Upsized MetroPCS prices as junk returns from break; OI, EXCO, Celanese slate; secondary quiet

By Paul Deckelman and Paul A. Harris

New York, Sept. 7 - It was back to work on Tuesday in Junkbondland after the three-day holiday break. However, despite the relative lack of activity seen in the high-yield market over the previous several sessions, particularly in the primary arena, there was no massive rush to get things done to meet pent-up demand.

In new deals, MetroPCS Communications, Inc. subsidiary MetroPCS Wireless, Inc. priced an upsized $1 billion eight-year offering for the purpose of taking out an existing issue of bonds. Although that drive-by deal, announced on Tuesday morning, had been expected to price during the session, terms did not surface until well into the evening, long after the close. Meanwhile, there was little activity seen in the bonds being taken out, the tender offer for which was also announced Tuesday morning; traders said that those bonds had already been trading around their anticipated takeout price for a while.

Tuesday was a big day for borrowers based in the Big D; besides the MetroPCS pricing, a pair of Dallas-based companies climbed on to the forward calendar - energy exploration and production operator EXCO Resources, Inc., which was heard hitting the road with its $750 million eight-year deal Wednesday, and chemical maker Celanese Corp., bringing a $400 million issue.

New-deal announcements also came from packaging-products company Owens-Illinois Group, Inc., whose European unit is selling a tranche of 10-year euro-denominated notes in order to repay some debt, and from Visant Corp., an Armonk, N.Y.-based marketing and publishing company doing a $750 million bond deal and new bank financing, also to refinance debt, including three series of bonds maturing in 2012 and 2013.

Secondary traders meantime saw little going on, noting that with a holiday Monday and the Jewish New Year holiday starting Wednesday night and stretching through Friday, a lot of people were, and will be, absent.

They did see NewPage Corp.'s bonds - firming smartly of late on last week's positive guidance from the paper company - several points lower Tuesday, the rally having apparently run its course.

MetroPCS massively upsizes

The primary market began the post-Labor Day week at a purposeful pace, although one syndicate banker expected a greater volume of news on Tuesday.

One new issue was placed.

MetroPCS Wireless priced a massively upsized $1 billion issue of 7 7/8% eight-year senior notes (B2/B) at 99.277 to yield 8%.

The yield printed on the tight end of the 8% to 8¼% price talk.

JPMorgan, Barclays Capital and Deutsche Bank Securities were the joint bookrunners for the quick-to-market deal, which was upsized from $500 million.

The Dallas-based wireless telecommunications company will use the proceeds to fund the tender for its existing 9¼% notes due 2014.

EXCO to bring $750 million

EXCO Resources will begin a brief roadshow on Wednesday for its $750 million offering of eight-year senior notes.

The deal is expected to price on Friday.

JPMorgan, Bank of America Merrill Lynch, BNP Paribas, RBC Capital Markets and Wells Fargo Securities are the joint bookrunners.

Proceeds will be used to redeem all $444.7 million outstanding 7¼% senior notes due 2011 and to pay down a portion of the outstanding balance under EXCO's credit agreement.

OI on Europe-only roadshow

Meanwhile, OI European Group BV, an indirect wholly owned subsidiary of Owens-Illinois Group, is marketing a €500 million issue of 10-year senior notes.

The deal, which is being led by Citigroup and BNP Paribas, is expected to price on Friday following the conclusion of a Europe-only roadshow.

The Perrysburg, Ohio-based glass company intends to use the proceeds to repay Owens-Illinois Group's credit facility.

Visant for next week

Elsewhere, Visant Holding Corp. and Visant Corp. are expected to launch their announced $750 million offering of seven-year senior notes during the Sept. 13 week, according to a market source.

Goldman, Sachs & Co. and Credit Suisse will lead the deal.

Proceeds will be used to help fund the tender offers for Visant's 10¼% senior discount notes due 2013, its 8¾% senior notes due 2013 and its 7 5/8% senior subordinated notes due 2012 and to repay bank debt.

The financing also includes a $1.43 billion credit facility.

Also, Celanese US Holdings LLC announced that it plans to offer $400 million of eight-year senior unsecured notes.

The Dallas-based chemical company will used the proceeds to retire its existing senior secured credit facility.

MetroPCS trades around takeout level

A trader said that about $10 million of MetroPCS' existing 9¼% notes due 2014 - the issue being taken out using the proceeds from the wireless provider's new deal - were trading "right around" the 104 7/8 level. That's just a small bit higher than the total consideration of $1,046.25 per $1,000 principal amount that the company announced as the total consideration for holders who tender those notes by the Sept. 20 consent deadline.

That's also the price at which the notes are currently callable, he said, and the price at which the notes have already been trading.

"PCS was trading right around the call price," another trader agreed, adding that "while it's good that they will be able to get the deal done, it doesn't exactly make for much price action."

No action in Visant bonds

A trader said that Visant's 7 5/8% notes due 2012 - one of the three issues of the company's bonds slated to be taken out using the proceeds from its new deal - were quoted around 100.3 bid, but he saw only 500 of the bonds ($500,000) trading.

"There was not a lot of activity," he said. "You really don't see that much action in this name."

He added that he "didn't see anybody bidding the paper up today" on the news of the planned redemption.

Market indicators turn mixed

Away from the new-deal world, a trader saw the CDX North American HY Series 14 index lose ½ point Tuesday to end at 97 bid, 97¼ offered after having gained 3/8 point on Friday.

The KDP High Yield Daily index meantime advanced by 9 basis points on Tuesday to close at 71.97 on top of a 10-bps gain on Friday. Its yield declined by 2 bps, to 8.25%, after having come in by 3 bps on Friday.

The Merrill Lynch High Yield Master II index improved by 0.14% on Tuesday after having advanced by 0.134% on Friday. It ended the day with a year-to-date return of 9.28% - that was up from 9.053% on Friday and set a new year-to-date peak for 2010 so far, eclipsing the old high watermark of 9.085% recorded on Aug. 9.

Advancing issues led decliners for a fourth consecutive session on Tuesday, although by only a relative handful of issues - just a couple dozen out of the nearly 1,400 issue tracked. On Friday, the advancers held a five-to-three edge over decliners.

Overall activity, represented by dollar-volume levels, jumped to nearly three times the truly anemic pre-holiday levels seen on Friday.

Despite the nominally higher activity pace, traders saw little real activity in most bonds, as high-yield secondary market participants straggled back in after their three-day Labor Day holiday break.

One said that he saw "not a heck of a lot" going on, chalking the relative lack of activity up to "your post-holiday, pre-religious holiday, tennis-shortened week"; the televised U.S. Open championships are continuing in Queens, N.Y., distracting the attention of some market participants.

"People seemed to be coming back in today and desks are starting to get re-staffed - but I guess we're just waiting for the new-issue machine to turn back on."

A second trader opined that "a better tone continues. There's not a lot that really jumps out, [even] with the market up ¼ to ½ since Thursday."

He said that the Rosh Hashana Jewish new year's celebration that starts on Wednesday night "has kind of extended some peoples' vacations this week, so I think it may be a little slower than is typically the case right after Labor Day."

That having been said, he declared that the volume "is clearly better than it was last Thursday and Friday, but it is not back to normal yet."

He said that financials CIT Group Inc. paper and American International Group Inc. paper was "fairly active, but it didn't really do much - maybe up ¼ point since Thursday, just like the market. Nothing stands out as a mover away from the trend of the market."

NewPage too pooped to pop

Among specific issues, the recent surge in NewPage's bonds that had lifted its 10% notes due 2012 and 11 3/8% senior secured notes due 2014 by multiple points over the previous three sessions ground to a halt on Tuesday.

A trader saw the 11 3 /8% notes having retreated to 88¾ bid, 89¾ offered, down from Friday's peak level at 90 bid, 90 3/8 offered. Those notes had shot up to around the 88 level last Wednesday from prior levels around 81 bid, in trading of over $100 million, in reaction to what one trader called "surprisingly strong" earnings guidance for the current third quarter and the fourth quarter that the company issued. The rise to above the 90 bid level continued on Thursday and again on Friday, although on considerably reduced volume from last Wednesday's very active levels.

Meanwhile, the trader saw the Miamisburg, Ohio-based coated-paper manufacturer's 10% notes having fallen back on Tuesday to around 45 bid, 46½ offered, after having been offered as high as 50, and quoted toward the end of trading during Friday's essentially abbreviated pre-holiday session as moving in a bid range between 46¾ and 481/4. Those bonds had begun last week mired in the mid-30s then jumped around 10 points to the 44 level last Wednesday on investor response to the bullish guidance, and on heavy volume of some $40 million, and then continued to firm into the upper 40s last Thursday and Friday, though on considerably less volume than Wednesday.

Anadarko active, Mariner not

In the energy patch, a trader said that there was "nothing since last Thursday" in Mariner Energy Inc., whose bonds had moved lower for a while last week as news of a fire aboard one of the Houston-based independent exploration and production company's drilling platforms in the Gulf of Mexico briefly raised the specter of BP Oil-Spill Disaster, Part Two. As it turned out, those fears were overstated, and by Friday, activity in the bonds had died down.

On Tuesday, the Mariner paper stayed pretty much where it had been since the close of trading on Thursday - the 8% notes due 2017 at 109 1/8 bid. The trader said he had not seen the 7½% notes due 2013, which had last traded last week around 102 bid, and the 11¾% notes due 2016, which had finished out the week at 122 bid.

The trader, did, however, see another energy name, Anadarko Petroleum Corp., actively trading in both the junk and high-grade markets, where the split-rated Woodlands, Texas-based energy company is considered a good crossover play. He saw more than $25 million of its 5.95% notes due 2016 trading around a neighborhood of 101¼ to 1011/2, which he called down ¾ point.

Anadarko's 7½% bonds due 2031 saw turnover of $24 million. The bonds traded around par, up 1/8 point.

GM easier, Ford steady

In the autosphere, a trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 were down ½ point at 31½ bid, 32 offered, and saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 97½ bid, 98½ offered.

At another desk, a trader pegged the GM benchmarks at 31 3/8 bid, 31 7/8 offered and saw the Ford long bonds at 98 1/8 bid, 98 5/8 offered.

Blockbuster steady; analyst issues warning

From deep in distressed-debt territory came word that Blockbuster, Inc.'s bonds were staying pretty much anchored to recent levels, with the troubled Dallas-based movie-rental company's 11¾% senior secured notes due 2014 at 51½ bid, 53½ offered, and its 9% senior subordinated notes due 2012 at 4½ bid, 6½ offered.

Analyst Kim Noland of the Gimme Credit independent research service said in a note to investors late Friday that "we don't see any reason for [Blockbuster's] bonds to trade higher near term" and warned that "even a consensual pre-packaged debt restructuring," which has been widely talked about lately in the financial and even the general-interest press, "may not keep the company out of a chapter 7 liquidation a la Movie Gallery."

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