Ardagh prices as primary winds down; new Quicksilver shines; E*Trade up despite downgrade

By Paul Deckelman and Paul A. Harris

New York, June 19 - After a busy week which saw the volume of high yield new issuance double from the previous week's total, the junk primary's domestic squad took a seat on Friday and let the overseas new-dealers take over.

The market saw one pricing from that area - a euro-denominated issue of seven-year notes from Irish container company Ardagh Glass Finance plc. The new bonds were seen to have moved up more than a point from their 98.116 pricing level in initial aftermarket dealings in London.

And Italy's Wind Telecomunicazioni was heard by syndicate sources to be readying a blockbuster €2.7 billion mega-deal.

Back on the domestic front, Solo Cup Co. - which earlier in the week had said that it was pursuing alternatives for refinancing upcoming maturing debt - announced Friday that it will sell a $300 million issue of new senior secured notes and do a concurrent bank debt deal. The company's existing bonds were seen firmer on the news.

Among recently priced junk paper, Quicksilver Resources Inc.'s upsized offering of seven-year notes, which came to market late Thursday, was heard to have firmed solidly once it broke into the secondary realm, up several points to, and above, the par level.

However, the new Wendy's International Holdings, LLC sevens, which also priced on Thursday, were seen little changed.

Among the established names, the improbable rise of E*Trade Financial Corp.'s bonds to levels which one trader called "a joke" and another termed "weird," continued Friday - even after Standard & Poor's had cut its ratings for the New York-based on-line financial services company in the wake of a deeply discounted public stock offering which the agency believes does not offer a real solution to E*Trade's problems.

Level 3 Communications Inc.'s bonds were meantime seen on the downside; a trader cited market gossip suggesting that the recently reported joint-venture talks between the Broomfield, Colo.-based telecommunications company and Sprint Nextel Corp. - which boosted Level 3's bonds solidly and caused the Sprint bonds to firm as well - may be far from producing any kind of workable agreement.

Ardagh Glass four-times oversubscribed

Most of Friday's primary market news emanated from Europe.

Ardagh Glass priced a €300 million issue of 9¼% seven-year first-priority senior secured notes (Ba3/BB) at 98.116 to yield 9 5/8% late Friday morning in London.

The yield was printed at the wide end of the 9½% to 9 5/8% price guidance.

Citigroup ran the books for the debt refinancing and general corporate purposes deal from the Dublin, Ireland-based glass container manufacturer.

The order book for the deal was four-times oversubscribed, according to an informed source. The source added that it was comprised primarily of asset managers from the United Kingdom and Europe.

Wind to bring €2.7 billion

Moving from Ireland to Italy, Wind Acquisition Finance SA, a financing unit of Wind Telecomunicazioni Spa, disclosed plans on Friday to sell €2.7 billion equivalent of senior notes in late June or early July.

Deutsche Bank Securities, Credit Suisse and RBS Securities Inc. will lead the deal, which is expected to come in tranches of dollar-denominated and euro-denominated notes.

Proceeds will be used to refinance €2 billion of PIK loans due 2011 and to fund a dividend to Weather Investments SpA, the holding company that acquired Wind in 2005.

The timing of the notes issue hinges on the outcome of a consent solicitation directed to holders of Wind's second-lien debt maturing 2014 and its 9¾% and 10¾% senior notes due in 2015. Those debt holders are being asked approve the above-described uses of proceeds.

That consent solicitation expires on July 1.

Solo Cup roadshow starts Monday

Solo Cup Operating Corp. and Solo Cup Co. will start a roadshow for a $300 million offering of senior secured notes due 2013 on Monday.

The deal is expected to price late in the June 22 week.

Goldman Sachs and Banc of America Securities are joint bookrunners.

The Highland Park, Ill.-based single-use foodservice products company is also in the bank loan market with a $200 million asset-based revolver.

Proceeds will be used to repay its existing first-lien credit facility.

As the final week of spring 2009 wound down, Solo was one of two deals on the road and expected to price during the first week of summer.

In addition to Solo Cup, Real Mex Restaurants, Inc. is roadshowing its $110 million offering of 3.5-year senior secured notes via Jefferies & Co.

On Friday Moody's Investors Service assigned its B3 rating to the notes.

The debt refinancing and general corporate purposes deal is also expected to price late in the week.

There are deals in the pipeline, say sources on both the buy-side and the sell-side.

There are bound to be plenty of deals because there are plenty of companies out there which need to refinance debt, a high-yield mutual fund manager reasoned.

However as the week wound down sources were not volunteering names. Nor were they professing any certainty that the deals they knew to be in the pipeline would surface during the week ahead.

$3.963 billion week

Although the week just completed failed to turn out issuance in line with the torrid $6.6 billion per week pace seen during the five-week period beginning May 4 and concluding on June 5, issuance did pick up relative to the previous week.

The June 15 week saw $3.963 billion price in eight dollar-denominated tranches, an increase both in dollar amount and deal volume from the previous week's $2.06 billion in seven tranches.

Year-to-date issuance to Friday's close came to $59.4 billion in 121 tranches.

Those numbers represent massive year-over-year increases from 2008 totals, with the dollar-amount of issuance up nearly 60% from last year, and deal volume up over 47.5%.

In 2008 to the June 19 close, $37.3 billion was priced in just 82 tranches.

Solo Cup seen up

A trader said that Solo Cup's current 8½% notes due 2014 were up 2 points on the news that the Highland Park, Ill.-based maker of paper and plastic cups, plates and utensils plans to offer $300 million of senior secured notes due 2013 and will use the proceeds from the offering, together with proceeds from an anticipated concurrent bank financing, to repay the company's existing first lien credit agreement.

Solo had said earlier in the week that it was "pursuing alternatives," possibly including an offering of secured or unsecured notes, to address the maturity of the existing credit facility, which includes a revolving facility that expires in 2010.

While that trader saw the Solo bonds move up on the financing news, at another desk, the notes were seen unchanged around the 81 area.

New Quicksilvers quickly rise

Traders saw Quicksilver Resources' new 11¾% notes due 2016 firming smartly from the 97.717 level at which the Fort Worth, Tex.-based energy exploration and production operator priced its $600 million issue of bonds - upsized from $425 million - late Thursday.

One called the new bonds "very strong," saying he saw them get as good as 101 3/8 bid during the day's trading, before they "backed off" - but still went out at 100¾ bid, 101¼ offered, up more than 3 points on the session.

A second trader saw the Quicksilver bonds going out at 101 bid, 101½ offered, while a third said that a 101 price "sounds about right."

New Wendy's wallows near issue

While the new Quicksilver bonds were definitely hot, the Wendy's bonds that priced a little earlier on Thursday were definitely not.

While the Atlanta-based fast-food chain operator and franchiser's $565 million issue of 10% senior notes due 2016 had initially firmed a little late Thursday, to 98 bid, 98½ offered from the 97.533 level at which the bonds priced to yield 10½%, by Friday, they had given back that early gain.

One trader saw them all day around 97½ bid, 98½ offered, while another saw them having about as much appeal to investors as a half-eaten Old Fashioned Hamburger with a side of two-day old french fries, stuck at 97½ bid, 97¾ offered. "The burger boys," he proclaimed, "didn't go anywhere."

Recent Paetec still stumbling

Among other recently priced issues, Paetec Holding Corp.'s $350 million issue of 8 7/8% secured notes due 2017 continues to struggle.

The Fairport, N.Y.-based telecommunications company had priced that issue on Wednesday at 96.549 to yield 9½%, but unlike most of the other bonds priced within the past week or two, that offering never seemed to get out of the gate when it got to the aftermarket.

On Friday, a trader said, Paetec traded into a 95¾ bid - but in relative terms this was better, as it was up from Thursday levels around 94½ bid, 95 offered.

"They hit that bid," he said, "and it left the bonds offered for sale." He saw them towards the end of the day at 95½ bid, 95¾ offered - up maybe a point on the session - but still a point below the issue price.

Market indicators mixed

Back among the established issues, the CDX Series 12 High Yield index - which had fallen by a point on Thursday, continuing its nearly week-long slide - was seen down about ½ point Friday at 81¼ bid, 81¾ offered. In contrast - and underlining the tough week the junk bond secondary market suffered through - the index had ended the previous week at a robust 85½ bid, 86 offered.

The KDP High Yield Daily Index, which had lost 35 basis points on Thursday, eased another 4 bps on Friday to end at 62.11, while its yield widened by 1 bp to 10.67%. The index stood at 63.52, with a yield of 10.27%, the previous Friday.

In the broader market, advancing issues - which were down for a third straight session on Thursday - managed to eke out a narrow gain in Friday's trading.

Overall market activity, measured by dollar-volume totals, fell about 19% versus Thursday's levels.

A trader said that the session was a "kind of a washout, with golf finally going on" - a reference to the U.S. Open tournament taking place out on Long Island, not far from the city, with the televised tourney serving as a huge magnet for the attentions of those market participants who were even in the office - and many were not.

Another trader agreed that things in the junk market and presumably on Wall Street in general were "pretty golf-o-centric."

A trader said that "even by the looks of the 'train station indicator'" - i.e. comparing the number of people getting off the subways and PATH trains in Midtown Manhattan and the Financial District today with the usual crush of humanity heading for work - "it was just like a holiday today." The result, he said, was "a quiet Friday, with volumes down."

Yet another market participant chalked things up to "a typical Friday in the summer - not much to report."

E*Trade remains explosive

A trader said that E*Trade Financial Corp. "was one of the bigger traders tody," sharing that spotlight with SLM Corp.

He suggested that E*Trade's bonds "benefitted from their [sic] IPO," despite Standard & Poor's ratings downgrade as the agency called its capital-raising measures, including the deeply-discounted public equity offering, "a short-term fix to a long-term problem."

E*Trade's bonds have been on a tear since mid-week, when the company first announced a $1.2 billion program to improve its balance sheet, including a $400 million equity offering and an exchange offer aimed at taking out all of its 8% notes due 2011 and most of its 12½% notes due 2017 by offering holders new convertible debt in exchange. That shot those two issues of bonds up by more than 20 points over the previous two sessions, and lifted its other issues by multiple points as well.

E*Trade's bonds "are up so much that it's a joke," the trader said, calling the 8s as high as the 109½ and 110 level. He noted that "yesterday [Thursday] they were at 103 - and a month ago, they were much, much lower."

"Anybody who had shorted them," thinking they would go lower, "will be crying all weekend."

Another trader noted that "a lot of them are at premiums" to par, having risen solidly earlier in the week on the news of the exchange offer.

He called it "weird" how the 8s had moved up to their current levels. "There were trades at 109½ and 110. I have no idea why." But he said "a lot of the trades - most of the trades happened, most of the volume - seemed to happen at 106 - there was a lot of volume at 106," although he saw later trades around 109-1091/2.

He saw another issue, the 7 3/8% notes due 2018, which are not being taken out in that exchange transaction, also higher, at 82 bid, 84 offered.

Yet another trader called the 8s up 10 points on the day at 108½ bid, 110½ offered, while the 121/2s ended at 105 bid, 107 offered versus 98 bid, par offered on Thursday.

He saw the E*Trade 7 7/8% notes due 2015 - also not affected by the debt exchange - up a point at 79 bid, 81 offered.

Sallie Mae still strong

The first trader noted that the other very active name on an otherwise dull day was SLM, whose bonds had firmed modestly, though on very busy trading, on Thursday, on the news that the Reston, Va.-based education lender - along with three other companies - had been awarded a large and potentially lucrative contract by the federal government to service billions of dollars of Department of Education student loans. The total value of the contract and the allocations among the four participating companies were not immediately announced, although analysts believe it to be substantial.

He saw Thursday's most active issue, the 5% notes due 2015, at 76½ bid, 77 offered on Friday, asserting that "it doesn't look like there was much in the way of [price] movement - just a lot of activity."

Level 3 lower

A trader saw Level 3 Communications bonds "a little lower" - an easing which he attributed to "rumors that the deal they were supposedly negotiating with Sprint for a joint venture seems to be falling apart."

He emphasized that he had seen no official pronouncements from either company to that effect, and no stories in the mainstream financial press indicating this was the case. "There's no real news out - but that's the rumor."

Level 3's 12¼% notes due 2013 were down a deuce, he said, at 94 bid, 95 offered.

Level 3 and Overland Park, Kan.-based wireless provider Sprint were recently reported to have been in talks on a potential joint venture possibly involving a combination of each company's long-distance service. That news caused the Level 3 bonds to rise by several points, while Sprint's bonds were also moderately firmer.

GM benchmarks better; Ford flails around

In the autosphere, a trader said that General Motors Corp.'s 8 3/8% bonds due 2031 "moved up a little bit," seeing them at 13 bid, 14 offered, which he called up "a point or so," on "a couple of trades." However, he said that the bankrupt Detroit-based carmaker's other bonds, like its 7.20% notes due 2011, were lower, languishing around 11-12.

"Obviously, someone wanted those 8 3/8s and they bid 13."

Another trader pegged the bonds at 12½ bid, 13½ offered, calling that up ½ point.

A trader saw GM's more financially solid domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 "hanging in the high 50s, around 59-60, unchanged."

However, another trader called those bonds down a point at 57 bid, 59 offered.

Those Ford long bonds had gradually moved as high as 70 bid a week ago from levels below 30 at the beginning of April, on investor hopes that the Dearborn, Mich.-based carmaker won't end up going the way of bankrupt rivals GM and Chrysler.

But after hitting that zenith, the bonds began to drift down, and the drift accelerated this week, the issue hammered down some 10 points, into the upper 50s, from the 68 area at which they began the week.

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