Fidelity National add-on prices; new Ford Motor Credit, NII trade actively; Kodak gyrates

By Paul Deckelman and Paul A. Harris

New York, Dec. 6 - After an exciting start to the week, with some $2 billion having priced on Monday, the high-yield primary sphere took a pause on Tuesday.

Just one deal - a $150 million add-on brought by banking and payments technology provider Fidelity National Information Services, Inc. - came to market and traded slightly higher after that.

But junk players were busy with the new bonds that priced on Monday.

The busiest of all was the upsized $1 billion offering of 10-year add-on notes banking and payments technology provider Ford Motor Credit Co., LLC.

There also was considerable activity in Monday's 10-year add-on issue from international wireless provider NII Capital Corp. Both of those upsized, quick-to-market add-ons were seen on Tuesday trading a little above their respective issue prices.

And there also was trading in Pacific Rubiales Energy Corp.'s upsized new 10-year issue, the sole one of Monday's three deals that was not an add-on to existing bonds. Its new debt moved up by nearly 2 points.

Charter Communications Inc.'s new deal from last week also continued to trade at a premium.

Away from the new deals, traders saw some upside activity in Eastman Kodak Co.'s bonds amid reports that it has shuffled its restructuring advisors.

AMR Corp.'s bonds were once again busy, as were those of Sprint Nextel Corp. and the latter's 49%-owned Clearwire Corp., especially after Clearwire announced plans to raise nearly $600 million via an equity offering.

Generally, more junk issues were up than down and statistical indexes of market performance remained in the black.

Fidelity taps 7 5/8% notes

Fidelity National Information Services brought Tuesday's sole deal, raising $158 million.

The Jacksonville, Fla.-based financial services company priced a $150 million fungible add-on to its 7 5/8% senior notes due July 15, 2017 (Ba2/BB-) at 105.375.

The reoffer price came at the rich end of price talk, which had been set in the 105.25 area.

The resulting yield-to-worst is 6.253%.

Bank of America Merrill Lynch was the left bookrunner for the quick-to-market add-on. HSBC and J.P. Morgan were the joint bookrunners.

The proceeds will be used to repay debt.

The original $600 million issue was priced at par in July 2010. It was part of an overall $1.1 billion two-part deal, which also included a $500 million tranche of 7 7/8% senior notes due July 15, 2020.

The add-on was oversubscribed and the new bonds were trading at 106 bid, 107 offered after Tuesday's close, an informed source said.

Low-volume primary

With a little more than two weeks before the Friday, Dec. 23 close, which is the practical terminus for 2011 new issue activity, the calendar is thin, as is the unannounced pipeline, market sources said.

Of the deals on the calendar, Expert Global Solutions, Inc. began a roadshow on Tuesday for its $300 million offering of eight-year senior notes (Caa1).

The roadshow wraps up on Dec. 12.

Deutsche Bank is the left bookrunner. Barclays, J.P. Morgan and RBS are the joint bookrunners.

As to the unannounced pipeline, there are issuers prepped and ready, sources said.

However, many are wary about stepping into a volatile new issue market, which lately has seen issuers making rate concessions in order to place their bonds.

Nevertheless, a few more deals are expected to come during the run-up to 2012, including at least three before the Friday close.

One of those three is a name from the energy sector.

And at least two of the three deals expected before the end of the week will fall into the sub-$500 million category, market sources said.

Fidelity firms a little

A trader said he saw some of the "old" Fidelity Information Services 7 5/8% notes due 2017 trading around 106 bid this morning, before the company priced its add-on offering.

After that, he said he did not see any dealings at all in the new bonds, which are fungible with the existing notes.

However, another trader quoted the credit going home in a 106- to 107-context, up from the 105.375 level at which the add-on priced.

Another market source saw a couple of smallish afternoon trades in Fidelity, the last as high as 107 3/8 bid.

There was no round-lot trading in the issue on Tuesday.

Ford Credit the busiest

A trader said that as was the case on Monday, Ford Motor Credit Co.'s 5 7/8% notes due 2021 "were still the most active" name in Junkbondland on Tuesday.

"Ford [Credit] again led the league in trading activity," he said, seeing those bonds ending around the 102½ bid level, up from 101 7/8 bid, 102 1/8 offered at the close on Monday. He put the size of the gain at three-eighths of a point to a half-point.

He said that the Trace system officially showed some $84 million of the bonds having changed hands on Tuesday.

But, the trader added, "I'm sure it was more than $100 [million]," given market interest in the paper from the lending arm of Dearborn, Mich.-based automotive giant Ford Motor Co. and the fact that Trace does not show the true size of any high-yield trades of more than $1 million.

A second trader quoted the new Ford Credit issue at 102 3/8 bid, 102¾ offered. Still another pegged the bonds at 102 11/16 bid.

The quickly shopped $1 billion issue - upsized from an originally planned $500 million - priced Monday at 101.80 to yield 5 5/8% on top of pre-deal market price talk. Then the issue moved up to around the 102 level, or slightly above that, in initial aftermarket dealings.

The new bonds are considered fungible with the existing $1 billion of the notes that priced at par back on July 27 and more than $100 million traded in Monday's aftermarket.

A market source saw Ford Credit's 5¾% notes, also due 2021, down more than 2½ points on the day at 103½ bid.

But parent Ford's benchmark 7.45% bonds due 2031 gained three-quarters of a point to end at 118¾ bid, 119¾ offered.

New NII bonds trade up

NII Holdings Inc.'s new 7 5/8% notes due 2021 were trading around the 99 level on Tuesday, a trader said, after having spent most of the day between 98½ bid and 99 bid.

He said that the quickly shopped $700 million add-on tranche actually traded on Monday between 99 bid and 991/2.

"So they were off a little bit" from Monday's close, he said, although they were still up from the 98.5 level at which the Reston, Va., provider of wireless service to Latin America had priced its deal, to yield 7.852%.

The issue - upsized from an originally announced $500 million - is considered fungible with the existing $750 million of the notes that priced at par back on March 24.

A second trader saw the bonds, new and old, struggling a bit, quoting them in a 981/4- to 981/2-context.

At yet another desk, the bonds were quoted at 99 bid, on volume of $49 million, making it one of the busiest junk bonds of the day, likely second only to the new Ford Credit issue.

Pacific Rubialies pop

A trader saw "a whole pile "of Pacific Rubiales Energy's new 7¼% notes due 2021 trading under Regulation S on Tuesday.

He saw the bonds trading around the 101¾ to 102¾ level, which is well up from the par level at which the notes priced on Monday, with no aftermarket dealings seen at that time.

The quickly shopped issue - the only one on Monday that was not an add-on tranche to existing bonds -was upsized to $300 million from the $250 million originally planned by the issuer, a Toronto-based company that drills for oil and gas in Colombia and other parts of Latin America.

New Charter stays strong

Also in the new-deal realm, a trader said the Charter Communications' 7 3/8% notes due 2020 that priced last week continued to trade around 102½ bid, after trading as high as 102¾ bid earlier Tuesday.

He noted that was little changed from Monday's dealings in the 102½ to 102¾ area.

That quickly shopped $750 million issue - technically sold by the St. Louis-based cable operator's CCO Holdings, LLC and CCO Holdings Capital Corp. subsidiaries - priced last Wednesday at par and then was heard to have moved up to 101 bid, 101½ offered in initial aftermarket dealings.

The new issue continued to gain during the remainder of the week, being quoted Friday as having pushed up to around the 101¾ to 102 neighborhood. Then it firmed above 102 on Monday and again on Tuesday.

A trader said that Tuesday's session "wasn't a quiet day - but those new deals definitely were the big, big traders."

Indicators continue on up

Apart from the new-deal arena, statistical measures of market performance notched their fifth consecutive session on the rise.

A trader saw the CDX North American series 17 high-yield index up by 5/16 of a point on Tuesday to end at 92 11/16 bid, 92 15/16 offered, after having risen by 3/8 of a point on both Friday and Monday.

The KDP High Yield Daily index gained 11 basis points on Tuesday to finish at 71.80, after it rose by 26 bps on Monday.

Its yield contracted by 5 bps to 7.66%, after having gone down by 8 bps on Monday.

And the widely followed Merrill Lynch High Yield Master II Index rose for a fifth consecutive session, gaining 0.117% on Tuesday on top of Monday's 0.44% advance.

That gain lifted the index's year-to-date return to 3.19% from 3.069% on Monday.

It was the highest year-to-date showing since Nov. 9, when the index showed a cumulative return of 3.246%.

That 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 mostly modestly better results on the equity markets, helped by renewed hopes that European leaders will continue more aggressive steps to bail out weak economies.

The bellwether Dow Jones Industrial Average, which had risen by 78.41 points on Monday, gained another 52.30 points, or 0.43% on Tuesday, to finish at 12,150.13.

The Standard & Poor's 500 index gained 0.11%, although the Nasdaq composite index lost 0.23% on the day.

AMR again busy

Among specific names outside of the new-deal arena, a trader said that AMR Corp.'s American Airlines Inc. 10½% notes due 2012 were trading with "a 92 handle all day," which he said was up maybe a quarter point from Monday when the bonds traded between 91 and 92.

The trader said the bankrupt Fort Worth, Texas airline company's paper was "still somewhat active."

A second trader saw "good volume" in the credit, around the 92 level, seeing it up a half-point.

A market source at another desk saw the 101/2s trading at 92¼ bid with more than $23 million having changed hands.

The parent company's 6¼% notes due 2014 also were up a half-point, at 21 bid, 22¼ offered on decent volume."

Kodak climbs on advisor news

A trader said that Eastman Kodak's 7¼% notes due 2013 "traded up a little," in line with a gain in the troubled Rochester, N.Y.-based photographic products and digital imaging technology company's shares, likely on news reports that Kodak is shuffling around its team of restructuring advisors.

He saw the issue trading as high as 49 bid, calling that "the first round-lot trade in a while" in Kodak.

He said that about $250,000 traded on Monday in a 46-and-change to 47-and-change context.

Smaller pieces traded above 47 on Tuesday and then a larger block traded at 49.

A second trader said he saw just "one big trade at the end of the day," boosting the bonds to 49.

"We'll see if it holds up [Wednesday]," he added.

Kodak's New York Stock Exchange-traded shares rose by 6 cents, or 5.71%, to end the day at $1.11.

Volume of 12.2 million shares was more than 1½ times the average daily turnover.

The trader cited reports of the change in advisors, which he didn't think was much in explaining movements in the bonds or the shares, particularly since the company said they didn't.

"But somebody believed the story and bought some bonds," he added.

The Wall Street Journal reported in Tuesday's editions that Kodak, which some weeks ago had hired the Jones Day international law firm to advise it on restructuring, has now hired another well known law firm, Sullivan & Cromwell, seeking advice from the latter's restructuring practice on reworking its finances.

The story cited unidentified sources as saying that Kodak is no longer being advised by Jones Day's restructuring unit, although it retains the company for other uses.

The paper said the shift in advisers "is seen as subtle but meaningful in the restructuring community," pointing out that while both law firms have sometimes helped clients with bankruptcy proceedings and both have sometimes sought other alternatives for some clients, Jones Day specializes in guiding troubled firms through bankruptcy proceedings. Sullivan & Cromwell often serves as corporate counsel advising public companies on a wide range of transactions that don't involve a trip through bankruptcy court.

Kodak has repeatedly insisted it has no plans for a bankruptcy filing.

Kodak said in a statement that it has employed Sullivan & Cromwell for decades and still retains Jones Day. It said it does not itemize the work any of its advisers do.

Clearwire climbs after news

A trader said that Clearwire's 12% first-priority senior secured notes due 2015 were 91½ bid, while its 12% second-priority senior secured notes due 2017 were 79½ bid.

"It looks like it was a little better," he said. Or in the case of the 2017 notes, a lot better, he said. The latter bonds had traded as low as 73½ bid, 74 offered on Friday.

"They moved up a fair amount," the trader said.

The Bellevue, Wash.-based broadband provider, 49% owned by Sprint Nextel, announced plans on Tuesday to raise $595 million in two stock offerings. One is a $300 million offering of class A shares and the other as a private $295 million purchase of class B shares by Sprint under the financing agreement between the two companies announced last week.

The deal calls for Sprint to buy up to $347 million Clearwire shares on a pro-rata basis should Clearwire seek to raise up to $700 million via equity offerings.

Although news of the stock sale initially dropped Clearwire's existing Nasdaq-traded shares, by the day's end the stock had moved back up to close at up 25 cents, or 11.11%, at $2.50. Volume of 27.6 million was more than three times the norm.

The junk trader also saw Sprint Capital's 6 7/8% notes due 2028 as the biggest trader of the day, finishing at 72 5/8 bid, 73 offered, which he said was down a little from Monday, when the bonds were as good as 731/2. He called it off a quarter, "which is strange given that the other ones are up."

Another trader saw Overland Park, Kan.-based wireless giant Sprint's 6% notes due 2016 up a half-point at 82½ bid, 83 offered, while its 6.90% notes due 2016 were unchanged at 82½ bid, 82¾ offered on "a decent amount of activity."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.