Piaggio prices as Hanesbrands, Cemex, Quantiles, others plan deals; Forest Oil gains again

By Paul Deckelman and Paul A. Harris

New York, Dec. 1 - The high yield bond market headed into the homestretch on Tuesday, kicking off the final month of 2009 with yet another session that saw a slew of new bond deals either announced or just surfacing, but only two relatively minor deals actually pricing - a modestly sized, euro-denominated issue from Italian motorcycle maker Piaggio & C. SpA and a smallish split-rated offering from Otter Tail Corp. - neither of them exactly considered household names in Junkbondland.

But while that was going on, the forward calendar continued to fatten, in anticipation of a year-end rush of financings expected to take place over the next two to three weeks, before everyone essentially goes home for the holidays.

Potentially the biggest deal - and one which will also stimulate interest from emerging markets investors - will come from Cemex Finance, an arm of Mexican cement producer Cemex SAB de CV, which plans a benchmark-sized offering of as much as $1 billion of seven-year notes; syndicate sources heard the company hitting the road this week to market the deal, with pricing expected early next week.

Also heard to have begun a roadshow in preparation for a pricing next week was Scottsdale, Ariz.-based supply chain services provider JDA Software Group Inc., which announced plans for a $275 million offering of five-year paper.

New deals were also announced by popular clothing manufacturer Hanesbrands Inc., by Primus Telecommunications Group Inc. and by Dollar Financial Corp., while the syndicate sources also heard that Durham, N.C.-based pharmaceutical test services and consulting firm Quintiles Transnational Holdings Inc. was bringing a deal to market, with pricing likely early next week.

Away from the new-deal arena, Forest Oil Corp.'s bonds gained for a second consecutive session in the wake of the news announced late Monday that the Denver-based oil and gas exploration and production company has agreed to sell holdings in West Texas and New Mexico to SandRidge Energy Inc., whose bonds were also better.

General Motors Corp.'s bonds were mixed, investors shrugging off a reported small decline in its overall sales in November, versus year-ago levels to focus instead on solid gains in the core nameplates which the restructured auto giant will be focusing on going forward as it sells or closes down its more unpopular brands. There was little impact seen from the late-session news that formerly bankrupt GM's chief executive officer had resigned.

Currently bankrupt Smurfit-Stone Container Corp.'s bonds rose smartly in active trading after the Chicago-based packaging company formally submitted a reorganization plan to the court overseeing its restructuring, which envisions converting its unsecured debt, including most of its bonds, to equity when the company emerges from Chapter 11 in the spring.

With U.S. stock indexes rallying approximately 1.25% across the board on Tuesday, junk bonds firmed, according to a New York-based syndicate banker.

Piaggio prices tight to talk

Although the primary market saw a flurry of activity, and the forward calendar built purposefully, no U.S. issuers priced junk deals on Tuesday.

However Italy's Piaggio priced a €150 million issue of seven-year notes (Ba2/BB) at par to yield 7%.

The yield printed at the tight end of the 7% to 7 1/8% price talk.

Banca IMI and J.P. Morgan Securities, Inc. led.

Proceeds will be used redeem the Rome-based scooter company's 10% notes which mature in April 2012.

Meanwhile, in a euro-denominated deal that some U.S. junk-watchers tracked, Croatia's Agrokor DD priced a €400 million issue of 10% seven-year senior notes (B2/B/) at 96.968 to yield 10 5/8%, at the wide end of the 10½% area price talk.

Market sources tended to see Agrokor as an emerging markets corporate play.

BNP Paribas and UniCredit were the leads for the Rule 144A and Regulation S sale.

Otter Tail prices split-rated issue

Another deal watched by some high-yield sources on Tuesday was Otter Tail Corp.'s split-rated $100 million issue of 9% seven-year senior unsecured notes (Ba1/BB+/BBB-) which priced at 99.994 to yield 9%.

The yield printed on top of price talk. The notes were priced off the investment grade syndicate desk.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. ran the books for the debt refinancing and general corporate purposes deal.

Hanes plans $500 million

Meanwhile, as forecast, the active forward calendar built purposefully on Tuesday, and is expected to continue to do so, as the dealers see a window of opportunity which they expect to stay open through mid-December.

Hanesbrands hosted an investor call on Tuesday, and will host another on Wednesday for a $500 million offering of seven-year senior unsecured notes (expected B2/B)..

The deal is expected to price before the end of the week.

JP Morgan, Bank of America Merrill Lynch, HSBC and Goldman Sachs & Co. are joint bookrunners for the debt refinancing.

JDA starts roadshow

Elsewhere, JDA Software Group began a roadshow on Tuesday for its $275 million offering of senior unsecured notes which will mature in December 2014.

The roadshow wraps up on Dec. 8, with the notes expected to price after that.

Moody's Investors Service is expected to assign its B1 rating to the notes. Standard & Poor's is expected to rate the notes at BB-.

Goldman Sachs & Co. is the left lead bookrunner for the acquisition financing. Wells Fargo Securities is the joint bookrunner.

Quintiles to bring $400 million conditional cash-pay notes

Quintiles Transnational Holdings will host an investor call at 10:30 a.m. ET on Wednesday for its $400 million offering of conditional cash-pay five-year senior notes.

The deal is expected to price early next week.

Morgan Stanley and Citigroup are joint bookrunners.

Proceeds will be used to fund a $275 million dividend, as well as related payments to certain option holders of $8 million. Proceeds will also be used to provide $97 million of cash to support PharmaBio's future operations and cash out its fractional shareholders, as well as for general and administrative expenses.

Market sources who spoke to Prospect News were debating whether "conditional cash-pay" notes are identical to PIK notes. An inquiry to the bookrunner did not generate an immediate response.

Neverthless, the Quintiles deal is a "conditional cash-pay, holdco, dividend deal," remarked a sell-sider not involved in the transaction.

"That's a sign of a bull market," the source added.

Birch via Knight Libertas

Elsewhere Birch Communications, Inc. is roadshowing a $100 million offering of six-year senior secured notes (B3/CCC+).

The deal is expected to price during the middle part of next week.

Knight Libertas Capital Group has the books.

Proceeds will be used to repay outstanding debt, purchase outstanding warrants for its common stock and for general corporate purposes, including future acquisitions.

Knight Libertas is the second boutique bookrunner to surface in the mainstream high-yield market during the late autumn.

The other was Citidel Securities, the investment banking arm of hedge fund, Citadel Capital.

Since mid-November, Citadel has run the books for an add-on from San Pasqual Casino Development Group, and served as right bookrunner on a deal from Advanced Micro Devices, Inc.

Dollar Financial launches $350 million

National Money Mart Co., a Canadian subsidiary of Dollar Financial Corp., launched a $350 million offering of seven-year senior notes on Tuesday.

The deal is expected to price mid-to-late next week.

However timing could be moved up, should the deal's reception from the buyside warrant that move, an informed source said on Tuesday.

Credit Suisse and Wells Fargo Securities are joint bookrunners for the acquisition and debt financing deal.

The maturity of the notes will be shortened to Nov. 30, 2012 from December 2016, if greater than $50 million of the company's existing convertible notes remain outstanding on Oct. 30, 2012.

Primus marketing $130 million

Finally, Primus Telecommunications Holdings plans to price $130 million of seven-year senior secured notes late next week.

The notes will be issued in the form of 130,000 units. Each unit will be comprised of $653.85 of Primus Telecommunications Holding, Inc. notes (expected ratings Caa1/B) and $346.15 of Primus Telecommunications Canada, Inc. notes (expected ratings B3/B).

Jefferies & Co. and UBS Investment Bank are joint bookrunners for the bank debt refinancing deal from the Washington, D.C., integrated facilities-based communications service provider.

Otter Tail trades around issue

When the new Otter Tail 9% notes due 2016 were freed for secondary dealings, a trader quoted the $100 million issue around par bid, 101 offered.

That was up slightly on the bid side from the 99.994 level at which the Fargo, N.D., diversified industrial company's bonds had priced earlier in the session

New Clearwire bonds little moved

Another trader lamented that there was "not much doing on the new-issue front." He saw Clearwire Communications LLC's two issues of new bonds pretty much "unchanged to a touch better" on the day, with the Kirkland, Wash.-based wireless broadband company's original $1.6 billion tranche of 12% senior secured notes due 2015 trading at 99 bid, 99½ offered, still well above the 97.921 level at which those bonds - upsized from the originally announced $1.45 billion deal - had priced on Nov. 18 to yield 12½%.

He meantime saw the Nov. 24 add-on tranche of those bonds "probably a touch lower" than the so-called "old" bonds which had priced the previous week, pegging them at 98½ bid, 98¾ offered - still up from the 97.945 level at which the $920 million of add-on bonds, massively upsized from the originally shopped $540 million, had priced to also yield 12½%.

Hanes existing bonds active but steady

A market source saw Hanesbrands' established floating-rate notes due 2015 trading fairly actively, presumably on the news of the Winston-Salem, N.C.-based underwear and hosiery manufacturer's upcoming new issue.

The bonds stayed around the same 901/2-90¾ levels they have recently held, with more than $10 million having traded, mostly in large-block transactions.

Market indicators head higher

Back among statistical measures of market performance not related to the new-deal market, a trader saw the CDX Series 13 index up ¾ point on Tuesday at 93½ bid, 94 offered, after having risen by nearly ½ point on Monday.

The KDP High Yield Daily Index was meantime up by 7 basis points on Tuesday to 69.69, after having fallen by 3 bps on Monday. Its yield tightened by 1 bp to 8.55%, after having narrowed by 2 bps the previous session.

In the broader market, advancing issues moved back ahead of the decliners, breaking out of a two-session funk, as they led them by a nearly three-to-two ratio.

Overall market activity, as measured by dollar-volume, was nearly 26% ahead of Monday's pace.

A trader said that "there wasn't a whole lot going on, but a couple of things were moving, like Smurfit."

Another trader opined that junk was "a little bit better today, up with the equity markets," which showed solid gains on the back of relatively positive economic data the effect of the weaker dollar boosting commodities prices and lifting shares of energy and materials companies; the bellwether Dow Jones Industrial Average shot up by 126.74 points, or 1.23%, to close at 10,471.58, its highest close since October of last year, while broader indexes like the Standard & Poor's 500 and the Nasdaq composite were each also up more than a full percentage point. Also helping sentiment was an easing of market fears that the recently publicized debt troubles in Dubai might snowball into a Lehman Brothers-like debacle.

Against that benign backdrop, the trader said, things seemed firmer, such as junk benchmark Community Health Systems Inc.'s 8 7/8% notes due 2015. He saw the Franklin, Tenn.-based hospital operator's big, liquid issue up by around ½ point in the 102½ bid, 102 5/8 offered neighborhood.

Forest Oil up again

A trader saw Forest Oil's bonds continuing to firm, pushed upward by positive investor reaction to the company's announcement late Monday that it will sell its remaining Permian Basin assets in West Texas and New Mexico to SandRidge Energy Inc. for $800 million, looking to focus instead on developing its North American tight-gas and shale resources.

He saw Forest Oil's 7¼% notes due 2019 having opened on Tuesday at 97½ bid and staying in a 963/4-97½ range for most of the day on "pretty good volume." Those bonds had been quoted on Monday at 95 bid, 95¼ offered, but had not been seen trading around after the SandRidge announcement.

And he saw Forest's 8% notes due 2011 move up to 104¼ bid, 105 offered, up from Monday's close around 103¼ bid, which in turn was up from levels before the Monday afternoon announcement around 1021/2.

Even so, he mused, "you would think they would go [even] higher than that - this is a pretty big deal for a company Forest's size. Sometimes, things truly amaze me."

Another trader also speculated that he "thought it would be up more -- $800 million is a big chunk of change" for Forest.

He saw the 8% notes at 104 bid, 1041/2, up from recent levels around 102¼ bid, 103½ offered.

The 71/4s, meanwhile, got as good as 97-98, "at one point," he said, versus their level most of the day at 96½ bid, 97½ offered. The bonds were still up from 95¼ bid, 96¼ offered seen last Wednesday before the Thanksgiving holiday break, "so they're up over a point."

The first trader saw Oklahoma City-based Sand Ridge's 8 5/8% notes due 2015 trading in a 961/2-97½ context on "pretty good volume," going home at 971/2. That was up from Monday's levels around 96¼ bid, 96½ offered, which he had called "pretty much unchanged" initially on the news of the big deal.

He also saw SandRidge's floating-rate notes due 2014 trading at 88, well up from last week's pre-news level around 84½ bid.

GM bonds gyrate around

A trader said that General Motors' benchmark 8 3/8% bonds due 2033 were about unchanged in the 21-22 area. "There was a good amount of volume trading in them," he said, seeing the last trade of the day at 22.

Another trader saw GM's long bonds trading inside a 211/2-22 context before the news of CEO Fritz Henderson's resignation, and then 22 post-news, which he called up ¼ to ½ point from the early trades in the morning. He said the bonds "bounced around" during the day between 21 and 22, up a little from Monday's levels around 201/2-211/2.

Yet another trader said GM's long bonds were down ½ bid at 21 bid, 22 offered, and saw GM domestic arch rival Ford Motor Co.'s 7.45% bonds due 2031 up 1½ points on the day at 86 bid, 87 offered, following the car companies' release of their November sales data.

GM said its total vehicle sales fell 2% in November to 150,676 vehicles - its core brands that the company will depend on going forward did well, with Buick sales zooming 24.8% and Cadillac up 19.9%. The Chevrolet and GMC brands posted gains as well. The company's overall year-over-year comparison numbers were dragged down by sales losses at Pontiac, Hummer, Saab and Saturn - but GM is in the process of getting rid of the latter three, either by selling them or, if need be, just closing them down, and it is also greatly downsizing its Pontiac operation.

Ford, meanwhile saw a 0.1% sales gain on the month.

Smurfit-Stone strong as plan filed

A trader said that Smurfit-Stone Container Corp.'s bonds "moved up nicely," given a boost on the news that the Chicago-based packaging company had formally filed its reorganization plan with the U.S. Bankruptcy Court in Wilmington, Del., which is overseeing the company's restructuring.

He saw the company's various issues trading in an 81-83 context, which he called up 3 or 4 points from levels seen on Monday.

He saw "a lot of volume" in the 8 3/8% notes due 2012, which last traded at 82, and likewise saw considerable activity in its 8¼% notes due 2012 going out around 82-821/2, with both bonds up about 3 or 4 points.

Smurfit-Stone filed for Chapter 11 protection from its junk bond holders and other creditors nearly a year ago, in January. Its plan envisions conversion of the company's unsecured debt into equity, with secured debtholders to get cash, new debt, or some combination thereof. Existing shareholders would get nothing. The company anticipates emerging from Chapter 11 next spring.

Nakheel bonds bounce back

For a second straight session, a trader said that Dubai's Nakheel Development was "the big trader of the day, still" -- but unlike the past two sessions, which have seen the bonds of the Dubai World property unit in retreat on investor angst about Dubai World's ability to handle its debts, on Tuesday, the bonds were unchanged to higher, apparently given a boost by the news that Dubai World plans to restructure some $26 billion of its $59 billion of outstanding debt. The plan will cover the debt of Dubai World's main property subsidiaries, Nakheel and Limitless.

Announcement of the restructuring plan late Monday helped calm investors rattled by last week's initial announcement by the Dubai government that Dubai World would ask creditors to agree to a standstill on billions of dollars of debt owed - including $3.52 billion of Nakheel bonds slated to come due in about two weeks - as well as by the assertion earlier Monday by a government official that the Dubai government disclaimed responsibility for Dubai World's debts, crushing assumptions by creditors that the emirate would guarantee its liabilities.

With the news picture looking a little brighter, the trader saw Nakheel's 3.172% euro-denominated notes slated to come due on Dec. 14 going out at 58-60, unchanged from Monday's close, but well up from the 52 bid level at which they began the session. Those bonds - which had traded as high as 110 bid last week before Wednesday's Dubai government announcement of a delay in debt payments - had fallen to the 80s at the end of last week and plunged further, to a low of 55, on Monday.

He also saw the 2¾% euro-denominated notes due 2011 trading in a 45-47 range, which he called up about 5 points from Monday's lows around 421/2; those bonds too had plunged badly on news of Dubai World's problems, dropping as low as the lower 40s Monday from the mid-50s at the end of last week and the mid-80s pre-news last week.

The trader said both issues were "active" Tuesday "at all of the big desks, which traded all kinds of paper."

Clear Channel climbs, but on no news

A trader saw Clear Channel Communications Inc.'s 11% notes due 2016 "up a couple of points" at 54 bid, but on "not a lot of volume," while its 6¼% notes due 2011 traded around 83, up a point or two on the session, but he did not know what was pushing the paper higher.

"I was not seeing a lot of activity."

Another trader said he saw "a lot of quotes" in the San Antonio, Tex.-based broadcasting and outdoor advertising company's paper, and called "everything up about a point."

"There must be some news somewhere on it - but I'm not seeing any of it," said a third trader, who called its 10¾% notes 2 point gainers at 65-65½ and saw the other bonds "up across the board" as well, "but I don't know why."

AIG steady even with debt deal

A trader said he "didn't think there was much change" in American International Group Inc.'s paper, even on the news that AIG had reached agreement with federal officials on an arrangement that will chop a $45 billion term loan obligation down to $17 billion, in exchange for the big New York-based insurer handing over stock in several subsidiaries to Uncle Sam.

He saw its 4% notes due 2011 still in an 89-90 context.

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