Georgia Pacific, Iron Mountain, Insight, Crown Castle deals price; funds see $325 million inflow

By Paul Deckelman and Paul A. Harris

New York, Dec. 4- Georgia Pacific Corp., Crown Castle International Corp., Iron Mountain Inc. and Insight Midwest Capital Corp. brought a quartet of upsized, quickly shopped deals to market on Thursday, taking advantage of favorable market conditions to opportunistically meet their financing needs. The Iron Mountain and Insight deals were add-ons to existing series of notes.

In all the hard-charging primary market saw $1.1 billion of dollar-denominated business transacted, Georgia-Pacific's 20-year bond that doubled in size to $500 million.

In the secondary market, Great Atlantic & Pacific Tea Co. debt was up on favorable credit facility news while Delta Air Lines gained some altitude on news that the air carrier's pilots offered to take a pay cut to help Delta rein in its labor costs - although the 9% cut they suggested is much smaller than what the airline is hoping to achieve.

Meantime, liquidity remains plentiful, with market participants familiar with the weekly mutual fund flow statistics compiled by AMG Data Services of Arcata, Calif. telling Prospect News that in the week ended Wednesday $324.7 million more came into the funds than left them. That follows the $425 million of inflows seen in the previous week, ended Nov. 26.

It was the fifth straight week in which more money entered the funds than left them, according to a Prospect News analysis of the AMG figures, and the 32nd week out of 48 since the beginning of the year. The latest week's inflow - which includes only those funds that report on a weekly basis and which excludes distributions - brings the year's cumulative inflow total to a hefty $19.276 billion, according to the analysis. By way of contrast, the cumulative inflow total just a year ago was some $7.876 billion.

Although mutual fund money represents a relatively small portion of the high yield universe, it is considered by market watchers to be a stable and reliable barometer of overall junk market liquidity trends.

"It just keeps coming," said one panting investment banker, referring to the most recent inflow.

"I think the stage is now set for us to make a run at the $140 billion record of 1998. We are currently right at $130 billion, and we see at least another five billion in the pipeline.

"But as you saw today, it's not what you can see coming, it's all of these drive-by deals.

"Last week people were saying that we would end up close to the 1998 record, but no cigar. Now it's anybody's guess whether or not we hit the mark."

Another sell-side source saw "$6 to $7 billion" in the pipeline, and said: "I think we may beat 1998.

"The year is wrapping up strong. We have a huge forward calendar for next week and we'll have some stuff pricing at the beginning of the following week. Then we're done.

"It all depends upon how people track their numbers," added the sell-sider, "but it will be close."

According to Prospect News data, $129.08 billion of dollar-denominated high-yield bonds have priced in the U.S. market so far this year. That includes $2.48 billion already this week.

Prospect News' figures do not go back to 1998, the all-time record year for junk bond issuance. News reports have previously quoted Thomson Financial as putting 1998's total at $138 billion while Merrill Lynch & Co. analysts have a global total of just over $140 billion.

The most eye-popping drive-by deal Thursday came from Atlanta-based paper maker Georgia-Pacific. It priced some of the longest paper to be sold in several years, sources said Thursday.

The company priced an upsized $500 million of senior notes due Jan. 15, 2024 (Ba3/BB+) at par to yield 8%, spot on to the 8% area price talk. The deal was increased from $250 million.

Citigroup, Deutsche Bank Securities and UBS Investment Bank ran the books.

One source told Prospect News late in the session that Georgia Pacific appeared to be the longest maturity to have priced since CalEnergy, Inc. sold $475 million of 30-year bonds (Ba1/BB+) on Sept. 17, 1998.

Another sell-side official, mulling the new Georgia-Pacific 20-year notes, said: "If you needed proof that this is a hot market, there it is.

"People are really starting to push now."

A buy-side source who spoke on background, however, was nonplussed.

"I can't blame a CFO for wanting to lock in long-term money right now," said the fund manager. "It makes common sense to me."

Another upsized, quick-to-market deal that priced Thursday came from Houston tower company Crown Castle International Corp. It sold an upsized $300 million of 7½% 10-year senior notes (B3/CCC) at 98.75 to yield 7.681%.

Price talk on the Morgan Stanley-led deal was 98.5-98.75 and it was increased from $200 million.

Iron Mountain Inc. priced an upsized $170 million add-on to its 6 5/8% senior subordinated notes due Jan. 1, 2016 (B2/B) at 96.50, resulting in a 7.06% yield to worst. The offering was raised from $160 million.

Bear Stearns & Co. ran the books for the Boston-based outsourced records and information management services provider's refinancing deal.

And Insight Midwest, LP and Insight Capital Corp. priced an upsized $130 million add-on to their 10½% senior notes due Nov. 1, 2010 (B2/B) at 108.75 to yield 8.039%, according to a market source, with Banc of America Securities running the books. The deal was increased from $125 million.

In Europe, Independent News & Media priced a quick-to-market €125 million of five-year subordinated notes at par to yield 8%.

Davy Stockbrokers ran the books for the international media group which operates primarily in Australia, Ireland, New Zealand, South Africa and the U.K.

Meanwhile the forward calendar continued to build, with two new roadshow starts coming into view during Thursday's session.

Viasystems Group Inc. begins the roadshow Friday for $200 million of six-year senior subordinated notes, which are expected to price on Dec. 12.

Goldman Sachs & Co. is the bookrunner for the deal from the St. Louis-based electronics manufacturing services company.

And Los Angeles chicken restaurant chain El Pollo Loco, Inc. will start a roadshow Monday for $110 million of six-year senior secured notes (B2), with pricing expected on Dec. 18 via Jefferies & Co.

Finally, iStar Financial Inc. reportedly upsized its senior notes offering (Ba1/BB+) to $400 million from $250 million by adding a $150 million 10-year tranche to its previously announced deal, with pricing expected on Friday morning.

The New York City-based commercial real estate finance company now plans to price $250 million of notes due 2010. Price talk is 6 1/8%-6¼%.

iStar also plans to price $150 million of notes due 2013. Price talk is 6 5/8%-6¾%.

Deutsche Bank Securities is the bookrunner on the public offering.

When the new Georgia Pacific 8% senior notes due 2024 were freed for secondary dealings, they were heard to have firmed to bid levels in the 101-101.5 range, up from their par issue price earlier in the session.

Back among existing issues, A&P's 7¾% notes due 2007 were quoted late in the day having moved up to 89 bid, a trader said, following the news that the Montvale, N.J. supermarket operator had extended and amended its $400 million senior secured revolving credit facility. The facility has been extended to provide an additional 2½ years and will now expire in December 2007.

In its statement announcing the development, A&P said that the amended facility "provides the company with greater operating flexibility and provides for increased capital spending provided availability under the facility exceeds specified amounts." It said that there are no financial covenants as long as availability under the facility exceeds $50 million.

That positive news, the trader said, bumped the bonds up two points to their closing level from 87 bid, 88 offered pre-news, and likewise pushed A&P's 9 1/8% notes due 2011 up to 88 bid from 86.5, although the 7¾% notes "are the real bellwether for them."

Also in the retailing area, major store chains reported their November same-store or comparable-store figures, and Gap Inc. reported that sales at its stores open at least a year were up 6% in November versus year-earlier levels; analysts had been expecting sales at the San Francisco-based operator of the Old Navy, Banana Republic and the eponymous Gap chains to have risen about 4%.

Also reporting better sales was Saks Inc., which had a 6.7% rise in November comps, around double what Wall Street was expecting from the Birmingham, Ala.-based department store operator.

The trader quoted Saks' 7½% notes due 2010 as having firmed to 109 bid from 108, while seeing Gap's 6.90% notes due 2007 at 110.5, up from 109.75, although he said, especially of the latter name, "it's hard for them to trade up, they're already at such a high premium [above par]."

He further saw JC Penney Co. debt "stronger again," despite the news that the Plano, Tex.-based department store operator's November comparable-stores sales actually fell 0.8%, around double what the Street was looking for.

Another trader saw little movement in the bonds of the retailers, opining that he "can't imagine any of them going much higher," given the extremely tight levels at which names like Saks, Penney and Gap already trade.

Elsewhere, a market observer saw Magellan Health Services Inc.'s bonds smartly firmer Thursday despite a lack of fresh news out on the Columbia, Md.-based provider of behavioral managed care services; he quoted Magellan's 9% notes as having firmed to 73.5 bid from 69 previously, while its 9 3/8% notes due 2007 advanced to 111.5 bid from 109, although the bonds are trading flat., or without accrued interest.

A trader saw Delta Airlines' 10% notes due 2008 as having risen as high as 86 bid from prior levels at 84 before coming off that peak to end at 85 bid, 85.5 offered, still up a point on the session, following news that the Atlanta-based airline carrier's pilots have offered to take a 9% pay cut.

But while that's progress of a sort as Delta tries to trim its labor cost, the company and the union representing its 8,500 pilots remain far apart; earlier this year, Delta asked the pilots to accept a 22% cut in hourly pay and give up scheduled 4.5% raises for 2003 and 2004.

Even with the gap, however, the trader said that the Delta bonds were up and airline paper generally was up around half a point across the board. He also saw America West's thinly traded 10¾% notes due 2005 up even more than that, finishing at 95 bid, up from 90 previously.

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