Anixter, downsized Digicel deals price; Cemex deal troubled; Ford holds debt-cut gains, MGM Mirage mixed

By Paul Deckelman and Paul A. Harris

New York, March 6 - Anixter International Inc. priced its $200 million offering of five year notes on Friday. The new bonds firmed modestly when they were freed for secondary dealings.

Also coming to market, late in the session, was Digicel Ltd., although the telecommunications provider had to sharply downsize its issue, which, like Anixter, priced well south of par to move the deal's yield northward.

Cemex SAB de CV, which was also expected to perhaps price a benchmark-sized deal on Friday did not do so. Instead, sources said the Mexican cement maker was having trouble selling the deal to investors. Cemex itself had meanwhile said earlier in the session that it still planned to do the deal - market conditions permitting.

In the secondary sphere, Ford Motor Co.'s bonds were seen pretty much holding the gains which they had notched over the previous two sessions on the news that the Dearborn, Mich.-based car maker will attempt to take out some $10 billion of its more than $25 billion of junk bond, convertible and term loan debt.

MGM Mirage's badly oversold bonds -which had been taking a drubbing for most of the past week on various debt and liquidity concerns - were seen mixed on the session.

Anixter over the finish line

Two companies priced single tranches on Friday, raising a combined total of $450.287 million of proceeds.

Anixter International priced a $200 million issue of 10% of five-year senior bullet notes (Ba2/BB+/BB+) at 92.625 to yield 12%.

The yield was printed 50 basis points beyond the wide end of the 11¼% to 11½% yield talk, while the issue price came cheap to talk that envisioned the notes pricing in the mid-90s.

An informed source commented that given where secondary market levels were over the past two days it was just a matter of getting across the finish line.

Banc of America Securities, JPMorgan and Wachovia Securities were joint bookrunners for the public issue which generated $181.25 million of proceeds. Funds raised will be used to repay short-term debt and for general corporate purposes.

Around the Friday close, the new Anixter 10% notes due 2014 were quoted at 93 bid, 94 offered, according to a high-yield mutual fund manager.

There was a $5 million lot of the notes offered at 931/4, the investor noted, adding "Somebody is trying to flip a fairly good sized piece."

Digicel: a 'dividend deal'

Elsewhere Digicel priced a downsized restructured $300 million issue of 12% senior unsecured notes (B1//existing B) at 89.679 to yield 15% on Friday, according to market sources.

The yield came on top of the 15% yield talk while the issue price came slightly cheap to the 90 area price talk.

While the deal did not appear successful to one market source, nevertheless the new notes will at least trade next to the company's existing bonds, the source conceded.

The deal was reduced from $435 million.

The Jamaican wireless services provider also introduced significant covenant changes.

Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Credit Suisse were joint bookrunners for the Rule 144A for life issue.

Proceeds will be used to acquire an equity interest in the prospective issuer's sister company, Digicel Holdings (Central America) Ltd., and for general corporate purposes.

Digicel was essentially a dividend deal, according to a high-yield mutual fund manager, who added that the company was using approximately $200 million of the proceeds to spin off two Central American entities, and that the proceeds from the asset sale would end up in the pocket of Digicel's chairman, Denis O'Brien.

"It hasn't been a bad business," said the investor, who declined to play in the deal.

"They've reported higher cash flow quarter over quarter and year over year.

"They've had decent subscriber growth. But it's in the Caribbean, which doesn't give you the impression that the company has a lot of high ARPU-types of customers.

Below the balk line

With Friday's business in the mix, the high-yield primary saw just over $787 million proceeds of issuance during the first week of March, rendering it the second lowest week of 2009 to date in terms of dollar volume.

What's more, the high-yield asset class, which had been touted as one of a very few - if not the only - one to have generated a positive return to the end of February, slipped back below the balk line during the first week of March, according to a high-yield mutual fund manager.

The Lipper High Yield Index ended Thursday down 0.95%, in terms of year-to-date returns, the investor said, estimating that by Friday's close it would likely be down a little over 1%.

The index closed Monday with a positive 1.24% return, the investor noted, adding that on the previous Monday, Feb. 16, the Lipper close was 3.64%.

However in the face of recent evidence from AMG Data Services that the high-yield asset class' cash flows have turned negative, this manager's fund continues to see positive cash flows. Only two of the past 10 days have seen negative flows, and those were minor, the manager added.

The week ahead

The forward calendar will begin the second week of March with just two deals poised to price.

Dole Food Co. Inc. is marketing a $325 million offering of senior secured notes due 2014 via Deutsche Bank Securities and Banc of America Securities.

And Mexico's Cemex is marketing a dollar-denominated offering (//BB), its first to feature high-yield covenants.

The Citigroup-led deal was launched at benchmark size.

However the deal is believed to be struggling, market sources say.

On Friday Cemex issued a press release stating that it continues its ongoing refinancing efforts, including, depending on market conditions, the previously announced debt financing in the international capital markets.

Anixter bonds head higher

When the new Anixter International 10% notes due 2014 were freed for secondary dealings, a trader saw $1 million of the bonds offered at 93 bid, though with no bids, versus its 92.625 pricing level earlier in the day. He said he had not seen any actual trades in the paper.

However, another trader, later in the session, pegged the new bonds at 93 bid, 94 offered.

The new Digicel 12% notes due 2014, which priced at 89.679 to yield 15%, came to market too late for any kind of aftermarket dealings.

Recent Plains bonds bounce off lows

Among recently priced issues, Plains Exploration & Production Co.'s 10% notes due 2016 were seen by a trader to have fallen to 88.5 bid, 89.5 offered - down from 92.25 bid on Thursday, down also from the 92.373 point at which the Houston-based independent oil and gas exploration and production company had priced its downsized $365 million offering on Tuesday, and down as well from the 92.5 bid, 93 offered peak which those bonds had hit in trading on Wednesday.

However, another trader - while acknowledging that the new deal "hasn't done very well" - said later on that while the new bonds had indeed bottomed at 88.5 bid, 89.5 offered, "they did bounce back later," rising to 91.25 bid, 92.25 offered on the day.

"So there were some very anxious flippers" on this deal, he said, adding that the issue "had not been well placed. There were some very anxious flippers that just wanted out, and hence drove them down to 89.5. But I think that once the ones that didn't want to be long [the new deal] over the weekend cleared out their bonds, that's when it bounced back to 91.25 bid, 92.25."

Louisiana Pacific rises again

A trader saw some further upside in Louisiana Pacific Corp.'s new 13% notes due 2017, which had been sold in units along with warrants for the Nashville-based building products company's common shares in a $375 million deal on Tuesday. Those bonds, which had priced at 75 in order to boost the offering's yield to above 19%, had then risen another 3 or 4 points beyond that into the upper 70s. The trader saw the bonds Friday "a little better," at 81 bid 83 offered.

Earlier, he said, its levels had been "sort of blah," although the company's shares were also better, on not much fresh news.

Market indicators off again

Back among the established issues, a trader saw the widely followed CDX High Yield 11 index of junk bond performance - which had lost 7/8 point on Thursday - down again on Friday, quoting it down another ¼ point to 67¼ bid, 67¾ offered.

The KDP High Yield Daily Index meantime lost 12 basis points to end at 49.67, while its yield rose by 1 bp to 14.63%.

In the broader market, advancing issues continued to lag decliners by an 11-to-seven margin.

Overall market activity, measured by dollar-volume totals, fell by around 10% from the levels seen in Thursday's session.

There was, a trader said, "not a lot to report - it was a very quiet day."

He noted that Community Health Systems Inc.'s 8 7/8% notes due 2015, sometimes considered a market bellwether because of the issue's great size and liquidity, were at 90 bid, up ¾ point from Thursday's levels, and it was the most active high yield issue, with about $22 million having changed hands. He called that "a pretty low number to be the most active bond in the market," although "it's actually, comparatively speaking, an active day for that issue." Sometime-bellwether bond First Data Corp. 9 7/8% notes due 2015 were up ¼ point at 51.25, on volume of $10 million.

Ford continues to hold gains

A trader saw Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 28.5 bid, 29.5 offered, while its 9½% notes due 2010 - the top-priority bond being tendered for - were at 53 bid, 55 offered. He suggested that those Ford bonds had had their run up the previous two sessions after the announcement of the company's plans to reduce its nearly $30 billion debt load by some $10 billion via tender offers and stock conversions, and were now "right around their tender price."

Another trader saw the Ford long bonds up ½ point at 28 bid, 30 offered.

Yet another trader saw the 91/2s up a point on the day to 53 bid, but said that was on "just one large trade. It doesn't seem like there was a whole lot of activity" in the credit. He saw the 7.45s unchanged at 28.

Still another trader saw the Ford 31s move up ½ point to 28.25.

A trader saw Ford domestic arch-rival General Motors Corp.'s benchmark 8 3/8% bonds due 2033 unchanged at 12.5 bid, 13.5 offered. Another trader saw those bonds down a point on the day at that same 12.5 bid, 13.5 offered level.

MGM mixed after market mauling

Bonds of MGM Mirage were all over the lot on Friday, with some traders seeing the Las Vegas-based gaining giant's bonds continuing their recent deep slide, while others said that the notes were bouncing back from an oversold condition.

A trader saw the 6% notes slated to come due on Oct. 1 trading at 49 bid, up 1½ points on the day, continuing the issue's momentum from Thursday. With some $20 million traded, he said it was the next most active junk bond after Community Health.

He saw MGM's 7 5/8% notes due 2017 at 37, up powerfully from 31.125 on Thursday, with $16 million traded, while its 6 5/8% notes due 2015 were at 37.375, up from 34.5 Thursday on $12 million of volume.

He believed that the bonds had been oversold over the previous several sessions, as investors reacted to a strong of negative news events, including the company's drawdown of the last of its revolving credit line, its delayed 10-K filing with the Securities and Exchange Commission, its warning that it could fall out of covenant compliance for the current first quarter, and reported difficulties in lining up the financing which MGM and joint venture partner Dubai World need to complete their ambitious CenterCity development project on the Las Vegas Strip.

At another shop, a market source saw the company's Oct. 1 notes up nearly 2 points at 47 bid, while the 7 5/8s were also 2 point gainers to 37, and the 6 5/8s gained as much as 7 points to the 37 mark.

Not everyone, however, saw MGM heading higher. A trader called the Oct. 1 notes down a point on the day at 47 bid, 48 offered, while its other short bond, the Mandalay Resort Group 6½% notes coming due July 31, were also down a point at 52 bid, 54 offered.

At another desk, a trader called MGM "pretty much unchanged all day," with its 13% notes due 2013 at 71.5 bid, 73 offered.

Las Vegas Sands, Harrah's better

Elsewhere in that same gaming sector, Las Vegas Sands Corp.'s 6 3/8% notes due 2015 gained more than 2 points to the 41 level, and Harrah's Operating Co.'s 5¾% notes due 2017 and 5 5/8% notes due 2015 were each about a point better at around 9. Some of the latter company's outstanding bonds are being tendered for by investors including affiliates of private equity firms Apollo Global Management and TPG Capital.

On the downside, Boyd Gaming Corp.'s 7¾% notes due 2012 were down a point at 74 bid.

Other names seen lower

Other losers standing out during the day, traders said, included supermarket operator Royal Ahold, whose 6 7/8% notes due 2029 had dropped to 98.40 from levels as high as 103.5 at the beginning of the week, on $10 million traded. A trader said he saw no fresh news out on the company, operator of the big Stop & Shop grocery chain in the northeastern United States. Ahold had opened the week by releasing what were generally seen as favorable fourth-quarter numbers.

Another downsider, a trader said was Terex Corp., whose 8% notes due 2017 fell 2 points on the session and 8 points on the week to 72 bid, 73 offered. He had seen no new news out on the maker of heavy construction and industrial equipment.

Hexion is higher

Another actively traded name was Hexion Specialty Chemicals' 9¾% notes due 2014, which moved up to 14 bid from 11.5 on Thursday, a trader said, with $19 million traded. Another market source saw those bonds up as much as 4 points-plus on the day, most of it in large-block transactions.

There was no fresh news out on the Columbus Ohio-based chemical manufacturer, which earlier in the week reported a fourth-quarter loss of some $921 million, versus a loss of $63 million a year ago. Most of the red ink in the latest period - about $800 million of it - was related to costs tied to Hexion's failed deal to buy rival chemicals maker Huntsman Corp.

WaMu a winner, again

A trader saw more upside in Washington Mutual Inc.'s bonds, continuing to rise ahead of the coming meeting at which recovery levels for the bankrupt Seattle-based savings institution are to be discussed. He saw WaMu's 4% senior holding company notes due April 1 up a point at 85 bid, 86 offered, while its subordinated junior holdco 8 ¼% notes due 2010 were 2 points better at 58 bid, 59 offered.

Little Moody's downgrade impact on homebuilders

Several traders saw little or no activity in the bonds of homebuilders, despite a Moody's Investors' Service downgrade of Hovnanian Enterprises Inc., Beazer Homes USA Inc. and Standard Pacific Corp.

However, at another desk, a market source saw Red Bank, N.J.-based Hovnanian's 11½% notes due 2013 down more than 2 points at 72 bid.

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