GXS, two more price; hugely upsized Clear Channel to come; Rite Aid up; funds add $415 million

By Paul Deckelman and Paul A. Harris

New York, Dec. 17 - The still somewhat outsized high yield forward calendar shrank a little further on Thursday with the pricing of three more issues totaling $1.235 billion - but the big news in the primary arena was the massive upsizing of Clear Channel Worldwide Holdings Inc.'s much-anticipated and already sizable offering of eight-year senior notes, as the Texas-based media company more than tripled the size of its prospective issue, to $2.5 billion from the originally announced $750 million, considering using the extra proceeds to repay term loan debt, according to a regulatory filing. That deal is now expected to price on Friday, and unofficial guidance on the offering circulated late Thursday.

Meanwhile, the company's existing bonds continued to trade busily and move higher, as they have for all of the past week.

Away from Clear Channel, new deals priced for GXS Worldwide Inc., United Maritime Group, LLC/United Maritime Group Finance Corp. and TriMas Corp. The new bonds were seen trading around their respective issue prices, or at best, slightly higher. That was also the case with Wednesday's mega-deal offering from McJunkin Red Man Inc. Meanwhile, Edgen Murray Corp.'s new seven-year senior secured bonds were trading a point or more below their Wednesday pricing level.

Price talk was heard on P2021 Rig Co. (Vantage Drilling Co.)'s planned issue of senior secured notes due 2013, which is expected to price on Friday morning. Also expected to price on the last trading session of the last full week of the year - and probably, some participants say, the last day for getting anything really serious done before the traditional year-end wind-down begins - are offerings from Geokinetics Holdings, Inc., Birch Communications, Inc. and, possibly, Formation Metals Inc.

Away from the new-deal sphere, Rite Aid Corp.'s bonds were better after the big drugstore chain operator reported a third-quarter loss that was both less than the year-ago red ink, and smaller than Wall Street was expecting.

CIT Group Inc.'s new bonds - which had been trading mostly firmer, in brisk activity, ever since those bonds were issued when the company emerged from Chapter 11 a week ago -- finally turned lower Thursday.

From among the deeply distressed credits, Six Flags Inc.'s bonds were seen continuing on their week-long tear, their rise apparently fueled by a favorable court ruling last week regarding the exit financing when the amusement park operator emerges from bankruptcy.

Although all the major U.S. stock indexes fell by 1%-plus on Thursday, junk bonds remained generally firm, according to a high-yield syndicate official

The rally in junk is almost certainly going to push into the new year, a mutual fund manager said.

Junk funds up $415 million

As trading was wrapping up for the day, 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 $415 million more came into the weekly-reporting funds than left them.

The latest week's inflow was the 17th consecutive advance, and followed the $324.088 million cash inflow seen in the previous week, ended Wednesday, Dec. 9, leading a secondary trader to characterize the continued inflow trend as "unbelievable." During that stretch, dating back to mid-August, inflows have totaled $5.812 billion, according to a Prospect News analysis of the AMG figures.

It was also the 24th week in the last 25 in which inflows were seen, dating back to mid-June. Some $8.241 billion of net inflows have been seen during that stretch, according to the Prospect News analysis - a run interrupted only by a lonely $89.9 million outflow recorded in the week ended Aug. 19.

With the end of 2009 now in sight, inflows, including the latest weekly gain, have been seen in 45 weeks out of the 50 since the start of the year, according to the analysis, against just five outflows - the Aug. 19 retreat, a $110 million outflow in the week ended June 24, and three weeks of outflows in late February and early March, totaling $969 million. The inflows, on the other hand, include an incredible 14-week run of consecutive gains, dating from mid-March through mid-June, during which time the funds grew by a record $9.1 billion.

Counting the latest week's number, the year-to-date net inflow for the weekly reporting funds rose to $19.825 billion, according to the analysis - a new peak level for the year so far, eclipsing the old mark of $19.41 billion recorded the previous week. Funds which report on a monthly basis, rather than weekly, have meantime seen a year-to-date inflow topping $12 billion. Consolidating the data from the weekly and the monthly reporters, aggregate inflows for the year so far total nearly $32 billion, a market source said.

Such sustained inflows have helped the junk market come roaring back from last year's staggering 25%-plus loss and sharply reduced primary activity totals. Total returns so far this year totaled an eye-popping 56.053% as of Wednesday's close, according to the authoritative Merrill Lynch High Yield Master II index - a new peak level for 2009, handily beating virtually every other major investment asset class.

Meanwhile, the $156.1 billion of new dollar-denominated high yield debt issued in the U.S. market so far this year, as of Wednesday's close - $125.275 billion of it from domestic issuers - is running some 115.45% ahead of the feeble pace of last year's overall primary tally, according to statistics compiled by Prospect News. Domestic-borrower new issuance is 109.26% ahead of its year-ago levels. Industrialized country global issuance in all major currencies of $170.763 billion equivalent is a blistering 164.63% ahead of last year's pace.

EPFR sees inflows resume

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, which uses a different methodology, calculated a $458 million inflow on the week, extending the trend seen the Dec. 9 week, when it had reported a $359 million cash infusion.

That inflow brought the year-to-date cumulative total up to $22.53 billion from the $22.07 billion seen the previous week, EPFR said, boosting that total to both a new 2009 peak - eclipsing the old mark, set the week before. EPFR's analysts note that cumulative inflows are at record levels.

While the EPFR junk figures most weeks point essentially in the same direction as AMG's, the precise weekly and year-to-date numbers almost always differ somewhat due to EPFR's inclusion of some non-U.S. funds in its universe. Any and all 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.

'09 to go out with a bang

In Thursday's primary market action Clear Channel Worldwide Holdings Inc. massively upsized its planned notes offer to $2.5 billion from $750 million on Thursday, sources say.

The unofficial yield guidance is 8½% to 8¾%, at a discount, a source added.

The deal, which is expected to price on Friday, will likely be among the last transactions to clear the market in the run-up to the new year, sources said Thursday.

The original $750 million deal was to be comprised of $600 million of series A notes and $150 million of series B notes.

Tranche sizes of the upsized deal remain to be determined.

Goldman Sachs & Co., Citigroup Global Markets Inc., Credit Suisse Securities, Deutsche Bank Securities Inc. and Morgan Stanley & Co. are joint bookrunners.

Proceeds will be loaned to Clear Channel Outdoor Holdings Inc., which will use the funds to repay debt owed to Clear Channel Communications, Inc.

Clear Channel Communications is considering using proceeds from the upsizing to repay term loans at par in addition to repaying an intercompany note, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

A runaway freight

News of the Clear Channel deal has caused the company's entire capital structure to run up significantly, sources said Thursday.

The Clear Channel Communications 11% PIK toggle notes due 2016 "have absolutely skyrocketed," a capital markets banker said.

"It has been a runaway freight train," the banker asserted, estimating that those bonds, along with the rest of Clear Channel's capital structure, are up 12 points in the past week, on ridiculous volume.

On Dec. 10 they were trading in the 60s, touching 61, the source recounted.

On Wednesday they were in the mid-70s, then traded off somewhat.

However, around the time the news of the deal's upsizing began to circulate, the bonds caught fire, and were trading around 74 bid, 75 offered, back to the Wednesday highs.

GXS upsizes

In Thursday's primary market action, GXS Worldwide, Inc. priced an upsized $785 million issue of 9¾% 5.5-year notes (B2/B) at 97.948 to yield 10¼%.

The yield printed on top of price talk. The deal was increased from $750 million.

Barclays Capital Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to repay bank debt, as well as for general corporate purposes. Proceeds will also be used to fund the cash portion of the merger with Inovis and to refinance Inovis debt. Proceeds from the upsizing will be used to redeem holding company notes.

TriMas tight to talk

Meanwhile TriMas Corp. priced a $250 million issue of 9¾% eight-year senior secured notes (Caa1/B-) at 97.992 to yield 10 1/8%.

The yield printed at the tight end of the 10 1/8% to 10 3/8% yield talk. The issue price came toward the rich end of the 2 to 3 points of discount talk.

Credit Suisse, Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and Jefferies & Co. were joint bookrunners for the debt refinancing deal.

United Maritime prices at tight end

Elsewhere, United Maritime Group, LLC and United Maritime Group Finance Corp. priced a restructured $200 million issue of 5.5-year senior secured notes (B3/B) at par to yield 11¾%, on Thursday, according to an informed source.

The yield printed at the tight end of the 11 7/8% area yield talk.

The tenor of the notes was decreased to 5.5 years from seven years. Call protection was decreased to three years from four years.

Jefferies & Co. Inc., Bank of America Merrill Lynch and Wells Fargo Securities LLC were joint bookrunners for the debt refinancing.

Vantage Drilling sets talk

P2021 Rig Co., a financing unit of Vantage Drilling Co., talked its $135 million offering of senior secured notes due 2013 with a 13½% coupon, at an issue price of 97.00, on Thursday.

Pricing is set for Friday morning.

Jefferies & Co. has the books for the acquisition deal.

Elsewhere, for Friday, in addition to Clear Channel and Vantage Drilling, Geokinetics Holdings, Inc. plans to price a $275 million offering of five-year senior secured notes (B2/B).

The notes are talked to yield 10% to 10¼%, and to price with 1 to 2 points of original issue discount.

RBC Capital Markets Corp. is the lead bookrunner for the acquisition-funding and debt refinancing deal.

Day's new bonds stay near issue

When they were freed for secondary dealings, traders saw the bonds which had priced during the session mostly holding either right at their respective issue prices, or perhaps slightly above them.

The big deal of the day was GXS Worldwide's $785 million issue of 9¾% senior secured notes.

A trader said the bonds traded at 97 7/8 bid, 98 3/8 offered. "They looked like they were bid for right around the issue price, so they're barely hanging in."

Another trader saw no dealings in the Gaithersburg, Md.-based e-commerce company's new issue.

A trader saw TriMas Corp.'s new 9¾% senior secured notes trading at 98¼ bid, 98¾ offered soon after pricing, before finally going home quoted at about 98 bid, 98½ offered. The Bloomfield Hills, Mich.-based diversified manufacturer priced its $250 million offering earlier in the session at 97.992.

Another trader saw them in a 981/4-98¾ range all day, "but they traded into a 98 3/8 bid at the end of the day - but they're still above the issue. I don't think they're extremely active."

A trader saw United Maritime Group's 11¾% senior secured notes trading soon after they priced at levels as tight as 100¾ bid, 101¼ offered, before retreating later in the day to 100½ bid, 101 offered. That was up just modestly from the par level at which the Tampa, Fla.-based dry-bulk cargo shipping company had priced its issue.

McJunkin stays around issue

A trader quoted McJunkin Red Man's $1 billion offering of 9½% senior secured notes due 2016 trading in a narrow 971/2- 97 5/8 context. He said that the Tulsa, Okla.-based pipe and valve manufacturer's mega-deal - which on Wednesday had priced at 97.533 to yield 10% and then traded up to a 98 bid - opened on Thursday at 97 3/8 bid, 97 7/8 offered.

"They kind of stayed inside that context most of the day," he said, before tightening to the 97½ bid, 97 5/8 offered level.

Edgen Murray edges downward

While most of the other new or recently priced paper seemed to be pretty much running in place on Thursday, Edgen Murray's 12¼% first-lien senior secured notes due 2015 were actually losing ground.

A trader saw the Baton Rouge, La.-based industrial steel products distributor's bonds having opened at 98 bid, 98½ offered, and then having retreated to 97½ bid, 98¼ offered - well down from the 99.059 level at which the $465 million issue, restructured from a seven-year bond to a five-year, had priced on Wednesday to yield 12½%.

It was, he said with no little understatement, "not one of your better investments for year-end."

Another trader said the bonds opened at 97 7/8-98 7/8, then "someone put in a 98 3/8 bid, and then it kind of died."

"It was a decent sized deal, too." He said. "It's just that the market was soft in sympathy with the equity market, which seems strange, because you still had a pretty decent inflow week."

Aquilex all over the place

A trader saw Aquilex Holding's $225 million issue of 11 7/8% notes due 2016 offered at 99½ -- but he warned that was the only quote he had seen on the bonds, which had been quoted on Wednesday after pricing at 97 bid, "so I really couldn't tell you where the market is on this one."

The Atlanta-based chemical and energy infrastructure services company priced its bonds on Wednesday at 95.948 to yield 12%

'Running out of gas'

A trader said that it appeared to him that [junk] "is finally running out of gas. There's still cash out there, but people are just tired right now. "

He opined that "the activity on Trace right now seems to be pretty plain vanilla-type stuff."

Clear Channel clearly the busiest

Away from the bonds which had actually come to market by Thursday's close, with the pricing of Clear Channel's hugely upsized deal now imminent, after a week of anticipation in Junkbondland, the San Antonio, Tex.-based broadcasting and outdoor advertising company's existing paper continued to trade very actively, as it has for the past week, with the bonds continuing to nose higher, traders said.

One saw "a lot of activity or quoting in them," seeing the 10¾% notes due 2016 trade as low as 77 bid and as high as 811/2, "on pretty good volume" estimated to be at least $25 million, mostly in round-lot transactions. He said that throughout the day, after their weak opening, "they kind of moved their way up" to as high as 81½ before easing slightly from that peak to end at around 81¼ bid, where "a couple of million traded," up about a point on the day.

He also saw considerable activity - at least $20 million - on the company's 11% notes due 2016, which traded as low as 70 bid and as high as 75½ before going out at 74.

He saw "not much activity" in Clear Channel's 4.90% notes due 2015, which stayed around 60 bid with $3 million traded, or its 5¾% notes due 2013, which held at 79, on only $1 million moved.

A trader said that the bonds "traded actively, but I don't think they moved that much."

He saw the 103/4s involved in "very active trading" between 79 and 80, with a high print at 811/2, and quoted them going out at 80 bid, 81 offered, which he called unchanged.

The 11s meantime, "finished the day higher, for whatever reason," at 741/4-743/4, "also on a lot of volume."

Market indicators ease slightly

Back among statistical measures of market performance not related to the new-deal market, a trader saw the CDX Series 13 index off by ¼ point on Thursday at 97¼ bid, 97¾ offered, after having gained 5/8 point on Wednesday.

The KDP High Yield Daily Index meanwhile fell by 4 basis points on Thursday to 70.81, after having gained 12 bps on Wednesday. Its yield rose by 1 bp to 8.18%, after having come in by 5 bps the previous session.

In the broader market, advancing issues again led decliners on Thursday, for a 13th straight session - but the margin of better than four to three they had enjoyed on Wednesday had by Thursday shrunk to a relative handful of issues - several dozen out of the more than 1,400 issues tracked.

Overall market activity, as measured by dollar volume, fell nearly 12% from Wednesday's pace.

A trader said that apart from interest in the new deals and, especially, Clear Channel, Thursday's session was "kind of uneventful."

Another said it's "been kind of quiet."

Rite Aid rallies on not-so-bad loss

Rite Aid's bonds moved up about a point on the day, following the release of not as bad as expected third-quarter results.

A trader said that Rite Aid's 8 5/8% notes due 2015 traded around the 85 level, which he said was up ½ point, albeit "not on huge volume."

He also saw its 9 3/8% notes due 2015 at 861/2, up ½ point, but added that "only $1 million traded."

Its 10¼% senior secured notes due 2019 "traded inside" a 103¾ bid, 104¾ offered context, with "nothing really exciting going on there."

A second trader said Rite Aid's bonds were "up a point early" in the session, seeing the 10 3/8% notes due 2016 around 106.

Another market source quoted the 9½% notes due 2017 at 94½ bid, 95 offered, while yet another placed the 8 5/8% notes due 2015 at 85 bid.

For the quarter ending Nov. 28, the Camp Hill, Pa.-based Number-Three U.S. drugstore chain reported a net loss of $83.9 million, or 10 cents per share, compared to a year-earlier loss of $243.1 million, or 30 cents per share.

Excluding certain one-time items, the quarterly loss came to 6 cents per share - just one-third of what Wall Streeters were looking for. Revenues came to $6.4 billion.

The company said "liquidity remained strong," with $903.2 million available under its credit facility and from cash on hand.

"Our results demonstrate the significant progress we've made to strengthen our company since last year's third quarter," said Mary Sammons, chairman and chief executive officer, in the earnings release. "Liquidity at the end of the quarter more than doubled, and we've refinanced all of our 2010 debt maturities to give more time for our growth initiatives to work.

Kim Noland, an analyst with Gimme Credit LLC, noted that the overall numbers were "better than we expected," but still had some concerns going forward.

"While liquidity is strong at $900 million and refinancing has given Rite Aid some time to improve cash flow and de-lever, we are concerned that this might be had to accomplish without skimping on capex," Noland wrote in an afternoon comment.

CIT takes a step backward

A trader said that CIT Group Inc.'s two series of new bonds - its five issues of 7% notes with maturities ranging from 2013 to 2017 and its five issues of 10¼% notes with those same maturities - were "probably down a point."

Those bonds had been rising solidly, and on brisk volume, over the previous several sessions, following the New York-based commercial lender's exit from Chapter 11 last Thursday.

He said that the longer bonds, such as the 7% notes due 2016 or 2017, were in an 86-87 context, which he called down a point, while adding that "the shorter ones are probably not down that much. So there was some selling in CIT."

Six Flags rides upward

A trader said that Six Flags Inc.'s bonds were higher, with its 9¾% notes due 2013 trading into a 28¼ bid, "so there you go, they moved up." He called it a 3 or 4 point rise on "good size trading in the Six Flags name today."

He also saw "Really good volume" in the New York-based theme park operator's 4½% notes due 2015," which he said "ended up around the same place," at 28 to 281/2.

The trader had also seen those bonds pushing up about 1½ to 2 points on Wednesday to levels in the mid-20s, and they had risen 3 points on Monday to the lower 20s from the upper teens, with the week's movement apparently coming in response to the decision by a federal bankruptcy court judge late last week giving the green light, over the objections of some bondholders, to company plans to finance Six Flags' exit from Chapter 11 using $800 million of bank loans and $450 million generated through a rights offering. The company can now send its plan to its creditors for a vote. A hearing to consider approval of the plan is scheduled for March 8 through March 19.

GM gains a bit

A trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 "moved up," quoting them perhaps ½ point higher above the 26 bid level, on "decent volume," continuing the gains seen Tuesday and Wednesday after the automaker said that it would have its loan debt to the federal government repaid by this coming June.

Another trader saw the long bonds unchanged at 25½ bid, 26½ offered.

Beechcraft maker bouncing along

A trader said that Hawker Beechcraft's bonds and bank debt continuing to be active, quoting its 8½% notes due 2015 at 65 bid, 66 offered, about the level to which they rose in Wednesday's volatile dealings, while its 8 7/8% notes due 2015 were at 60-61 and its 9¾% notes due 2017 at 581/2-60, with the latter issues also unchanged.

On Tuesday, the Wichita, Kan.-based aircraft manufacturer's 8½% notes fell more than 10 points to about the 59 level, after the company said that a customer, NetJets Inc., had cancelled orders for some $2.6 billion of jet planes - but after falling as low as 56 in early dealings Wednesday, the bonds had moved back up to the mid-60s after company officials dismissed the lost contracts on a conference call with investors and said Hawker's finances would not be affected.

YRC holders mull revised deal terms

A trader said that YRC Worldwide's 8½% notes due 2010 traded down a point to a close at 59¾ bid, 60 offered, versus prior levels around 61, even as the Overland Park, Kan.-based trucking company announced that it was extending into next week its current offer to exchange new debt for those bonds and for several convertible issues, and lowering the minimum tender thresh hold that must be met for the exchange offer to succeed.

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