Corrections Corp. brings eight-year deal; tech names lower on Intel results

By Paul Deckelman

New York, Jan. 18 - Corrections Corp. of America successfully sold $150 million of new eight-year bonds in a quickly-shopped drive-by deal Wednesday - the only real feature in an otherwise sedate high-yield primary market, new-deal players said.

In the secondary sphere, junk bonds of high tech companies were seen lower pretty much across the board, in sympathy with the tumble that tech leader Intel Corp.'s shares took after the semiconductor giant missed Wall Street's fourth-quarter earnings estimates.

The automotive sector - which has been recently reeling - was mixed, with General Motors Corp.'s bonds a bit firmer, but Tower Automotive Inc.'s bonds taking over as the day's big loser from Dana Corp. and Collins & Aikman Corp., which held that unenviable distinction on Tuesday.

The broad high-yield market traded off Wednesday morning as news that Tokyo's Nikkei closed 20 minutes early, its computers unable to handle the trading volume following allegations of fraud at the high-profile internet company Livedoor, made a negative impact on U.S. capital markets.

However by the end of the session a senior sell-sider said junk was "unchanged with a slightly positive tone to end the day," and added that there were buyers on the dips during the session.

Livedoor news makes early impact

A trader marked the broad market lower as much as one quarter of a point mid-morning, down along with equity prices as U.S. capital markets observers were digesting the Livedoor news out of Asia.

"It's never a good thing if you can't depend on an exchange," the trader commented.

"The whole fraud thing with this internet company is the other problem," the source added.

"Those two things taken together - where people are trying to get out the door all at once and you don't have an exchange that can handle the volume - are a recipe for panic."

Correction Corp. drives by

Nevertheless, Corrections Corp. of America managed to price a classic "a.m.-to-p.m." drive-by deal during the Wednesday session.

The Nashville, Tenn.-based incarcerator priced a $150 million issue of eight-year senior notes (Ba3/BB-) at par to lock up a yield of 6¾%, on top of the 6¾% area price talk.

Banc of America Securities, Lehman Brothers and Wachovia Securities were joint bookrunners.

Davomas marketing starts Monday

Only one roadshow start was heard during the Wednesday session.

Indonesian cocoa producer PT Davomas Abadi Tbk will begin a roadshow on Monday in Singapore for its $150 million offering of five-year senior unsecured notes (B2/B+).

Subsequent roadshow stops are in Europe and the United States, with pricing expected during the Jan. 30 week.

The Lehman Brothers-led Rule 144A/Regulation S offering comes with typical high-yield covenants, according to a market source.

Corrections higher in trading

When the new Corrections Corp. 6¾% notes due 2014 were freed for secondary dealings, a trader saw those bonds at 100.625 bid, 101 offered, up from their par issue price earlier in the session.

"We like it," he said of the Nashville-based provider of outsourced services to federal, state and local corrections departments. He said that his shop had "a pretty aggressive buy on it from the equity perspective," even though it was just a "minor participant" in the bond sale.

At another desk, the new bonds were quoted trading at 100.5 bid, though with no offers seen.

Corrections Corp.'s bond sale coincided with the company's announcement earlier in the session that it expects to meet the fourth quarter and full year 2005 guidance that it previously announced in November, excluding the effect of the non-cash charge associated with the accelerated vesting of certain employee stock options announced in December.

On Nov. 3, the company said that it expects to earn between 55 and 58 cents a share in the fourth quarter, and $1.77 to $1.80 a share for all of 2005.

Unisys, Amkor fall on tech slump

Back among the established issues, a trader saw the high-tech names moving lower after Silicon Valley powerhouse Intel reported its fourth-quarter results. While the chipmaker posted a 16% jump in fourth-quarter profits, it missed Wall Street's earnings forecasts by 3 cents per share. The tech bellwether - a component of the widely followed Dow Jones Industrial Average - blamed the shortfall on soft computer demand. Its Nasdaq-traded shares, considered a barometer for the rest of the tech sector, tumbled $2.92 (11.45%) to $22.60.

The trader said that translated into a downward sympathy move in the bonds of such junk tech names as Unisys Corp. and Amkor Technology Inc.

Blue Bell, Pa.-based technology solutions provider Unisys's 8% notes due 2012 were off a point or so, he said, to 92 bid, 93 offered.

Chandler, Ariz.-based high tech manufacturing services provider Amkor Technology Inc.'s 7¾% notes due 2013 were likewise seen down a deuce at 86 bid, 88 offered. However, at another shop, a market source said that while Amkor's bonds initially were down about 1½ to two points, they had bounced off their preliminary lows and were down just half a point at the day's close at 57 bid.

Georgia-Pacific lower

Elsewhere, a trader mentioned that Standard & Poor's had lowered Georgia-Pacific's ratings, including that of its unsecured debt, which was lowered to B. He said that the Atlanta-based forest products company's 8 1/8% notes due 2021 "were down ¾ point for a good part of the day," but the afternoon news of the ratings cut "looks like it knocked them down further," so that the bonds finished at 99.75 bid, 100.75 offered, down 1¼ points on the day.

On the other hand, he saw the Georgia-Pacific 8 7/8% notes due 2031 at 100.75 bid, 101.75 offered, down just half a point on the session.

Tower slammed

In the automotive area - which has recently turned ugly after a flying start early in the year - bankrupt Novi, Mich.-based vehicle frames maker Tower was "the name of the day," a trader said, as its 12% notes due 2013 traded as high as 72 before going out at 70.5 bid, 71 offered.

Another trader saw the 12s at 70.625 bid, 71.625 offered, well down from Tuesday's levels around 73 bid, 74 offered. He said that there was no news out Wednesday on the company, although he theorized that the bonds may have been weakened by its recent disclosure of a big net loss in the latest reporting period.

By taking it on the chin, Tower assumed the role that had been played on Tuesday by Dana Corp., whose various series of bonds fell several points after the Toledo, Ohio.-based automotive systems maker reported a $1.27 billion net loss in the third quarter, and Collins & Aikman, whose 10¾% notes due 2011 nosedived six points down into the lower 30s following a Wall Street Journal report about the bankrupt Troy, Mich.-based auto interiors manufacturer to interest potential buyers for the company or for one or more divisions.

On Wednesday, those Collins & Aikman bonds were seen holding steady at those lower levels, after "they already took their beating," a trader said. However, Dana's bonds continued falling, with a trader seeing its 5.85% notes due 2015 down another two points to 67 bid, 68 offered. Another trader saw those bonds at that same level, though estimating them to be 1¾ points lower.

GM firmer

But not everything in the autosphere was skidding downward, as had been the case lately; a trader saw General Motors Corp.'s 8 3/8% notes due 2033 half a point better at 69.5, while its General Motors Acceptance Corp. 8% notes due 2031 were a point better at 99.5 bid, par offered.

And Visteon Corp.'s 8¼% notes due 2010 were a point better at 83.5 bid, 84.5 offered.

AMR higher after earnings

Airline giant AMR Corp's bonds were seen flying a little higher, after the Fort Worth, Tex.-based corporate parent of top operator American Airlines reported a narrower operating loss for the fourth quarter and beat Wall Street expectations, even though it did report a sizable net loss for the period. Company executives also touted AMR's strong balance sheet, which showed more than $4 billion of cash available (see related story elsewhere in this issue).

AMR's 9% notes due 2012 were seen by a trader up ¼ point on the day at 88 bid, 90 offered, while its 10% notes due 2021 were up a half point at 75.5 bid, 77.5 offered. However, the trader said that the company's 9% notes due 2016 were a full two point better at 86 bid, 88 offered.

Chiquita down

A trader saw the bonds of Chiquita Brands International Inc. "off a little," continuing a slide that pushed the Cincinnati-based banana importing giant's 7½% notes due 2014 down about six points from where they had been a week ago. He quoted those bonds at 88 bid, 89 offered, down half a point on the session, but noted that "the stock got beaten down last week, 7%, 8%, 9%, and we saw the bonds drift six points over the course of four or five sessions" from their prior levels in the mid-90s.

He also saw fruit and vegetable producer Dole Food Co.'s bonds, like its 8 7/8% notes due 2011, lower in sympathy with Chiquita, at 101.5 bid, 102.5, off about a point from where they were a week ago.

"It's been a gradual grind lower, but nonetheless, there have been more sellers than buyers of these names."

Jorgensen gains

A trader saw Earle M. Jorgensen Co.'s 9¾% notes due 2012 at 108.5 bid, 109.5 offered, up from recent levels around 107.75 bid, although he noted that the Lynwood, Calif.-based metal products company's notes rarely trade and had not been seen the previous several sessions. However, there was some interest in the Jorgensen bonds on the news that the company has agreed to be acquired by Reliance Steel & Aluminum Co. In a $934 million cash and stock deal, that includes Reliance's assumption of $291 million of Jorgensen debt.

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