Upsized Calpine, Linn price; Cellu Tissue, Gibson slate deals; Lear lifted, Sprint struggles

By Paul Deckelman and Paul A. Harris

New York, May 12 -The high yield new-deal machine rolled on without interruption on Tuesday, as quickly shopped offerings came to market from Calpine Construction Finance Co. LP/ CCFC Finance Corp. and LINN Energy, LLC while Ameristar Casinos, Inc. moved up pricing on a deal that came to market after a brief roadshow.

Prospective offerings from Cellu Tissue Holdings Inc., Gibson Energy Ltd and a split-rated deal from Wyndham Worldwide Corp. replenished the forward calendar.

The new Calpine and LINN deals priced too late in the session for any meaningful aftermarket dealings. Meanwhile, the offerings from Range Resources Corp. and SandRidge Energy Inc. that priced on Monday were seen by traders to have pretty much held around their respective issue prices, in contrast to some of the deals that priced last week and which then shot up by multiple points, among them being Goodyear Tire & Rubber Co. The latter company's new bonds were seen continuing to back away from the highs they had hit after pricing.

Among the established issues, the market's heavier tone seen Monday seemed to persist; among the notable laggards was Sprint Nextel Corp. bonds, although there was no fresh negative news out on the Overland Park., Kan., wireless operator.

Among the relatively few strong upsiders was Lear Corp., whose bonds jumped, though its stock got dumped, ahead of Thursday's release of quarterly earnings and a much-anticipated conference call by company executives. Also in that same automotive parking lot, Ford Motor Co.'s bonds continued to cruise higher even though its shareholders reacted negatively to the company's plan for a big stock sale to fund its union health plan obligations.

Junk traded lower on Tuesday, sell-side sources said.

Cash bonds were down ¼ point, a syndicate source reckoned.

However another banker from a different high-yield syndicate said that the more liquid names were as much as ½ to 1 point lower in Tuesday trading.

$1.75 billion priced

In the primary market, meanwhile, three issuers each brought a single tranche of bonds. The combined face amount for the session came in at $1.75 billion

Two of the deals priced in the middle of yield talk, while the third came at the wide end.

Meanwhile the dealers rolled out two new junk deals that will roadshow into next week. Co-issuers Gibson Energy ULC and GEP Midstream Finance Corp., newcomers to the market, as well as Cellu Tissue Holdings, Inc. launched offerings on Tuesday.

And three more deals - one a drive-by and two for the road - will be announced Wednesday morning, a banker confided, but declined to furnish names or sectors.

Calpine prices $1 billion

Calpine Construction Finance Co. LP and CCFC Finance Corp. completed Tuesday's biggest deal, an upsized $1 billion issue of 8% seven-year senior secured notes (B1/BB-) that priced at 95.488 to yield 8 7/8%.

The yield was printed in the middle of the 8¾% to 9% yield talk while the issue price came slightly rich to the discount talk of approximately 5 points of original issue discount.

The deal, which was upsized from $800 million, went well but was not as strongly oversubscribed as issues that priced in the recent past, an informed source commented.

Morgan Stanley was the lead bookrunner for the debt refinancing. Credit Suisse, Deutsche Bank Securities and Goldman Sachs & Co. were joint bookrunners.

Ameristar moves up pricing

Meanwhile Ameristar Casinos priced a slightly restructured $500 million issue of 9¼% five-year senior unsecured notes (B2/B+) at 97.097 to yield 10%.

The yield came on top of yield talk while the issue price came slightly richer than the price talk of 3 to 4 points of original issue discount.

A lot of accounts came into the deal at 10%, the source said.

Pricing was moved up to Tuesday afternoon from Wednesday due to demand that surfaced at 10%. Timing was also moved up due to the company's sensitivity to market risk.

The notes traded up 1½ points in the aftermarket, the source added.

Banc of America Securities LLC, Wachovia Securities and Deutsche Bank Securities were joint bookrunners for the debt refinancing.

Call protection was increased to 2.5 years from two years. The notes become callable on Dec. 1, 2011 at 104.625.

Linn Energy upsizes

Linn Energy Finance Corp. priced an upsized $250 million issue of 11¾% eight-year senior unsecured notes (B3/B-) at 95.081 to yield 12¾% on Tuesday.

The deal, which was upsized from $200 million, came at the wide end of the 12½% to 12¾% price talk.

The issue, also a debt refinancing, was oversubscribed, and went well, according to the source.

Citigroup, Barclays Capital, BNP Securities, Calyon Securities, RBC Capital Markets and RBS Greenwich Capital were joint bookrunners.

Gibson Energy launches high-yield debut

Gibson Energy and GEP Midstream Finance Corp. will begin a roadshow on Wednesday for their $545 million offering of five-year first-lien senior secured notes.

It is the Calgary, Alta.-based midstream energy company's first junk deal, market sources say.

The roadshow ends May 20, with pricing expected the same day.

UBS Investment Bank is left bookrunner. RBC Capital Markets and RBS Greenwich Capital are joint bookrunners.

Credit ratings remain to be determined.

Proceeds will be used to refinance outstanding bridge loans used to fund Gibson Acquisition ULC's purchase of outstanding class A and class B common shares of Gibson Energy Holdings from Hunter plc.

Cellu Tissue starts roadshow

Cellu Tissue Holdings began a roadshow on Tuesday for its $230 million offering of five-year senior secured notes (expected ratings B2/B).

The roadshow wraps up on May 19, with pricing set for May 19 or May 20.

JP Morgan has the books for the debt refinancing and general corporate purposes deal from the Alpharetta, Ga.-based converted tissue and tissue hard roll producer.

With Gibson Energy and Cellu Tissue both launching roadshows, plus two more roadshow deals expected to be announced on Wednesday, sources noted that the investor roadshow, which seemed like a bad idea amid the capital markets volatility of 2009's first quarter, seems to be making something of a return.

Monday deals stay around issue levels

The new Calpine and Linn Energy deals both priced late in the session - way too late for any kind of aftermarket activity.

There was trading in the two new issues that came to market during Monday's session, for Range Resources and SandRidge Energy - but not a whole lot of movement in either of them.

"The new issues are definitely drifting lower," a trader said. "These things aren't flying out."

He saw Fort Worth, Tex.-based independent oil and natural gas exploration and production operator Range Resources' new 8% notes due 2019 trading into a 96 bid, which left the bonds at 95¾ bid, 96 offered.

The company had priced $300 million principal amount of the bonds on Monday at 95.067 to yield 8¾%.

At another desk, a trader quoted the bonds at 95½ bid, 96 offered.

The first trader meantime saw SandRidge Energy's 9 7/8% notes due 2016 at 95 3/8 bid, 95½ offered.

The Oklahoma City-based oil and gas operator had priced $365 million of its bonds, upsized from the originally planned $300 million, at 95.773, to yield 10¾%.

Another trader saw the new bonds at 95½ bid, 95¾ offered, and noting the fact that those bonds, and the Range Resources paper, had stayed in a narrow range not far from the bonds' respective issue prices, agreed with the suggestion that the two deals had been "appropriately priced" - unlike some of the prior week's deals, which quickly firmed by several points, movement that was taken by some market participants as a sign that those latter deals may have been priced too cheaply.

Goodyear trading down from its peak

One such offering was from Akron, Ohio-based tiremaking giant Goodyear, whose $1 billion of new 10½% notes due 2016 - doubled in size from the $500 million initially shopped around - had priced last Wednesday at 95.846 to yield 11 3/8%. After that, the bonds quickly pushed up to above the 99 bid level by Thursday afternoon, although they started to come down from that zenith later on that session, and have continued to ease off that peak since then.

Goodyear, one of the traders said, "keeps coming in - it keeps weakening." He quoted the bonds Tuesday at 97½ bid, 98, noting that "we traded those bonds last week at 99¾ bid, par offered."

Another trader saw those bonds trading in round-lots at 971/2, which he said was unchanged from similar big-block trades seen on Monday, with $11 million of the notes changing hands.

A market source at another desk saw the new Goodyears bouncing around, including at levels as high as 101, up more than 1 5/8 in intraday dealings - but noted that the bonds had risen that high mostly on smaller odd-lot pieces thought to be not really reflective of the true market. The source saw the bonds come down from those intraday peak levels to end around 981/2, but again, in odd-lot trades late in the day.

Nalco bonds not retreating

Not all recent new-issue paper was necessarily giving up its initial aftermarket gains. Naperville, Ill.-based water treatment technology provider Nalco Holding Co.'s new issue of 8¼% notes due 2017 were seen by a trader continuing to hold to the high levels to which the $500 million of new bonds had moved after pricing last Wednesday at 97.863 to yield 8 5/8%.

Those bonds also firmed to levels above par, but unlike the Goodyears, the Nalco paper has hung in there, quoted offered at 101 with no bid. He opined that "I guess they placed [the new deal] very well," meaning to investors who would hang onto the bonds, "rather than putting it to flippers" who would look to sell out once they had made their profit, pushing the bonds lower.

Market indicators seen mixed

Back among the established issues, a trader saw the CDX Series 12 High Yield index - which lost 3/8 point on Monday - down ¾ point to finish Tuesday at 80½ bid, 81 offered.

However, the KDP High Yield Daily Index, which had fallen by 25 basis points on Monday, meantime rose by 4 bps on Tuesday to end at 60.63, while its yield narrowed by 1 bp to 11.21%.

After having trailed on Monday by a six-to-five ratio, advancing issues regained their lead over decliners, though only by a narrow margin.

Overall market activity, measured by dollar-volume totals, rose by 32% from Monday's levels.

"There was not a whole lot going on," said one of the traders, who noted that many of the most active issues were on the downside, some by several points. Among these, he said, was Citigroup's 8.30% subordinated preferred hybrid deal. He saw the New York-based banking giant's Baa3/CC rated paper as having eased to 84 bid, from 87, with $26 million traded.

Other active issues pushed lower, he said, included such names as Toll Brothers Inc.'s 8.91% notes due 2017, which lost ¾ point to end at 1001/4, on $22 million of volume, as well as Bausch & Lomb Inc.'s 9 7/8% notes due 2015, off nearly 2 points at 891/4, on $10 million traded.

Rite Aid Corp.'s 7½% notes due 2017 fell 1½ points to 71½ bid, on $19 million and its 6 7/8% notes due 2013 lost 2 points to end just below 52, while frequent active mover Freeport-McMoRan Copper & Gold Inc.'s floating-rate notes due 2015 dropped 3 points from their levels on Friday, when they last traded, down to 87½ bid, on $13 million.

However, the Phoenix-based metals mining company's 8 3/8% notes due 2017 "were the exception to the rule," the trader said, seeing them 5/8 point better at 98 1/8, on $9 million traded,

Wireless operator gets whacked

He also said that "it looks like a couple of Sprint issues may have gotten smacked," seeing its 6 7/8% notes due 2013 dip to 79 5/8 bid from 81½ on $10 million traded, while its 6 7/8% notes due 2028 dropped to 67¼ bid from 691/2, on $9 million of volume.

There was no fresh negative news seen out about the company, which held its annual shareholders' meeting on Tuesday. As expected, the shareholders voted in line with the company most of the proposals they were given, including the election of 10 directors nominated by the company. However, by an overwhelming margin - 77% to 23% - those shareholders also defied management's recommendations and voted for a measure that would give holders of 10% of the outstanding shares the power to demand and get a special meeting - a sign that the underperforming company's holders want more say in running Sprint.

Lear lifted on no news

Another company whose bonds were moving around fairly actively, though on no news - at least not yet - was Southfield, Mich.-based automotive components maker Lear Corp.

A market source saw its 5¾% notes due 2014 up by some 7 points on the day to the 35 bid mark, in busy dealings of more than $12 million by mid-afternoon, while its 8¾% notes due 2016 were up 4½ points, also to that same mid-30s region.

A source at another desk also saw the 53/4s at 351/2, but called that only a 4 point rise.

While those bonds were firming - perhaps on investor belief, or hopes, that Lear may have positive news to report about its ongoing restructuring talks with its lenders when it releases its quarterly results and then holds a conference call on Thursday morning - Lear's shareholders shared no such optimism. They took its New York Stock Exchange-traded shares down 65 cents, or 27.08%, to end at $1.75, on volume of 11.7 million shares - over three times the usual turnover.

Lear has been in talks with the lenders since mid-March on restructuring its debt as it seeks to avoid being pushed into bankruptcy by the problems of the auto industry the way some sector peers have been - supplier Hayes Lammerz International Inc., for instance, became the latest victim of the downturn, filing for protection late Monday.

Ford remains firmer

Also in the autosphere, a trader said that General Motors Corp. was "barely breathing, well in the single digits, on a little bit of volume." He saw the benchmark 8 3/8% bonds due 2033 "down a little" on the day to a 5-ish level. The bonds have been gradually eroding on increasing signs that the once-mighty top carmaker in America may be forced to join smaller rival Chrysler LLC in bankruptcy.

On the other hands, GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were in a 55-57 range and "ended at the high," around 57, which the trader called up a point.

Another trader saw the Dearborn, Mich.-based Number-Two U.S. car producer's long bonds at 57½ bid, up from 55 7/8 previously with $4 million having traded.

The Ford bonds began the year trading in the high 20s, but have since moved steadily upward, helped by its successful debt swap, which substantially reduced its outstanding indebtedness, as well as being helped by investor relief that Ford has not been forced to follow the larger GM's path; alone among the traditional "Big Three," Ford has not required emergency assistance from the federal government.

Ford late Monday announced plan to bolster its finances by selling at least 300 million, and possibly as many as 345 million common shares. After the close Tuesday it priced 300 million shares at $4.75 each for a total of $1.4 billion. Ford plans to use much of the money to make a required payment into a union healthcare fund, with the rest earmarked for general corporate purposes.

While Ford's bondholders continued to feel they're in the driver's seat, many of Ford's shareholders opted to hop out, feeling their ride was getting too bumpy, especially with the company's plan to massively dilute their holdings with its new stock sale. Ford's NYSE -traded shares slid $1.07, or 17.60% percent, to $5.01, on volume of 217 million - about three times the norm.

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