CIT bonds boosted by new credit line; R.H. Donnelley quiet, Idearc gaining ground; Charter slips

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., June 9 - News of new financing boosted CIT Group Inc.'s paper during Monday trading.

Traders saw the company's longer-dated issues firm by as much as 2 points on the day after the company said it received $3 billion in financing from Goldman Sachs. Its short paper, however, ended the session unchanged.

In other refinancing news, R.H. Donnelley Corp. announced it extended the tender deadline on its exchange offer. But investors did not seem interested one way or another, and traders across the board called the company's debt quiet. Sector peer Idearc Inc., however, saw its bonds trade more actively, inching their way upward.

Meanwhile, Charter Communications Inc.'s bonds slipped during trading. The bonds had experienced a steady run-up last week and one trader speculated that profit-takers were taking advantage.

Monday's primary market session saw terms emerge on a portion of the backlog of hung high yield bridge loans.

Sequa notes priced

Underwriters, who last week announced they would transform the Sequa Corp. bridge into securities, priced approximately $711.4 million of Sequa senior notes due Dec. 1, 2015 (Caa2/B-) in two tranches on Monday.

A $500 million tranche of 11¾% senior cash pay notes priced at 91.731 to yield 13¾%, 12.5 basis points beyond the wide end of the 13½% area price talk.

Meanwhile an approximately $211.4 million tranche of 13½% senior PIK notes priced at 95.23 to yield 14¾%, on top of price talk which had the PIK notes coming 100 basis points behind the cash pay notes.

Lehman Brothers, Citigroup and JP Morgan were joint bookrunners.

Proceeds will be used to refinance the bridge loan facility which put in place to help fund the LBO of Sequa by Carlyle Group.

Sotheby's split-rated deal

Elsewhere on Monday, Sotheby's launched a split-rated deal which will be transacted off the high yield desk.

The art auction company will begin a brief roadshow on Tuesday for its $150 million offering of seven-year senior notes (Ba3/BBB-).

Banc of America Securities and Goldman Sachs & Co. are joint bookrunners for the non-callable notes.

Proceeds will be used to finance the acquisition of Sotheby's York Avenue property in New York and to redeem its $100 million of existing 6 7/8% notes due 2009.

Sotheby's will concurrently offer $150 million of convertibles due 2013.

It expects to use some of the bond proceeds and a portion of the proceeds from the warrants to fund convertible note hedge transactions. Any remaining proceeds will be used for general corporate purposes.

Broad market softer; traders blame market gyrations

The CDX Index "didn't have such a good day," a trader remarked, as the junk bond indicator fell ¼ point to 95 5/8 bid, 96 offered.

The KDP High Yield Index was likewise softer, falling 5 bps to 75.46 with a 9.35% yield.

Both market gauges exemplified what sources across the board were saying: Monday's junk sector was indeed softer. Some opined that Friday's nearly 400 point loss in the stock market caused investors to wait and see what the day would bring. As a result, trading volumes were considerably low.

"It was an extremely quiet day," said one trader. "It all came to an abrupt halt Friday morning."

The trader said that as Thursday's market closed, the market was still "bullish," with "incredible momentum."

"It is amazing what one day does," the trader added.

But another source speculated that Friday's breakdown was just a symptom of a bigger problem. Investors, he said, have "no idea" what is going on, as the equity markets gyrate all over the place and negative news floods the wires.

"Then there is some positive news that shouldn't really do anything but does, simply because it is positive," he said.

A trader also added that speculation and disclosure of more troubles at Lehman Brothers could have diverted attention away from high yield.

"There is very little in terms of flow," he said. "Nobody's chasing anything up, nobody's chasing anything down."

CIT boosted by new credit line

News of a new credit line with Goldman Sachs boosted CIT Group's longer-dated issues, traders reported.

One trader called the 5% notes due 2015 "up a solid point or 2" at 80.5 bid, 81.5 offered, up from Friday levels around 79.75. Another trader called that up 1 to 1½ points, "relative to Friday," while another pegged the bonds at 81 bid, 81.5 offered.

"There was significant volume [in that issue]," he said, especially for a day like Monday.

At another desk, a trader deemed the 5.40% notes due 2013 up 2 points at 82.5 bid, 84.5 offered.

But shorter-dated paper ended unchanged, according to one source. Issues, such as the 3.13% notes due 2008, closed at "98 and change," he said.

"The short-dated paper is not going to move that much," he said. "But it looks like the longer-dated paper got a boost."

CIT received $3 billion in financing from Goldman Sachs Monday - just a few months after the company had to increase emergency credit lines due to liquidity issues. As of last week, CIT had $8.1 billion in unsecured term debt, as well as $2.1 billion in bank debt.

"We view this transaction as another important milestone in achieving our desired financing profile," Jeffrey Peek, CIT's chief executive, said in a statement.

CIT is a New York-based lender.

R.H. Donnelley quiet, Idearc better

R.H. Donnelley said Monday it would extend its deadline for an exchange on its 11¾% notes due May 15.

Despite the news, the online and phonebook directory publisher's corporate debt was rather quiet. One trader said he had seen nothing since June 3, while another called the name "very, very quiet."

Elsewhere, a trader saw the 8% notes due 2013 at 79.5, unchanged from late last week. Another trader pegged the issue at 79 bid, 80 offered, also unchanged.

But as R.H. Donnelley's bonds held steady, sector rival Idearc saw its debt gaining.

One trader called Idearc's 8% notes due 2016 "marginally up" at 72.25 bid, 72.75 offered, versus opening levels of 72 bid, 72.5 offered. Another source said there was "a little action" in the name, placing the notes around 72, "about where they were."

At another desk, a trader called the paper up a point at 71.75 bid, 72.75 offered, though another called the bonds unchanged at 71.5 bid, 72.5 offered.

Charter slips on profit-taking

Profit-takers were blamed for softness in Charter Communications' paper Monday.

A trader called Charter's debt "a touch softer" on profit-taking, "coupled with softness in the market," its 11% notes due 2015 around 87 and its 9.92% notes due 2014 at 69.5 bid, 70 offered.

Another trader called the 9.92% bonds down 2 points at 68 bid, 70 offered. But another source saw the 8% notes due 2012 gain ¼ point to close at 99 bid.

Last week, Charter's bonds steadily climbed higher, though there was no news to prompt the move. Traders speculated that investors were beginning to become more comfortable with the credit and were starting to think that the company could manage a turnaround.

Charter Communications is a St. Louis-based telecommunications provider.

Benchmarks, new issues mixed

A trader said General Motors Corp. ended the session unchanged, while Ford Motor Co.'s 7.45% notes due 2031 fell ½ point to 65 bid, 66 offered.

But another source called GM's 8 3/8% notes due 2033 better by ½ point at 68 bid, 69 offered. GMAC LLC's 8% notes due 2031 were unchanged at 74.5 bid, 75.5 offered.

However, the trader agreed that Ford's debt was down, pegging the 7.45% notes at 66 bid, 67 offered, a point softer.

Harrah's Operating's 10¾% notes due 2016 ended unchanged at 86 3/8 bid, 86.5 offered.

A trader said Alltel Corp.'s 7% notes due 2012 were likewise unchanged at 104 bid, 104.25 offered.

Rite Aid Corp.'s 9 3/8% notes due 2015 closed at 77.25, while the 8 5/8% notes due 2015 ended at 77.25 bid, up nearly a point.

Among new issues, Ply Gem Industries Inc.'s 11¾% notes due 2013, priced last week at 99.072, closed at 97.5 bid, 98 offered. On the other hand, Airgas' 7 1/8% notes due 2018 moved up to 101.5 bid, 102 offered, versus the par issue price.

"Airgas is a very strong credit, while Ply Gem is related to homebuilding," a trader said. "Hence the difference in direction."

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