HCA slates $1 billion of notes as market awaits Express deal; Visteon surge continues, AIG up

By Paul Deckelman and Paul A. Harris

New York, March 1 - The high-yield market turned the page on a new calendar month on Monday, bringing March in with the announcement from Nashville-based hospital giant HCA Inc. that it will sell a $1 billion issue of 10-year secured notes. The mega-deal will be shopped around to investors on a Tuesday morning conference call, with pricing expected soon afterward.

Elsewhere, the primary market - fresh off a more than $2.5 billion borrowing binge during Friday's session - saw no additional pricings on Monday, but participants did hear price talk on Express LLC/Express Finance Corp.'s $200 million offering of eight-year notes. The Columbus, Ohio-based specialty retail apparel company's deal is also expected to price on Tuesday afternoon.

Traders meantime saw the deals that priced during Friday's session -- Niska Gas Storage, Equinix, Inc., Oshkosh Corp., ArvinMeritor Inc. and even the late-appearing Reddy Ice Holdings, Inc. - all trading above their respective issue levels. Ditto for offerings from earlier in the week, including Eastman Kodak Co. and Central Garden & Pet Co.

Among secondary credits not connected to the new-deal market, Visteon Corp.'s bonds were seen firming smartly for a second consecutive session in the wake of its announcement late last week of favorable fourth-quarter and full-year 2009 results.

American International Group Inc.'s bonds were seen having gained on the news that the troubled New York insurer had agreed to sell its Asian unit for some $35 billion.

HCA lines up $1 billion for Tuesday

Primary market activity was muted on Monday because of the JP Morgan Global High Yield & Leveraged Finance Conference, which is underway in Miami, a debt capital markets banker said.

The conference, which runs through Wednesday, will likely dampen new issue market activity into the middle of the week, the banker added.

Nevertheless, HCA Inc. disclosed plans to price a $1 billion offering of senior secured first-lien notes due September 2020 (expected ratings Ba3/BB) on Tuesday.

Pricing will be preceded by an investor call at 10:30 a.m. ET on Tuesday.

Bank of America Merrill Lynch, Citigroup, JP Morgan, Barclays Capital, Deutsche Bank Securities, Goldman Sachs & Co. and Wells Fargo Securities are joint bookrunners for the bank debt refinancing.

Express sets price talk

Meanwhile Express, LLC and Express Finance Corp. set price talk for their $200 million offering of senior notes due March 1, 2018 at the 9% area, on Monday.

The order books close at noon ET on Tuesday for accounts seeing the deal through Monday, and at 3:30 p.m. ET for others.

Pricing is set for Tuesday afternoon.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co. Inc. are joint bookrunners for the debt refinancing and dividend deal from the Ohio-based specialty retail apparel company.

New deal domination continues

A trader said that "some of the new issues [recently priced] continued to do well" on Monday, particularly Oshkosh Corp.'s $500 million two-part bond issue, both parts of which had priced at par on Friday and then had proceeded to move up in initial aftermarket dealings.

On Monday, he saw the Oshkosh, Wis.-based fire truck and specialty-access vehicle maker's $250 million of 8½% notes due 2020 at 103 bid, 103¾ offered, up slightly from around 102¾ bid, 103 offered late Friday. He saw the company's $250 million of 8¼% notes due 2017 "a little lower," around 102½ bid, 103 1/8 offered, near where the bonds had gone out on Friday.

He noted that this past weekend, Barron's magazine had "a negative piece on their equity - but it doesn't seem to have hurt [the bonds] much."

Niska Gas bonds continue to cook

A trader said that the new Niska Gas Storage 8 7/8% senior note units due 2018 were trading at around the 102¼ bid level - well up from the 101½ bid level seen in Friday's dealings and better still than the par level at which the Calgary, Alta.-based natural gas storage company had priced its $800 million offering earlier that session.

ArvinMeritor upside continues

A trader quoted ArvinMeritor's 10 5/8% notes due 2018 at 101 3/8 bid, 102 offered. That was up from the 101 level at which the Troy, Mich.-based automotive components company's new deal had traded in Friday's aftermarket - which itself represented a nearly 3 point jump from the 98.024 level at which the company had priced its $250 million offering earlier Friday to yield 11%.

A market source meantime saw ArvinMeritor's existing 8¾% notes due 2012 - most of which are to be taken out via a previously announced tender offer for those bonds financed with the proceeds from the new bond deal - having shot up to 109 bid from around 106½ on Friday. That coincided with the news late Friday after the market had closed that ArvinMeritor had raised the price it would be willing to pay under the tender offer. The tender offer consideration was raised to $1,067.50 per $1,000 principal amount from the original $1,035 and the total consideration for those holders who tender their bonds by the March 8 early tender deadline increased to $1,097.50 from $1,065. Arvin Meritor is still only tendering for $175 million of the outstanding $276 million of bonds, and will accept notes on a pro-rata basis should the tender offer be oversubscribed.

Reddy Ice is pretty nice

A trader saw Reddy Ice Holdings' 11¼% first-lien senior secured notes due 2015 at 101 3/8 bid, 102 offered. The Dallas-based maker of packaged ice priced its $270 million deal - which was downsized from the originally announced $300 million - at par on Friday but way too late in the session for any kind of meaningful secondary dealings.

Equinix slightly firmer

A trader said that "fairly early in the day" on Monday he saw Equinix Inc.'s 8 1/8% notes due 2018 trading in a 102-102¼ bid context - up a little from late Friday's trading levels around 101½ bid, 102 offered. That in turn was s well up from the par level at which the Foster City, Calif.-based data infrastructure services company priced the offering - upsized from the original $500 million - earlier in the session on Friday.

Central Garden holds gains

A trader saw Central Garden & Pet Co.'s 8¼% senior subordinated notes due 2018 trading as around 101 bid, 101½ offered - little changed from where they had gone out on Friday.

The Walnut Creek, Calif.-based lawn, garden and pet care supply company's $400 million deal, upsized from $300 million, had priced at par on Thursday to yield 8¼%.

Kodak shows improvement

A trader saw Eastman Kodak's 9¾% senior secured notes due 2018 at 98 bid, 99 offered, but added that he would "have to imagine they were up" from the pricing levels seen last Wednesday, when the Rochester, N.Y.-based photographic products' $500 million deal - upsized from the original $400 million - priced at 97.967 to yield 10 1/8%.

Kodak's 7¼%notes due 2013 meantime quoted by a market source at trading just below 97 bid, up more than 2½ points on the day.

Market indicators stay firm

Away from the new deal market, a trader saw the CDX Series 13 index up ½ point on Monday to end at 97 5/8 bid, 98 1/8 offered, after having risen by ¼ point on Friday.

The KDP High Yield Daily Index meanwhile edged up by 2 basis points on Monday to finish at 70.53, after having gained 12 bps on Friday. Its yield was steady on Monday at 8.38%, after having tightened by 5 bps on Friday.

Advancing issues made it two sessions in a row ahead of decliners on Monday, by a better than eight-to-five margin.

Traders noted the impact on junk market activity of the J.P. Morgan high yield and leveraged finance conference, which opened on Monday in Miami. "The theme of the day might be the J.P. Morgan conference," one declared, adding "there's always a lot of people out" for that.

"Volume wasn't all that light, but it was fairly light for the day."

A second characterized the day as "pretty quiet, though the market did better."

Even so, overall market activity, as measured by dollar-volume levels, rose by about 25% from Friday's pace.

Visteon victory parade rolls on

A trader said that Visteon Corp.'s bonds went up sharply for a second straight session on Monday, raising the possibility that "the ArvinMeritor [new ] deal getting done may have helped them," since both companies are in the automotive components business. Another trader theorized that a weekend Barron's article favorable to General Motors Corp. said the carmaker was doing well, "which could, or should, spill over to Visteon.

"The Motor City is back - and maybe things in the [auto] sector are not so bad."

A third market source continued to echo the conventional wisdom, i.e. the bonds were better because of the favorable fourth-quarter and 2009 full year results, since "the quarterly results significantly beat expectations with sales, EBITDA and cash flows that were well ahead of consensus. The performance was attributed to cost reduction and reduced overhead costs."

Visteon late Thursday reported fourth-quarter sales of $2.03 billion, up from $1.65 billion the year before. Net income came to $276 million, or $2.12 per share - an improvement over the net loss of $346 million, or $2.67 per share, for the fourth quarter of 2008.

For the year, Visteon - spun off from Ford Motor Co. a decade ago - reported its first ever yearly profit, with net income coming to $128 million, or 98 cents per share, on sales of $6.68 billion. In 2008, the Van Buren Township, Mich.-based auto components company reported a full-year loss of $681 million, or $5.26 per share, on sales of $9.54 billion.

The market source saw the company's 7% notes due 2014 and its 8¼% notes slated to come due on Aug. 1 both around an 81ish context, up about a dozen points on the former bond and about 6 point on the latter.

"They reported," he noted, "though that was last week. I guess people liked that." He further pointed out that "their sales were way up from $1.6 billion to $2 billion, gross margin went from negative to wildly positive, so I guess that will do it."

Another trader said that Visteon "was the name of the day today," with both of its bonds had moved up to 82 from around 70ish for the 7% 2014 notes and 76 for their 101/4s. "In two days [Friday and Monday] they're up 20 to 30 points." He quoted the 7s at 82-83 offered, which he estimated would be "12 to 15 points, up a lot, on a decent amount of trading." He said the 81/4s gained 6 points.

GM gains on Barron's Buzz

General Motors' benchmark 8 3/8% bonds due 2033 were "up pretty good," with the carmaker's paper having risen to a 32-32¾ range on Monday, versus Friday's 30-31, helped by the positive article in Barron's, traders said.

Another trader saw the GM benchmarks up 1½ points, though he pegged the bonds at 103¾ bid, 103¾ offered. He saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 87½ bid, 89½ offered.

AIG up on asset sale news

A trader saw American International Group's bonds up on news that the troubled New York-based insurer will sell its AIA Asian insurance business to U.K.-based Prudential plc for about $35.5 billion, giving AIG around $25 billion in cash it can use to start paying back government loans. He said that AIG's 8.175% junior subordinated debentures due 2058 were one of the most active AIG credits. "They traded a lot of bonds today," with the paper having moved up to 72-73 from around 66½ on Friday.

He saw its 6 5/8% notes due 2013 "up, but not nearly as much" as the 8.175s, rising to 90 bid from Friday's 88-88¼ context.

A trader saw AIG's 6¼% notes due 2036 having gained some 4½ points to end the day just under the 77 bid mark.

Its American General Finance unit's 5 3/8% notes due 2012 moved up by nearly 1½ points to just under 84.

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