Libbey Glass prices, Manitowoc, Media General slate deals; Ford flies; funds lose $75 million

By Paul Deckelman and Paul A. Harris

New York, Jan. 28 - Libbey Glass Inc. successfully priced a $400 million offering of five-year secured notes on Thursday, with the Toledo, Ohio-based table glassware manufacturer's deal coming to market a little ahead of original expectations for a Friday pricing. When the new bonds were freed for secondary dealings, traders saw them firming smartly to levels above par.

Also on the new-deal front, several prospective issues joined the forward calendar. Heavy equipment producer Manitowoc Co., Inc., based in the eponymous Wisconsin town, announced plans for an offering of eight-year notes, and was heard to have begun a roadshow, with pricing expected around the middle of next week. Media General Inc. said it would sell $350 million of secured seven-year notes. The Richmond, Va.-based newspaper, online website and television station owner's deal is seen as business for the middle of next week. Wayne, N.J.-based roofing maker Building Materials Corp. of America is hitting the road to market a split-rated (Ba3/BBB-) offering of 10-year secured notes, for a pricing early next week.

Price talk meantime emerged on several issues already on the calendar that are expected to come to market during Friday's session - seven-year deals from Readers Digest Association, Inc. and Regent Seven Seas Cruises and an eight-year offering from Cenveo Inc., all of them for secured notes. Price talk also came out on PH Glatfelter Co.'s tranche of 7 1/8% notes due 2016, which will mirror one of the York, Pa., paper company's existing issues. Also on tap for likely pricings on Friday are issues from Appleton Papers Inc. and Hudson Products Holdings Inc.

Away from the new-deal arena, Ford Motor Co.'s bonds gained traction as the Number-Two domestic automaker reported its first annual profit in four years and said that it expects to remain profitable this year.

Eastman Kodak Co. also got back in the black, which pushed the Rochester, N.Y.-based photographic products and imaging technology company's bonds higher.

Junk funds off by $75 million

As the day's trading was finishing up, market participants familiar with the high yield mutual fund-flow statistics generated by AMG Data Services of Arcata, Calif. - a key barometer of overall market liquidity trends - said that in the week ended Wednesday, some $75 million more left the weekly-reporting funds than came into them. It wasn't a terribly large outflow - but an outflow it indeed was, the first this calendar year, after three consecutive weekly inflows. It was also the first such cash exodus from the funds after an amazing 22 consecutive weeks of inflows dating back to mid-August and totaling $8.123 billion, according to a Prospect News analysis of the AMG numbers. That included the $554 million inflow seen in the previous week, ended Wednesday, Jan. 20.

The outflow - which came as no surprise to market participants, given Junkbondland's struggles over the past week, according to various statistical indexes - reflected a weakening of investor confidence in the market. It dropped the year-to-date inflow to $1.501 billion from the previous week's $1.576 billion, the peak level for 2010 so far. In 2009 - which saw 47 weekly inflows against just five widely scattered outflows, according to the Prospect News analysis - the year's inflow total came to a record $20.56 billion.

Those kind of sustained inflows - which last year also included the over $12 billion which came into a separate came into a separate category of funds that report on a monthly basis, rather than weekly, swelling 2009's aggregate mutual fund inflow to a record $32 billion plus - made it possible for the junk market to come roaring back last year from 2008's staggering 25%-plus loss and sharply reduced primary activity totals.

As for this year, the first three weeks of the year saw the inflows continuing, with fairly strong performance in the secondary, but since then, the market has lately been in retreat from its peak levels of earlier January. For instance, as of the close on Wednesday, the authoritative Merrill Lynch High Yield Master II index showed a year-to-date return of 1.429% -- respectable enough, but down from the 2.182% return seen the previous Wednesday, and down still further from the 2010 peak level to date of 2.292%, seen on Thursday, Jan. 14. In 2009, the index had notched a record 57.512% advance, as high yield handily beat virtually every other major investment asset class.

The relatively robust inflows seen so far this year, despite the latest week's decline, have also fueled the primary market's continued revival, a rebound which was especially notable in the busy second week of this year, when over $9 billion priced. As of the close on Wednesday, there had been $15.37 billion of new dollar-denominated high-yield debt issued in the U.S. market so far this year -- $10.626 billion of it from domestic issuers - running some 356% ahead of the feeble pace of early 2009, while the domestic issuance represented a 308% gain over the 2009 year-to-date levels. Industrialized-country global issuance this year in all major currencies of $19.978 billion equivalent was a healthy 427% ahead of 2009's pace.

In 2009, with ample incoming liquidity fueling its resurrection from the previous year's second-half swoon, the junk bond market by the Dec. 31 year-end close had seen $160.028 billion of new dollar-denominated high yield debt issued in the U.S. market, as of Dec. 31 -- $129.202 billion of it from domestic issuers - running some 120.87% ahead of the feeble pace of 2008, while the domestic issuance represented a 115.82% gain over the 2008 levels. 2009 industrialized-country global issuance in all major currencies of $174.902 billion equivalent was 171.05% ahead of 2008's pace.

EPFR sees flows interrupted

Another fund-tracking service, EPFR Global of Cambridge, Mass., which uses a different methodology from AMG, saw an outflow of $137.4 million, the first outflow in eight weeks. That stood in sharp contrast to the previous week's $771 million inflow.

The company's analysts said that "gloomy earnings forecasts, angst about China's monetary tightening and the deteriorating finances of countries ranging from Greece to Japan triggered a global selloff of equities and, to a lesser extent, the riskier debt classes. Fund flows for the week ending Jan. 27 mirrored this uncertainty and flight to safety."

The outflow brought the year-to-date EPFR-calculated inflow total down to approximately $1.86 billion from the prior week's $1.991 billion. In 2009, it said that some $22.9 billion of inflows had been seen, a record.

While the EPFR numbers generally point in the same direction as AMG's - with an exception to the rule here and there - the exact magnitude of those figures differs since EPFR includes in its calculations some funds domiciled outside the United States.

Cumulative fund-flow totals, whether for AMG or EPFR, can include unannounced revisions and adjustments to figures from prior weeks.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they comprise less of the total monies floating around the high yield universe.

Libbey prices $400 million

Libbey Glass Inc. priced a $400 million issue of 10% five-year senior secured notes (B2/B) at 98.082 to yield 10½% on Thursday.

The yield printed on top of the price talk.

Barclays Capital Inc. and Bank of America Merrill Lynch were joint bookrunners for the debt refinancing.

Talking Friday deals

Reader's Digest Association, Inc. set price talk for its $525 million offering of seven-year senior secured first-lien floating-rate notes (expected ratings B1/B+).

The notes are talked with a coupon of three-month Libor plus 650 basis points area, to price at 97. They will feature a 3% Libor floor.

The books close at noon ET on Friday. The Rule 144A/Regulation S with registration rights notes are expected to price on Friday afternoon.

JP Morgan, Bank of America Merrill Lynch, Credit Suisse and Goldman Sachs & Co. are joint bookrunners.

Meanwhile Cenveo Corp. talked its $375 million offering of eight-year senior secured notes (B2/B) at the 8 7/8% area.

Pricing is set for Friday morning.

Bank of America Merrill Lynch, Morgan Stanley & Co. and RBS Securities Inc. are joint bookrunners.

Regent talk, covenant changes

Regent Seven Seas Cruises set price talk for its $200 million offering of seven-year second-lien senior secured notes at the 12% area.

The books close at noon ET on Friday, with the notes expected to price shortly after.

Barclays Capital Inc., HSBC Securities and Deutsche Bank Securities Inc. are joint bookrunners.

In addition to talk, modifications to the covenants were announced on Thursday.

The covenants will include a "secured vessel debt cap," comprised of the sum of $425 million (decreased from $475 million) and the new vessel aggregate secured debt cap.

Also, proceeds from asset sales used for first-lien debt reduction permanently reduce the secured vessel debt cap.

Glatfelter talks mirror notes

PH Glatfelter Co. set price talk for its $100 million offering of notes mirroring its 7 1/8% senior notes due May 1, 2016 (Ba2/BB+) at a dollar-price range of 95 to 96.

The books close at 11:30 a.m. ET on Friday.

Credit Suisse has the books.

Manitowoc rolls out $400 million

Manitowoc Co. began a roadshow on Thursday for its $400 million offer of eight-year senior unsecured notes (Caa1/BB-).

The roadshow wraps up on Tuesday, with the notes expected to price later that day or on Wednesday.

JP Morgan, Deutsche Bank and Bank of America Merrill Lynch are joint bookrunners for the bank debt refinancing deal.

Media General starts marketing Friday

Media General, Inc. will start a roadshow on Friday for its $350 million offering of seven-year senior secured notes.

The roadshow wraps up on Feb. 4, and the notes are set to price after that.

Bank of America Merrill Lynch and SunTrust Robinson Humphrey are joint bookrunners for the deal to refinance bank debt.

Community Education to bring notes

Also, Community Education Centers, Inc. will begin a roadshow on Friday for its $210 million offering of six-year senior secured notes, via Jefferies.

Proceeds will be used to repay debt.

New Libbey issue is lifted

When Libbey Glass's new 10% notes were freed for secondary dealings, a trader saw them at 100¾ bid, well up from the 98.082 level where the bonds had priced earlier in the session to yield 10½%.

"They did pretty well," he declared.

A second trader quoted the bonds at 100¾ bid, 101 offered, while at another desk, they went home quoted as good as 100½ bid, 101½ offered.

Coleman, Ryerson quoted slightly firmer

Also on the new-deal front, a trader saw Tuesday's offering from Coleman Cable & Wire Corp. up perhaps ¼ point at 98¾ bid, 99¾ offered at the outset, but after that, "there was never a two-sided trade.

The Waukegan, Ill.-based electrical and electronic wire and cable manufacturer's $235 million issue of 9% senior notes due 2018 priced at 98.597 to yield 9¼%.

The trader also quoted Ryerson Holding Corp.'s new 14½% senior discount notes due 2015 as having opened at 47 bid, up a little better than the 46 bid, 47 offered level at which those bonds had finished on Wednesday, after trading most of the day in a 45-46½ context. However, he said, after that initial higher bid, "there's been nothing since then, and we have not seen a right side."

Ryerson, a Chicago-based metals company, priced a face amount of $483 million of the discount bonds at 45.598 on Tuesday, for a yield of 16.32%, to generate proceeds of $220.238 million.

Market indicators unchanged-to-lower

Among established bonds, a trader saw the CDX Series 13 index pretty much unchanged on Thursday at 97¼ bid, 97½ offered, following Wednesday's marginal decline.

The KDP High Yield Daily Index - after just one day back in the black following more than a week's worth of declines - returned to the red on Thursday, losing 14 basis points to end at 70.98; it had gained 17 bps on Wednesday. Its yield, meantime, widened by 3 bps, to 8.23%, after having narrowed by that same amount the previous session.

Advancing issues pulled even with decliners on Thursday after having lagged for seven straight sessions.

Overall market activity, as measured by dollar-volume levels, rose by about 1% Wednesday's pace.

Index downturns overdone?

While the major indexes that junk-watchers follow as a key to the market's likely future behavior are definitely well below where they stood even a week ago -- the KDP index's close represents a marked deterioration from its week-ago close of 71.74 and a 7.96% yield, the CDX index is down from 98 bid, 98¼ offered a week earlier, and the Merrill Lynch High Yield Master II index's Wednesday night close of a 1.429% year-to-date return and 649 bps spread to worst stands in contrast to a 2.182% 2010 return and 630 bps spread a week earlier -- those numbers may not tell the whole story.

A trader said that "what seemed to go on is that there were a couple of firms that were big sellers," although he did not know whether this was tied to an actual shift in market sentiment by several hedge funds or just the unwinding of some basis trades. Whatever the motivation for those sales, "they really took Clearwire [Corp.], Sprint [Nextel Corp.], and Clear Channel [Communications Inc.] to the woodshed."

Another name taken down by multiple points over the course of the week was First Data Corp. "So there was some real pressure exerted on some of these names. Some of them were in the [Merrill Lynch] index, and therefore, some of the index moves" - and moves of other, similar market gauges - "may have been exaggerated."

Despite the seeming carnage, he said, many junk bonds continue to more than hold their own.

"If you go out and you try and buy a good single-B energy name at 8% [yield] or cheaper - there's none. Or if you were to go out and try and buy a good healthcare name, you're going to pay up, if you can find anyone that will sell you the bonds."

Similarly, he said that "sellers of good names in the secondary market are not coming off their levels at all. So it results in a lot of stalemates."

Also helping to keep many junk names well bid for, he said was the fact that some of the demand is coming from the high-grade sector, stepping over and into this market" in order to reach for yield.

Zions bonds keep pushing higher

One such name with appeal on both side of the fence is Zions Bancorporation. For a third consecutive session on Thursday, they remained well bid-for in active dealings, with a market source seeing the Salt Lake City, Utah-based regional banking company's 7¾% senior notes due 2014 having risen to just over 97 bid, up another 1½ points from around the 951/2-96 area levels at which those bonds traded on Tuesday. Over $16 million of the bonds had traded by late in the afternoon, making the credit one of the more active issues for a third day running.

At a rating of NR/BBB-/BBB, the bonds attract attention from both high-grade and high yield accounts.

The bonds have been firming since Tuesday, in reaction to Zions' announcement after the close on Monday that its fourth-quarter loss shrank to $176.5 million, or $1.26 per share, well down from a loss of $498.1 million, or $4.37 per share, in the year-earlier period, as the bank took considerably less in the way of charges and write downs. The loss also came in at less than the roughly $1.65 per share which Wall Street had been anticipating.

AIG lease unit still strong

Another split-rated (B1/BB+/BBB) quasi-junk "crossover" name which has been putting points up on the board this week is International Lease Finance Corp., the aircraft leasing arm of troubled New York-based insurer American International Group Inc. A trader saw ILFC's 5¾% notes due 2011 up 1¾ points on Thursday at 93¾ bid, on "a lot of volume." He said that he selected that particular issue to quote more or less at random, because there was "a boatload" of various International Lease bonds trading firmer.

However, he qualified that, saying that "the shorter paper is better - the longer paper had not much movement."

Another market source saw brisk trading in some of the ILFC issues, with its 5.40% notes due 2011 marginally higher on the day - perhaps ¼ point - at 94, while the 53/4s were nearly 2 point gainers to just under 94 bid.

While the International Lease bonds remained strong - apparently unaffected by news reports during the week indicating that AIG had abandoned plans to sell the unit because it could not fetch the price that CEO Robert Benmosche wanted - other AIG paper was backpedaling on Thursday, with the company's American General Finance Corp. unit's 5 3/8% notes due 2012 seen down a deuce at 82½ bid.

Ford finances boost bonds

Back among the purely junk issues, a trader saw Ford's 7.45% bonds due 2031 up 2¼ points at 88¼ bid, 89¼ offered.

A second saw those 2031s up 3 points on the day to 89 bid, 90 offered, on "some decent activity."

A market source pegged the carmaker's Ford Motor Credit Co. auto loan unit's 7½% notes due 2012 up more than a point on the day, approaching the 102 level, although Ford Credit's 8 1/8% notes due 2020 were heard to be down more than a point, at just above 101.

Ford's bonds were mostly cruising along on an upside ride after the Dearborn, Mich.-based auto giant posted a $2.7 billion profit for 2009 - its first such full-year black ink in four years. On a per-share basis, Ford earned 86 cents per share. Those full-year figures are in stark contrast to 2008, when Ford lost a record $14.6 billion, or $6.50 per share.

Excluding charges, credits and other unusual items, Ford's per-share earnings for the latest year were exactly flat, still beating both analyst expectations and year-earlier results.

Ford's total for the year was helped by a $1.3 billion profit at Ford Credit.

For the fourth quarter, Ford earned $868 million, or 25 cents per share, versus a loss of $5.9 billion a year earlier. Excluding special items Ford's quarterly earnings came in at 43 cents per share - well up from the around a quarter per share Wall Street had been looking for.

Ford executives - who previously had only predicted a profit for 2011 - now say the carmaker will be in the chips in 2010 as well, helped by signs of overall economic growth, their own cost-cutting, and projected higher prices for some models.

Ford - which in 2009 increased its total share of the domestic auto market by 1.1%, to 15.3% -- its first such market-share gain since the mid-1990s - expects to match that market share or even beat it in 2010.

With Ford's bonds trading higher, traders saw domestic arch-rival General Motors Corp.'s paper coming along for the ride as well. A trader said its benchmark 8 3/8% bonds due 2033 were "up a couple of points, on really good volume, seal size traded," at 28 bid, 28½ offered.

Another, however, saw those long bonds unchanged at 26¼ bid, 27¼ offered.

Pretty picture for Kodak

Another gainer, following good numbers, was Eastman Kodak; a trader said that its 7¼% notes due 2013 were up 3 points at 90 bid, 91 offered, following the release of the numbers.

At another desk, a trader saw those bonds as 4 point winners, quoting them having gone home at 91 bid, in active trading of more than $20 million, putting Kodak among the busiest junk bonds of the day.

Kodak - which has been struggling to gain a foothold in digital photography in order to replace lost sales from its dying traditional film-based photography business - beat Wall Street forecasts and posted its first quarterly profit in more than a year as it earned $443 million, or $1.40 a share, on the period - versus a year-ago net loss of $918 million or $3.42 a share.

Blockbuster again busy

A trader said that Blockbuster Inc.'s bonds were "still trading up a storm," with the 9% senior subordinated notes due 2012 trading around 26-27, while the Dallas-based movie rental company's 11¾% senior secured notes due 2014 were at 74-76.

He said of the latter issue that there was "a lot of volume - but I think it was unchanged to 1 point lower."

Another trader said that Blockbuster - whose bonds had bounced back on Tuesday, and again on Wednesday from the drubbing they had taken over the three previous sessions - "opened pretty strongly, but then went down. He saw the 9s finishing in a 26-27 context, after having gotten as good as 28 earlier, while its 113/4s ended at 75¼ bid, 76¼ offered, off from their peak at 76.

NewPage trades around

A trader saw "a lot of activity today" in NewPage Corp.'s 10% notes due 2012. He quoted the Miamisburg, Ohio-based coated paper manufacturer's bonds at 66-67, which he said "are up a bit from yesterday [Wednesday]," estimating the gain at about 3 or 4 points.

There was, he said, "a lot of volume" in the credit.

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