 13.

"Investors need to put this cash to work and they will no doubt want to do that before summer, if they can," the official said.

However, as Thursday's abbreviated session drew to a close, the forward calendar contained just five deals amounting to $1.425 billion. Two of them - American Seafoods Group's $175 million via Banc of American Securities and Tesoro Petroleum Corp.'s $450 million via Lehman Brothers - are scheduled to price during the week of April 1.

Meanwhile, when terms emerged Thursday on the new senior subordinated notes from Icon Health & Fitness, the deal had lost substantial weight, having been downsized to $155 million from $200 million. The B3/B- rated 10-year five notes priced at 98.589 to yield 11½%. Price talk of 11%-11¼% was reported to Prospect News by syndicate sources on Wednesday. Credit Suisse First Boston ran the books on Icon.

Also Thursday, a new deal surfaced from Rye, N.Y.-based canning and storage products-maker Alltrista, Inc. The company will start roadshowing $150 million of new 10-year senior subordinated notes on Monday. Banc of America Securities and CIBC World Markets are the joint bookrunners.

Alltrista will use the proceeds to acquire vacuum packaging manufacturer Tilia International as well as to repay bank debt.

Meanwhile, secondary market sources reported a quiet session as Thursday's early close drew nigh.

Amid the scant trading activity, one trader saw movement in the paper of Adelphia Communications, which has drawn the attention of investors for off-balance sheet debt revealed during its earnings conference call Wednesday.

With financial markets still jittery after off-balance sheet activities helped bring down Enron Corp., Adelphia's disclosure of $2.3 billion in "co-borrowings" has unnerved investors. In addition, the company's exposure to the debts of former subsidiary Adelphia Business Solutions - which filed for Chapter 11 bankruptcy protection on Wednesday - are now said to possibly exceed $0.5 billion.

However there were widely varying quotes on Adelphia Communications' junk bonds both Thursday and Wednesday.

"Adelphia's junk cratered 10-12 points and since then came back and bounced off their lows by about three points," said one trader.

Another source quoted Adelphia paper down. However the declines were quite a bit more modest than ones reported Wednesday, after Adelphia broke the bad news.

The company's 10 7/8% notes of 2010 dropped to 94 from 961/2, Thursday, this source specified. He also saw the 101/4s of 2011 falling to 92 from 92½ and the 101/4s of 2006 sinking to 92½ from 94.

However, secondary market sources who spoke Thursday with Prospect News noted that trading levels were so low as to hardly be meaningful.

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