Levi, Plains Exploration lead $2 billion primary session; Ford jumps on ratings upgrade

By Paul Deckelman and Paul A. Harris

New York, April 24 - The high-yield primary market got back on track on Tuesday after a one-day hiatus on Monday, pricing more than $2 billion of new paper - most of it coming via upsized "drive-by" offerings.

Familiar junk issuer Plains Exploration and Production Co. came in with the biggest deal of the day: a quickly shopped, upsized $750 million offering of seven-year notes. The oil and gas operator's new bonds were little moved in aftermarket dealings, though.

Another well-known issuer doing a same-day deal was iconic blue-jeans maker Levi Strauss & Co., whose upsized $385 million of 10-year notes was seen having gained a point when freed to trade.

Laredo Petroleum, Inc., another energy exploration and production company, struck oil with an upsized, quick-to-market $500 million tranche of 10-year notes, which was heard by traders to have firmed smartly in the aftermarket.

The day's sole deal that was not upsized came from Viasystems Group, Inc., a manufacturer of electronic components, which priced its $550 million offering of seven-year bonds off the forward calendar. Traders saw the bonds up more than a point when they were freed for secondary activity.

In addition to the deals that priced, a handful of others slated, including a $600 million secured offering from natural gas transportation and storage company NGPL PipeCo LLC; a $400 million tranche from travel information technology company Sabre Holdings; a $350 million seven-year issue from industrial products distributor Anixter International, Inc.; and a $125 million secured offering from offshore energy rig builder OPI International Inc.

Price talk emerged on oilfield services company MBI Energy Services, Inc., whose $250 million of eight-year notes could price as early as Wednesday.

Away from the new-deal realm, traders saw a generally firm tone to Tuesday's market. Statistical performance indicators were pointing northward across the board in contrast to Monday's retreat.

Among individual names, Ford Motor Co. bondholders appeared to be in the drivers' seat, as the auto giant's paper rose handsomely after Fitch Ratings lifted Ford back to the investment-grade status it enjoyed in the early part of the last decade, before being dumped into Junkbondland in 2005.

Plains massively upsizes

Plains Exploration priced the session's biggest deal, a massively upsized $750 million issue of seven-year senior notes (B1/BB-), which came at par to yield 6 1/8%, at the tight end of the 6 1/8% to 6 3/8% yield talk.

J.P. Morgan, Barclays, BMO, Goldman Sachs, Scotia and Wells Fargo were the joint bookrunners for the quick-to-market deal, which was upsized from $500 million.

The Houston-based oil and gas company plans to use the proceeds to repay bank debt, redeem its 7% notes due 2017 and for general corporate purposes.

Viasystems' $550 million

Viasystems priced a $550 million issue of seven-year senior secured notes (B2/BB-) at par to yield 7 7/8%.

The yield printed in the middle of the 7¾% to 8% yield talk.

Goldman Sachs, Wells Fargo and Stifel Nicolaus were the joint bookrunners.

The St. Louis-based company plans to use the proceeds to fund the previously announced acquisition of DDi Corp. and to redeem $220 million of 12% senior secured notes due 2015.

Laredo at the tight end

Laredo Petroleum priced an upsized $500 million issue of 10-year senior notes (B3/B-) at par to yield 7 3/8%, at the tight end of price talk that was set in the 7½% area.

Bank of America Merrill Lynch, J.P. Morgan, Wells Fargo and Goldman Sachs were the joint bookrunners for the quick-to-market deal, which as upsized from $400 million.

Tulsa, Okla.-based energy company plans to use the proceeds to repay bank debt and for general corporate purposes.

Levi Strauss upsizes

Levi Strauss priced an upsized $385 million issue of 10-year senior notes (B2/B+/B+) at par to yield 6 7/8%, on top of price talk.

Bank of America Merrill Lynch and J.P. Morgan were the joint bookrunners for the quick-to-market issue, which was upsized from $350 million.

The San Francisco-based apparel maker plans to use the proceeds to fund the tender offer for its outstanding 8 7/8% senior notes due 2016 and for general corporate purposes, which may include repaying other outstanding debt including any 2016 notes not tendered.

MBI talks $250 million

Looking ahead to Wednesday's session, MBI Energy talked its $250 million offering of eight-year senior notes (confirmed Caa1/expected B) with a yield in the 9½% area.

The deal is set to price on Wednesday afternoon.

RBC is the left bookrunner. Wells Fargo is the joint bookrunner.

Anixter brings $350 million

Anixter will host an investor call at 11:30 a.m. ET on Wednesday for its $350 million offering of non-callable seven-year notes (expected ratings Ba3/BB).

The deal is set to price on Wednesday afternoon.

Wells Fargo is the left bookrunner. Bank of America Merrill Lynch, J.P. Morgan and RBS are the joint bookrunners.

Proceeds will be used to repay the accounts receivable securitization, repay revolver debt and for general corporate purposes.

Sabre roadshow on Wednesday

Sabre Holdings will start a roadshow on Wednesday for a $400 million offering of seven-year senior secured notes.

The deal is set to price mid-to-late in the April 30 week.

Goldman Sachs, Bank of America Merrill Lynch, Barclays, Deutsche Bank, Mizuho, Morgan Stanley and Natixis are the joint bookrunners.

The Southlake, Texas-based travel technology company plans to use the proceeds to repay portions of its outstanding loans due 2014, as part of a proposed amendment and extension of its credit facility and for general corporate purposes.

OPI starts roadshow

OPI International began a roadshow on Tuesday for its $125 million offering of first-lien senior secured notes.

The deal, which is being led by sole bookrunner Global Hunter, is set to price during the week of May 7.

The Houston-based services provider to the offshore oil and gas industry plans to use the proceeds to help fund the acquisition of offshore construction vessels and refinance debt.

'Bits and pieces'

A secondary market trader said: "We didn't have a whole lot going on today," and a second trader characterized the market as largely "bits and pieces here and there, but everyone's kind of been on hold," waiting for the expected barrage of new deals, which in fact happened late in the session.

He noted, "General Electric priced a big [$3.1 billion] investment grade deal today, so a lot of folks were involved in that."

Back among the purely junk names, meantime, things were slow until "the last hour, waiting for all of this new-issue stuff."

"Everything happened in the last hour" of the session, yet another trader observed.

New deals mostly firmer

Once the new deals started coming in rapid-fire succession and then began trading around, they were seen generally higher on the day and none more so than Laredo Petroleum's 10-year issue.

A trader saw the Tulsa, Okla.-based energy exploration and production operator's $500 million 10-year deal trading at 101¼ bid, 102¼ offered, well up from the par level at which those bonds priced after having been upsized from an originally announced $400 million.

A second trader later on saw those bonds at 102 bid, 102½ offered.

The day's other energy-sector pricing, from well-known junk issuer Plains Exploration and Production Co., was little moved in the secondary sphere, where one trader quoted the bonds at 100¼ bid shortly after that upsized $750 million deal had priced at par.

"Then they hit that bid, and it got really tight, to 100 1/16," he said.

Another trader saw the bonds going home at par bid, 100¼ offered.

But Plains was the exception, rather than the rule.

Venerable San Francisco-based jeans maker Levi Strauss' 10-year notes were seen by a trader around 101 bid, 102 offered. The $385 million deal moved up to that level after pricing at par.

And Viasystems Group's seven-year paper was quoted by a trader at 101¼ bid, 102¼ offered.

The St. Louis-based electronic components manufacturer's $550 million had earlier priced at par off the forward calendar.

A second trader pegged those bonds going home at 101 3/8 bid, 101 7/8 offered.

Friday deals stay strong

Among the deals that came to market on Friday - there were no junk pricings on Monday - a trader said that ACCO Brands Corp.'s $500 million of 6¾% notes due 2020 continued to firm.

He quoted the Lincolnshire, Ill.-based office products company's bonds 103 3/8 bid, 103 7/8 offered, which he called up one-eighth point on the day.

That $500 million deal had priced at par fairly late in the session on Friday via a special-purpose entity named Monaco Spinco Corp. and then moved up solidly after pricing, with a trader at another desk quoting them as having moved up to 102½ bid, 103½ offered in the initial aftermarket dealings. He saw the bonds on Monday having tightened up a little at higher levels, to 102¾ bid, 103¼ offered.

A trader said that Columbus, Ga.-based movie theater operator Carmike Cinemas Inc.'s 7 3/8% senior secured notes due 2019 were trading Tuesday at 101½ bid, 102¼ offered, but called that pretty much unchanged.

On Friday, the company had priced its $210 million tranche at par, and the new bonds were initially quoted around later Friday at par bid, 100½ offered, but they had moved up on Monday, first hitting highs around 102 bid, before dropping back to around the 101½ bid, 102½ offered level.

Ford flies after upgrade

Away from the new deals, the standout performer in the secondary market Tuesday was Ford Motor and the Dearborn, Mich.-based carmaker's Ford Motor Credit Co. LLC financing arm, which was given a big boost by the news that Fitch Ratings upped Ford's bonds to investment grade - a neighborhood Ford hasn't been parked in since 2005.

A trader said there was $19 million of the Ford Credit 7% notes due 2015 changing hands and about $15 million of the parent company's 7.45% bonds due 2015.

He saw the latter bonds "trading up by a fair amount," going from 122½ bid on Monday to 126 bid on Tuesday for most of the trades. The bonds had been trading around a 123ish context last week, "so maybe it was the upgrade that did it," he said.

The 7% moved up to 110¾ bid, 111¾ offered on Tuesday, versus earlier levels at 109½ bid, 110 offered.

The Ford Credit 6 5/8% notes due 2013 moved up to bid levels between 112¾ and 113 from prior levels around 1111/2. About $9 million of the bonds traded.

Ford cruised higher after Fitch upgraded the ratings of both Ford and Ford Credit by one notch to BBB- versus their previous BB+.

The agency said, "Since the last recession, Ford's management has been heavily focused on increasing profitability, growing liquidity, lowering debt and reducing the company's pension obligations."

It further said that it feels that "the work that has been accomplished has put the company in a solid position to withstand the significant cyclical and secular pressures faced by the global auto industry."

Back in 2006, Ford borrowed more than $23 billion, securing the loan with virtually all of its assets, including the rights to its famous "Blue Oval" logo.

Ford's management proved to be prescient or, perhaps, just plain lucky. When the credit crunch hit in 2008, Ford had billions in the bank and was able to ride out Detroit's worst downturn since the Depression. Meanwhile, rivals General Motors and Chrysler were unable to borrow the money they needed to stay afloat; both skidded into bankruptcy and have still not fully recovered.

As part of the lending agreement, the Blue Oval and other assets remain as security for Ford's loan until at least two of the three major ratings agencies return it to investment grade, where Ford's debt was rated up till 2005.

Fitch's action gets Ford halfway to that goal, which company officials say would be a big psychological and financial boost if Ford can achieve it.

Standard & Poor's and Moody's Investors Service both currently rate the automaker just one tantalizing notch below investment grade.

PDVSA is busy

Elsewhere, a trader noted brisk activity in the bonds of Petroleos de Venezuela SA, that country's state oil monopoly.

He said: "That seems to be the one that's finishing up 79-80. A boatload traded."

He said that those 9% notes due 2021 "only started trading [Monday], at 77 to 771/2."

"It definitely has a lot of volume."

He said the 8½% notes due 2017 were ending around 87½ bid, 88 offered, and "looks like it's up a little bit."

While he saw PDVSA as "the volume leader, a lot of trading in that whole capital structure," he also said that it was difficult to tell just how much volume there was because the bonds don't Trace. "It's private," he pointed out.

Colt Defense little moved

A trader saw "not much activity today" in the 8¾% notes due 2017 of firearms manufacturer Colt Defense LLC, whose bonds fell about 3 or 4 points on Monday, apparently hurt by a news report that the Defense Department, Colt's major customer, had decided to buy some of the M4 carbines, which it had been buying exclusively from West Hartford, Conn.-based Colt, instead from rival gunsmith Remington Arms, a unit of Madison, N.C.-based Freedom Group Inc.

He said that only about $1.3 million of the Colt bonds were changing hands "and just small pieces" trading between 63 and 65 bid. He said the final trades went off at 63, down 1¼ points on the day.

"It was more quoted down than traded down."

Bon-Ton seen easier

A trader saw Bon-Ton Department Stores Inc.'s 10¼% notes due 2014were finishing around 81 bid, 81½ offered, which he called down 1½ points

He saw no news out on the York, Pa.-based department store chain operator.

Another market source saw more than $7 million of the bonds having changed hands, making it one of the busier junk issues of the day.

ATP shows improvement

A trader saw ATP Oil & Gas Corp.'s 11 7/8% second-lien senior secured notes due 2015 trading around 75-76.

"There was a small trade at 76. That's why it looks like it's up a lot," he said, quoting the Houston-based offshore energy company's paper more properly trading between 72¾ and 731/4.

"That seems to be where most of them are trading," he said, pronouncing the issue up 1½ to 2 points, "but on a lot of volume - at least $12 or $13 million."

Market measures move up

Statistical measures of junk market performance rose across the board on Tuesday, after having turned South on Monday.

A trader saw the Markit Group CDX North American Series 18 High Yield Index up by 9/16 point on Tuesday to end at 95 3/16 bid, 95 3/8 offered, after having lost 1/8 point Monday.

The KDP High Yield Daily Index was up by 9 basis points on Tuesday to end at 73.59, after having lost 11 bps on Monday. Its yield came in by 5 bps, to 6.67%, after having risen by 3 bps Monday.

And the widely followed Merrill Lynch High Yield Master II Index regained its winning ways on Tuesday, adding on 0.159%. On Monday, it declined by 0.032%, its first loss after seven straight sessions on the upside.

Tuesday's gain lifted the index's year-to-date return to 5.741%, well up from Tuesday's 5.303%. It also established a new peak level for 2012, eclipsing the old mark of 5.361%, which had been set back on March 2. The new year-to-date figure is the index's highest since it hit 5.68% back on Aug. 3, 2011.

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