CNH prices; HMA, Amerigroup slate deals; MF Global mauled again amid general junk downturn

By Paul Deckelman and Paul A. Harris

New York, Nov. 1 - The month that just ended may have been "an October to swoon over," as one poetically inclined high-yield market participant put it, but junk players anticipating "a November to remember" are going to have to wait, at least for a while, as the new month opened on an inauspicious note Tuesday.

Wall Street got clobbered again, posting a second straight large-sized loss amid fears that Greece's plan to put the European debt crisis rescue deal up for a referendum among its citizens might unravel the long-awaited and carefully constructed bailout plan that had investors walking on air last week. The fallout was felt in Junkbondland, where statistical indicators took a pounding and many more issues were seen down than were up, particularly among the big, liquid high-beta names like Caesars Entertainment Corp., one of many junk issues seen off by multiple points.

But the biggest thing going on in the secondary was once again the gyrations in MF Global Holdings Ltd.'s battered bonds. As has been the case in each of the past few sessions, they swung around wildly in heavy trading before ending lower on the day. Still more bad news emerged about the failed New York-based financial firm, now beset by questions over the alleged disappearance of millions of dollars of clients' money.

But at least for now, the junk primary market has not suffered. Fresh off Monday's $1.2 billion session, CNH Capital LLC priced a quickly shopped $500 million offering of five-year notes, which firmed smartly when they were freed for trading, while new deals were announced by Amerigroup Corp. and Health Management Associates, Inc. - the latter a mega-deal-sized offering, part of a multi-billion-dollar financing package for the hospital operator.

CNH at the tight end

Amid Tuesday's capital markets turbulence, a single deal priced in the high-yield primary.

First-time issuer CNH Capital priced a $500 million issue of five-year senior bullet notes (Ba2/BB/) at par to yield 6¼%.

The yield printed at the tight end of the 6¼% to 6 3/8% yield talk.

Credit Suisse, Bank of America Merrill Lynch and BNP Paribas were the joint bookrunners for the quickly shopped issue.

The Burr Ridge, Ill.-based company, the financial services business of CNH Global NV, plans to use the proceeds for general corporate purposes including debt repayment and the purchase of receivables or other assets.

The deal played to an order book that contained a lot of high-quality accounts, according to an informed source, who added that it went well, especially considering that the Dow Jones industrial average fell 297 points during the Tuesday session.

Amerigroup to start Thursday

There was one new deal announcement on Tuesday. Amerigroup plans to start a roadshow on Thursday in New York for its $450 million offering of eight-year senior notes (expected ratings Ba3/BB+).

Goldman Sachs & Co. is the bookrunner.

The Virginia Beach-based managed health-care company plans to use the proceeds to prefund its existing convertible notes and for general corporate purposes.

Health Management's $1 billion

Although the timing remains to be determined, Health Management Associates plans to sell $1 billion of eight-year senior notes (B3/B-/).

Deutsche Bank Securities Inc. will be the left bookrunner in a syndicate of banks that includes Wells Fargo Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc. and SunTrust Robinson Humphrey Inc.

It is likely the deal will be rolled out during the Nov. 7 week, a syndicate source said.

In addition to the bond offering, Health Management Associates is putting in place $2.7 billion of credit facilities.

The Naples, Fla.-based operator of acute care hospitals plans to use the proceeds, together with initial borrowings under its term loans and revolver, to repay a portion of its outstanding credit facilities and for general corporate purposes.

Manager miffed at Greece

Word that the final say on Greece's sovereign debt situation could go before Greek voters rocked the global capital markets on Tuesday, according to sources on the buy and sell sides of the high-yield market.

A massive rescue plan worked out last week in Brussels by the European Union, the International Monetary Fund and others - a plan that would have prevented or at least forestalled a Greek sovereign default - is now in limbo, sources said.

Tuesday's news, or more specifically the impact the news had on capital markets in the United States, miffed one high-yield mutual fund manager.

"Over here the trends have not been too bad, and the earnings numbers have been decent," the manager said.

"The high-yield [market] has been rallying, and we've had two weeks of strong inflows.

"And now it's Greece again.

"Can our exposure possibly be big enough to snuff out the rally we've had?!"

Investors have been poised for a big offering from Sprint Nextel Corp., said the buysider, adding that it's conceivable that turbulence could push the deal back.

A syndicate banker saw the CDX North American series 17 High Yield index off 1 11/16 points on the day and characterized Tuesday's sell-off as a "fear" play.

"Flows have been positive, but if people start taking big losses in the secondary market, they may start hoarding cash again," the sellsider said.

As to the impact of Tuesday's events on the primary market, it's too early to tell, the banker added.

CNH bonds trade up

When the new CNH Capital five-year notes were freed for secondary dealings, a trader saw the $500 million issue move up solidly to finish at 101 bid, 101½ offered versus their par issue price.

A second trader also saw them there, although another market participant called them "wrapped around 101."

CSC holds near issue price

The new 6¾% notes due 2021 issued by Cablevision Systems Corp.'s CSC Holdings LLC unit were meantime quoted by a trader as having "actually gained."

He saw the Bethpage, N.Y.-based cable system operator and professional sports team owner's $1 billion drive-by deal - radically upsized from the originally announced $500 million - as having opened slightly below Monday's par issue price.

But as the day went on, he said, "they had a little bounce" and moved to 100¼ bid, 100 5/8 offered.

A second trader disagreed. He said that the new bonds "went nowhere." He pegged them holding right around issue at par bid, 100 1/8 offered.

And another trader located the new issue at 99 7/8 bid, 100 3/8 offered.

Axle spins its wheels

American Axle & Manufacturing Holdings, Inc.'s 7¾% notes due 2019 were seen limping along on the downside on Tuesday. A trader quoted the new $200 million issue as having gotten as low as 98 bid, 99 offered early on Tuesday. He saw the Detroit-based automotive drive train components manufacturer's bonds finishing up at 99 bid, par offered.

That was still down from the par level at which the quickly shopped transaction priced on Monday. After that pricing, the bonds got as good in Monday's aftermarket as 100¼ bid, 100½ offered.

"They fell from [Monday]," another market source said, seeing the issue go out at 98¾ bid, 99¼ offered.

Indicators fall again

Away from the new-deal arena, a trader characterized Tuesday as "a bad day all around today."

"Overall, the secondary [market] got beat down with stocks," another trader opined.

Statistical secondary market performance indicators bore him out. Those market measures, which turned sharply lower on Monday after having ended the previous week on a high note, moved further to the downside on Tuesday - which was 11/1/11, for the numerically inclined.

A trader said the CDX North American series 17 High Yield index plunged by 1¾ points on Tuesday to close at 91¾ bid, 92¼ offered after having lost 1¼ points on Monday.

The KDP High Yield Daily index nosedived by 70 basis points on Wednesday to finish at 72.51, on top of its 32-bps loss on Monday. Its yield ballooned out by 19 bps to end at 7.64% after having risen by 6 bps on Monday.

And the Merrill Lynch U.S. High Yield Master II index finished in negative territory for a second straight session on Tuesday, dropping by 0.816% on the day, one of the largest daily losses seen this year, after having eased on Monday by 0.113% - the first loss the index had seen after 11 straight sessions of gains dating back to Oct. 14.

That lowered the index's year-to-date gain to 3.312% from Monday's finish at 4.162% and from 4.28% on Friday, its recent peak level.

The cumulative return remains below its high-water market for the year of 6.362%, which was set on July 26, but is well up from its 2011 low point, a 3.998% deficit recorded Oct. 4.

On Monday, the last trading session of October, the index had closed with a one-month gain of 5.956%, the strongest month's-end level of the year so far, eclipsing the 2.102% monthly gain seen at the end of January.

Junk moved down in tandem with stocks, which were hammered for a second straight session, in line with a world-wide stock retreat triggered by the announcement from Athens that Greece will put the recently reached European debt rescue plan up for a vote among its citizens - who are already smarting from unpopular earlier rounds of austerity programs demanded of Greece by other European nations as the price the country must pay for the rest of Europe's help. A feared defeat of the new plan would shake the markets and undo weeks of careful negotiations on help for Greece from its European neighbors.

Against that somber background, the bellwether Dow Jones industrial average, which had swooned by 276 points on Monday on renewed Europe debt jitters and MF Global's bankruptcy filing, ended Tuesday down another 297.05 points, or 2.48%, closing at 11,697.96.

The Standard & Poor's 500 index fell by 2.79% on the day, while the Nasdaq Composite index lost 2.89%.

Familiar names fall

Last week's junk bond and stock market euphoria over Europe having reached its debt deal has evaporated over the past two sessions under a blast of reality as icy as the winds whipping through Wall Street the past few days. A junk trader said the day's trading was largely "just a hodge-podge of names. Every name you look at is down."

A second trader said that "the go-go high-yield stuff was down 1 to 2 [points], even more than that in spots."

For instance, he saw the 10% notes due 2018 of Las Vegas-based gaming giant Caesars Entertainment - still more popularly known as Harrah's - "down a couple" of points from their Monday closing levels in the middle 70s - which in turn was off the recent peak levels around 80 recorded last week.

A market source said Harrah's was not off that much - maybe just around a quarter of a point, at 74½ bid.

A source at another desk disagreed, seeing the 10% notes finishing down around the 71 bid level, which he called off 4 or 5 points.

The first trader also said that Nashville-based hospital operator HCA Inc. was "down a couple," with its 6½% notes due 2020 down 1 5/8 points at 102 7/8 bid.

HCA's 7½% notes due 2022 were down three-quarters of a point at 100¾ bid.

Atlanta-based credit-card transaction provider First Data Corp.'s 11¼% notes due 2016 were seen down 5 points at 85 bid, and its 10.55% notes due 2015 lost a point to end at 94¼ bid. Its 9 7/8% notes due 2015 dropped by nearly 3 points to end at 94.

A trader said that Ford Motor Co.'s 7.45% bonds due 2031 lost 1 point to end at 117 bid, 118 offered.

MF debacle continues

For yet another day, MF Global Holdings "was the most active trader," a market participant said, with its 6¼% notes due 2016 "all over the place" before ending several points lower at 46 bid.

Those bonds are trading flat, or without their accrued interest, following the company's announcement on Monday of its bankruptcy filing, which came after a deal that MF Global chief Jon Corzine was trying to broker to sell the troubled firm fell apart over the weekend.

A market source at another desk said that nearly $60 million of the 6¼% notes traded on Tuesday - well below the nearly $200 million of those bonds that had traded both on Friday, on the bankruptcy rumor, and again on Monday, as the market tried to gauge what happens next.

What happens next could be a federal investigation of the failed company. News reports said that MF Global is expected to come under FBI scrutiny amid questions over the alleged disappearance of millions of dollars of clients' money. Some estimates put the missing money as high as $700 million.

Reports cited a "federal official" claiming that an executive of the New York-based futures broker admitted early Monday that the company had used client dollars to shore up its books as its financial issues unraveled.

Regulations require company funds and client funds to be kept separately. An investigation is pending and could lead to civil or even criminal charges.

In the wake of the bankruptcy filing, Moody's Investors Service said Tuesday it downgraded the company, its third rating action in just over a week. The Moody's downgrade followed similar downside moves by Standard & Poor's and Fitch Ratings.

Stephanie N. Rotondo contributed to this report

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