Ford Credit, NII drive-bys price, move up; NPC, 99 Cents Only slate; AMR, Sprint still busy

By Paul Deckelman and Paul A. Harris

New York, Dec. 5 - Ford Motor Credit Co., LLC and NII Capital Corp. came to market Monday with a pair of upsized, quickly shopped add-on tranches to existing bonds that had each priced earlier this year.

Ford Credit priced $1 billion of new 10-year notes, while NII Capital - a unit of international wireless service provider NII Holdings Inc. - brought in a $700 million issue, also a 10-year piece of paper.

Between the two of them, Ford Credit and NII started the week off with the primaryside having priced more in one day than it did in all of last week.

Canada-based Latin American oil and gas producer Pacific Rubiales Energy Corp. also priced an upsized $300 million of 10-year notes as a drive-by deal.

The new Ford Credit and NII Capital deals each traded up modestly from where they had priced, according to traders.

But, Ford Credit's notes ended the day below the level they had held at the end of last week before the deal surfaced in the market.

Besides the pricings, the new-deal arena also saw two other prospective issues join the forward calendar: NPC International Inc., a big Pizza Hut franchise operator; and 99 Cents Only Stores, a retailer. The deals are part of the financing for leveraged buyouts of the respective companies.

Last week's new deal for Charter Communications Inc. continued to trade well, pushing above the 102 bid level

Away from the new deals, there was still a fair amount of activity in the two names that had pretty much dominated Junkbondland last week - AMR Corp. and Sprint Nextel Corp.

And it was another strong session for statistical indicators of junk market performance.

Ford Credit doubles tap size

The Dec. 5 week got underway with a couple of sizable drive-by add-on deals in the primary market.

Three issuers, each one bringing a single tranche of notes, raised $2.01 billion.

In a deal the market had been looking for since mid-November, Ford Motor Credit priced a massively upsized $1 billion add-on to its 5 7/8% senior fixed-rate notes due Aug. 2, 2021 (Ba1/BB+/BB+) at 101.80 to yield 5 5/8%.

The deal size doubled from the $500 million offering announced Monday morning.

The yield printed on top of the 5 5/8% area yield talk.

Barclays, Citigroup, J.P. Morgan and RBS were the joint bookrunners.

The original $1 billion issue priced in July, so Ford Credit realized 25 basis points of interest savings.

However, the existing Ford 5 7/8% notes due August 2021 were 103 bid in the Street, representing a 5.47% yield, according to a trader from the crossover space.

Hence, the deal came notably cheap to existings, which is odd because "Ford normally prices deals on the screws," the trader remarked.

The trader also noted Trace activity ion the Ford Credit add-on paper indicated that there was massive flipping.

NII Capital upsizes

Also driving by with a Monday add-on was NII Capital.

The Reston, Va.-based company priced an upsized $700 million add-on to its 7 5/8% senior notes due April 1, 2021 (B2//) at 98.50 to yield 7.852%.

The reoffer price came on top of the price talk.

Deutsche Bank, Credit Suisse, Goldman Sachs and J.P. Morgan were the joint bookrunners.

The mobile telecommunications company priced the original $750 million issue at par in March 2011. Hence, its rate jumps 23 basis points versus the yield printed on the original issue.

Pacific Rubiales upsizes

Toronto-based Pacific Rubiales Energy, an oil and gas exploration and production company focused on Colombia, priced an upsized $300 million issue of 10-year notes (Ba2/BB) at par to yield 7¼% on Monday, according to a market source.

The yield printed within guidance, the source added. The amount was increased from $250 million.

Bank of America Merrill Lynch was the bookrunner.

99 Cents Only plans roadshow

The forward calendar saw a modest build-up on Monday.

99 Cents Only Stores plans to start a roadshow on Tuesday for a $250 million offering of eight-year senior notes (Caa1/CCC+).

The deal is set to price during the middle part of the Dec. 12 week.

RBC is the left bookrunner. BMO and Deutsche Bank are the joint bookrunners.

The proceeds will help fund the buyout of the company by Ares Management LLC and Canada Pension Plan Investment Board for $22.00 per share in cash with a total equity value of about $1.6 billion.

NPC starts Tuesday

NPC International plans to start a brief roadshow in New York City on Tuesday for a $190 million offering of eight-year senior notes (expected ratings Caa1/CCC+).

The deal is set to price at the end of the present week.

Goldman Sachs is the left bookrunner for the buyout deal. Barclays is the joint bookrunner.

Meanwhile, NPC revised the commitment deadline on its $460 million senior credit facility to Wednesday at 5 p.m. ET from Dec. 13, because the deal is already oversubscribed after launching on Nov. 29, according to a market source.

The $190 million of senior notes replaces the company's previously planned roughly $190 million of mezzanine debt, the source remarked.

The company likely chose to issue notes instead of mezzanine financing due to the perceived strength of the high-yield market, where the company felt like it could get attractive pricing, the market source added.

Ford Credit creates interest

Activity in the new Ford Credit add-on issue was the dominant feature of Monday's secondary market, traders said.

One trader saw the new bonds initially trading around the 102 1/8 bid level, up a little from the 101.80 at which the upsized $1 billion drive-by deal priced. A little later on, he quoted the bonds as good as 1021/2.

"They were trading pretty well," he said, noting that the deal was easily the most active junk issue and estimating that north of $70 million had changed hands heading into the final hour of dealings.

A second trader had the bonds in a context of 102 to 1021/2, while a third trader had them at an even narrower 102 1/8 to 102¼ range.

When all of the dust settled, a market source said nearly $110 million of the 5 7/8s had traded, ending the day at 1021/4. The source noted that the bonds, while up from the pricing, were well below where the established issue had traded on Friday when they went home at 104¾ bid.

New NII seen firmer

The day's other junk-market pricing, NII Capital of Reston, Va., came later in the day, was smaller and not the kind of instantly recognizable benchmark issuer as Ford Credit.

Even so, a trader saw the deal moving up to 99½ bid, 100½ offered after having priced earlier at 981/2.

New Charter adds to gains

A trader said that the new Charter Communications 7 3/8% notes due 2020 that priced last week were continuing to move up, quoting the notes on Monday at 102½ bid, 102¾ offered.

A second trader saw the bonds at 102 3/8 bid, 102 7/8 offered.

And at another desk, the new Charter notes - technically issued by the St. Louis-based cable operator's CCO Holdings, LLC and CCO Holdings Capital Corp. subsidiaries - were being quoted as high as 102¾ bid, with volume a brisk $11 million-plus mid-afternoon, putting it near the top of the junk most-actives list.

That quickly shopped $750 million issue priced on Wednesday at par and then was heard to have moved up to 101 bid, 101½ offered.

The new issue continued to gain during the remainder of the week, being quoted Friday as having pushed up to about the 101¾ to 102 neighborhood.

Indicators continue improving

Away from the new-issue world, statistical measures of market performance notched their fourth consecutive session of upside.

A trader saw the CDX North American series 17 High Yield index up by 3/8 of a point for a second straight day on Monday, to end at 92¼ bid, 92½ offered.

The KDP High Yield Daily index rose by 26 basis points on Monday, to 71.69, after having gained 15 bps on Friday.

Its yield went down by 8 bps to 7.71% after having eased by 3 bps on Friday.

And the widely followed Merrill Lynch High Yield Master II Index rose for a fourth consecutive session, gaining 0.44% on Monday on top of the 0.413% advance seen on Friday.

That gain lifted the index's year-to-date return to 3.069% from 2.617% on Friday.

It was the first time that the year-to-date figure had topped the psychologically potent 3% mark since Nov. 14, when it stood at 3.189%.

The year-to-date return remains below its recent peak level of 4.28%, recorded on Oct. 28, and is well below its high-water mark for the year of 6.362%, which was set on July 26.

However, it is still well up from its 2011 low point: a 3.998% deficit recorded Oct. 4.

Junk continued to rise against a backdrop of better results on the equity markets. The bellwether Dow Jones Industrial Average, which had lost 0.61 point on Friday, rose by 78.41 points on Monday, or 0.65%, to finish at 12,097.83.

The Standard & Poor's 500 index did even better, up 1.03%; and the Nasdaq composite index better still, gaining 1.10%.

However, stocks gave up much of their even greater early gains after Standard &Poor's warned that the AAA ratings of such key European states as Germany and France potentially face a downgrade similar to the United States because of the ongoing debt crisis in the euro zone.

"You come in and it's all this Europe nonsense going on and it's like a bad soap opera that just keeps getting worse," a junk trader lamented.

The financial markets have recently been whipsawed around, traveling on a day-by-day basis from bullish hope and belief that the European governments and central banks will be able to take decisive action to solve the continent's economic problems, to pessimistic fears that no viable solution will emerge any time soon.

AMR activity continues

Among specific names in Monday's market, a trader said that the activity in the new Ford Motor Credit deal pushed AMR aside as Junkbondland's busiest issue.

He saw "only about $18 million" of the 10½% notes due 2020 issued by the Fort Worth, Texas airline holding company's American Airlines Inc. unit trading around, calling the bonds up about 1½ points at 92 bid.

A second trader said that because AMR is now in bankruptcy, it trades every day. That trader saw the 101/2s a little better at 92 bid, 93 offered.

He saw the American Airlines 7½% notes due 2016 up a little in a 74-75 context, but added that there wasn't much activity in that particular credit.

"They're 144A, so it's tough to see the volume on those," the trader said.

He also saw parent AMR's 6¼% notes due 2014 pretty much unchanged in a 21 to 21½ range. That's "where they've traded all day long on decent volume," he said.

AMR's 6.977% airline pass-through trust certificates due 2021, on the other hand, gained more than 4 points on the day to end at 57 bid.

AMR filed for Chapter 11 protection last week in an effort to shed debt and cut costs. The company is reportedly not paying interest on its debt or paying its leases since the filing. Those costs run about $1.5 billion annually.

Still, the savings might not be enough to stem the airline's nosedive.

This won't completely offset the ongoing cash drain from continued pressure on profits as operating costs, especially fuel, remain insupportably high and revenue quality erodes even faster on massive fare sales to induce wary flyers to buy tickets from a bankrupt carrier, wrote Gimme Credit LLC analyst Vicki Bryan in a report released on Monday.

Bryan also warned that AMR might need to add debt on top of its structure for a debtor-in-possession loan "to augment liquidity and that means it will need a convincing stash of high quality unencumbered assets to attract a sufficient pool of willing lenders."

That could be a problem, she continued, as the company had no unencumbered assets before it filed for bankruptcy.

Sprint still busy

A trader said that Sprint Nextel's 6 7/8% bonds due 2028 - issued by the company's Sprint Capital Corp. subsidiary - had decent volume, though ended pretty much unchanged at 72 to 721/2.

A market source at another desk said that more than $11 million of the bonds changed hands. He quoted the Overland Park, Kan.-based wireless provider's issue ending the day at 72¾ bid, down ¼ point from its Friday finish.

The first trader saw "pretty good volume" in the parent company's 6% notes due 2016, which he saw ending around 831/2, up ½ point, where the bonds had traded for most of the day.

About $10 million changed hands on a round-lot basis.

Sprint's busiest issue of the session, the Sprint Capital 8 3/8% notes due 2012, was seen having eased a little to about 101 5/8 bid from around 102 at the close on Friday. More than $12 million traded.

Sears up despite downgrade

Moody's Investors Service slapped retail giant Sears Holdings Corp. with a downgrade Monday, but there was little reaction to the news, traders reported.

In fact, traders saw the bonds gaining traction.

One trader said the 6 5/8% notes due 2018 opened "straddling 80," only to close around 81.

Another trader quoted the paper at 80½ bid, 81 offered.

"Maybe we'll see reaction to it tomorrow," he opined. "The market just seemed to be shrugging it off."

Moody's dropped its rating on the Hoffman Estates, Ill.-based operator of the iconic Sears and Kmart retail chains to B1 from Ba3. The agency attributed the change to "persistent negative trends in revenues and operating margins."

Realogy rises

Elsewhere, Realogy Corp.'s 11½% notes due 2017 were seen by a trader up 2 points at 80 bid, with over $10 million of the Parsippany, N.J.-based real estate company's notes having changed hands.

He saw no real activity in its 10½% notes due 2014, which were in a 90 to 93 context.

"The 111/2s were the ones with the activity," he said.

Clear Channel climbs

Clear Channel Communications Inc.'s bonds "were feeling better," a trader said, quoting the San Antonio, Texas media company's 11% notes due 2016 having moved a little. He called the bonds up a couple of points at 63½ bid, 64 offered.

He said there were "not a lot trades, but a few trades."

He said there were "just one or two small trades" on the company's 10¾% notes, also due 2016, which finished at 69 bid, up 1 point.

Stephanie N. Rotondo contributed to this report

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