Range Resources prices deal; Amkor, Visteon continue rising; funds see $297 million inflow

By Paul Deckelman and Paul A. Harris

New York, May 1 - Range Resources Inc. was heard by high yield syndicate sources to have successfully brought a new deal to market on Thursday - and the new notes traded upward when they were freed for secondary dealings.

Back among the established issues, Amkor Technology Inc.'s bonds extended the gains they notched in late-session trading Wednesday following the release of considerably better than expected quarterly numbers. Also seen cruising higher were the bonds of automotive components maker Visteon Corp., which also reported improved numbers during Wednesday's session.

However, another late-Wednesday reporter, Las Vegas Sands Corp., was trading lower in Thursday's dealings as investors reacted to the Nevada-based gaming company's unexpected first-quarter loss. That helped to drag other gaming names, like Trump Entertainment Resorts Inc., lower.

Funds up by $297 million on week

And as trading was winding down for the session, market participants familiar with the high yield mutual fund flows statistics generated by AMG Data Services of Arcata, Calif., said that in the week ended Wednesday some $297.2 million more came into those funds than left them. It was the fifth consecutive inflow, following the very similarly sized cash infusion of $294.6 million seen in the previous week, ended April 23.

Over that five-week stretch, inflows have totaled $1.739 billion, according to a Prospect News analysis of the figures, far outweighing the $409.6 million of net outflows which had been seen over the three weeks immediately before that.

The results over the past five weeks have represented a sharp break away from the negative fund-flow trend which had dominated for most of this year. With 18 weeks now in the books, inflows - after trailing outflows pretty much all year - have now pulled even, with nine of each seen since the start of the year, according to the Prospect News analysis.

That winning streak has also now erased what up till that time was a sizable year-to-date outflow totaling over $1 billion as of the week ended Wednesday, March 26

According to market sources, net inflows from the weekly-reporting funds since the start of the year are now estimated at $664.1 million, up from $366.9 million the previous week.

The sources meanwhile said that there was no change on the week in the total assets of funds which report on a monthly, rather than a weekly basis. So far this year, $547.8 million more has come into that latter group of funds than has left them.

Taken in the aggregate, combining the cumulative totals for the monthly-reporting funds and the weekly reporters, the high yield mutual funds show a consolidated net inflow of $1.212 billion, the market sources said.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they only comprise 10% to 15% of the total monies floating around the high yield universe, far less than they used to - because there is no reporting mechanism to track the movements of other, larger sources of junk market cash, such as insurance companies, pension funds and, most recently, hedge funds.

Range prices $250 million

The Thursday primary market session saw a single junk deal completed.

Range Resources Corp. priced a $250 million issue of 10-year senior subordinated notes (Ba3/BB) at par to yield 7¼%, on top of price talk.

JP Morgan and Banc of America Securities ran the books for the debt refinancing deal.

A trader saw the bonds having moved up to 101.25 bid, 102 offered, versus their par issue price earlier in the session, continuing the recent trend of good aftermarket activity in new-deal paper.

Another such credit is Axcan Pharma Inc., which priced $235 million of 12¾% notes due 2016 on Wednesday at a price of 98.84, to yield 13%. When those new bonds were freed for secondary market dealings, they shot up solidly, gaining almost 2 points to finish at 100.5 bid.

But having notched those gains in their initial trading on Wednesday, "they really weren't any better [Thursday], a trader said, hanging in around the same 100.5 bid, 101.5 offered level. "They had their day in the sun."

Market indicators pointing skyward

Back among the established issues, the trader said, the widely followed CDX junk bond performance index was up ¾ point to 98¼ bid, 98¾ offered. The KDP High Yield Daily Index rose by 15 basis points to 76.09, while its spread tightened by 5 bps to 9.12%.

In the broader market, advancing issued led decliners by a better-than five-to-four margin. Activity, represented by dollar volume levels, was up about 2% from Wednesday's pace.

"The market is rallying," he opined. "They can't get enough of these things [junk bonds] now. Happy days are here again."

GM, Ford up despite sales drop

He said that the renewed bullishness even extended to issues which saw bad news during the session, such as General Motors Corp., which reported a 22.7% slide in April vehicle sales from year-earlier levels. GM's sales of cars, SUVs and light trucks dropped to 260,922 units. Truck sales were particularly hard hit, nosediving 32.3% versus a more moderate 9% falloff in car sales.

Despite this latest setback for the world's largest automaker - coming on the heels of GM's report this week of a more than $3 billion first-quarter loss versus a year-earlier gain - the Detroit giant's benchmark 8 3/8% notes due 2033 were up ¾ point at 76 bid, 77 offered.

"People don't care about that," he declared in reference to the decidedly negative sales figures.

GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were ½ point better at 75.25 bid, 76.25 offered. Ford reported a 12.2% drop in its consolidated April sales to 200,727 cars and trucks from 228,623 a year ago, although the decline was smaller than many analysts had been expecting. Truck sales plunged 18.3% to 120,814 vehicles while cars, due to a planned cut in fleet sales to rental-car companies, fell 1% to 79,913.

Visteon, parts makers stay strong

Also in the automotive realm, a trader saw Visteon's 8¼% notes due 2012 up 4 points on the day to 90 bid, 91 offered, noting the smaller loss that the company reported on Wednesday, and the fact that the bonds had already been up several points "over the last couple of days, before today." He saw its 7% notes due 2014 up a point at 68 bid,. 70 offered.

Another market source saw the latter bonds up 2 points to 70.5, while yet another had them a shade over 70, up more than 2½ points on the day.

Those gains followed the Van Buren Township, Mich.-based former Ford parts unit's report Wednesday of a first-quarter loss of $105 million, or 81 cents per share, well down from its year-earlier red ink of $153 million, or $1.19 per share. Excluding earnings charges and other one-time items, the company had a per-share loss of 33 cents - about half of the roughly 65 cents per share of red ink which Wall Street had been expecting. The company managed to cut its losses by aggressive belt-tightening at home and increased sales abroad, particularly in Asia.

The trader said that other parts of component makers were also doing well - the sector has been strong pretty much the whole week on the strength of good numbers from companies like Lear Corp., whose 8¾% notes due 2016 were up another point Thursday to 94.25 bid, 95.25 offered,

He also saw Houston based auto and truck body components manufacturer J.B. Poindexter & Co.'s 8¾% notes due 2014 up a point at 73 bid, 74 offered.

Amkor continues gains on numbers, outlook

And the trader saw Amkor as "another name this week that's been up a bunch" of points, and was up again on Thursday.

Its bonds had already been seen firming around the end of Wednesday's session following the release of what the trader called "great numbers." He saw its 9¼% notes due 2016 up another 2 points to the 101.5 bid, 102.5 offered level.

A market source said that bonds had been 2 point gainers in late trading on Wednesday, and hovered in a 102ish context Thursday, rejecting a short-lived attempt to pull them down to levels around 98-99.

Another big mover for Amkor was its 7¾% notes due 2013, which were seen having risen about 3 points on the day to the 98.5 region.

Its 7 1/8% notes due 2011 were pretty much unchanged around the 99 neighborhood, although another trader said that they were "a touch off their highs" in a 98-98.5 context. He said that this was a case where the bonds had been "doing well and performing well, and then we get to a point where we see some selling on strength," as investors take profits.

Amkor's Nasdaq-traded shares meantime jumped by $2.78, or 29.11%, to end at $12.33. Volume of 19 million was nearly five times the norm.

As the financial markets were closing on Wednesday, Chandler, Ariz.-based Amkor, which provides assembly and testing services to the semiconductor industry, reported that its first-quarter net income rose to $72 million, or 36 cents per share - more than double its year-earlier profit of $34.6 million, or 18 cents per share. The company cited an increase in wireless and network sales and a gain on currency transactions.

On a conference call following the release of the results, company executives said that they anticipate earnings for the current second quarter to come in between 32 and 36 cents per share - somewhat above Wall Street's expectations of profits around 28 to 30 cents per share.

The company's revenue projections for the quarter also exceed analysts' consensus expectations - Amkor sees a 1% to 3% sequential sales gain from its first-quarter revenue of $699.5 million, implying revenue of $706.5 million to $720.5 million, versus the roughly $700 million of sales expected by the analysts.

Las Vegas Sands lower on surprise loss

On the downside, Las Vegas Sands' 6 3/8% notes due 2015 fell as much as 2 points on the session before coming off their lows, with the bonds stabilizing around 88.25, down a point on the day.

The Las Vegas-based gaming operator surprised Wall Street by reporting a first-quarter net loss of $11.2 million, or 3 cents per share, tumbling into the red after having posted a year-earlier profit of $90.9 million, or 26 cents per share. Not counting charges and other special items, the company earned 7 cents a share - well under the roughly 40 cents per share of ex-items earnings that analysts on average were looking for. Revenue for the quarter also came in well below expectations at $1.08 billion versus around $1.2 billion.

The company cited higher development and operating costs, the impact of the U.S. economic downturn on its properties in Las Vegas, and an increase in competition in Macau, where its two casinos, the original Sands Macau and the glitzy new Venetian Macau, now face stiff competition from, among others, sector peers MGM Mirage and Wynn Resorts Ltd., both of which opened new hotel-casinos last year in the Chinese gaming enclave.

The unexpected loss threw a pall over pretty much the whole gaming sector, pushing other names lower. A trader called Trump's 8½% notes due 2015 "a mover," seeing them "drifting lower" to 61 bid, 62 offered from prior levels around 63.5 bid, 63.875 offered on no visible news about the Atlantic City-based hotel and gaming operator.

He also saw Wynn's 6 5/8% notes due 2014 doing "nothing post-news" after the Las Vegas-based gamer reported quarterly earnings late in the session. He saw the bonds "wrapped around 97."

Wynn's adjusted net income was $78.2 million, or 69 cents a share, slightly above its year-earlier profit of $72.6 million, or 67 cents a share, but missing Wall Street's expectations of around 70 cents a share. Total revenue rose 23% to $778.7 million, well above analysts' consensus estimates of around $735 million.

Overall, the trader said, "things kind of seemed firm in the morning, and then they backed off a little, even with the Dow [Jones Industrial Average] up." The bellwether market index gained 189.87 points, or 1.48% to push slightly above the psychologically important 13,000 barrier, and the broader equity indexes followed suit.

"We did see some selling into strength later in the day," he said. "Things have [recently] gone so far so fast that after that run, people figured maybe they'd take some profits."

Besides the selling into strength, he saw earnings, and investor reaction to them, as a continued theme. And he noted the brisk recent pace of new issuance on the investment-grade side and predicted that "we're going to see more of that trickle down into our world."

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