HCA, drive-by Solutia, upsized Express deals price; overall market firm, Visteon soars again

By Paul Deckelman and Paul A. Harris

New York, March 2 - HCA, Inc. priced a $1.4 billion offering of 10-year secured notes on Tuesday to jump-start the primary pricing parade. When they were freed, the bonds were quoted trading around their issue price, a point below par.

Also pricing was an upsized $250 million offering of eight-year notes for Columbus, Ohio-based specialty retail apparel company Express, LLC/Express Finance Corp., as well as a drive-by issue of 10-year notes from St. Louis-based chemical company Solutia Inc. Those deals came too late in the day for any aftermarket action.

In the secondary realm, activity was somewhat muted by the ongoing J.P. Morgan high yield conference taking place this week in Florida, but traders said the tone was generally firm.

Visteon Corp.'s bonds continued to climb for a third straight session, their surge fueled by the release late last week of favorable fourth-quarter and fiscal 2009 results, as well as investor sentiment that maybe a nascent turnaround in the fortunes of the automakers also bodes well for the bankrupt Van Buren Township, Mich.-based automotive components company, which sells most of its product to former corporate parent Ford Motor Co. and other large automakers.

Ford's bonds, meantime, were seen mostly better, after the Dearborn, Mich.-based automotive giant posted sharply higher February sales numbers versus a year ago, even actually edging out larger domestic arch-rival General Motors Corp. in the number of cars sold in the United States. last month - the first time that has happened in almost a dozen years.

HCA massively upsizes

During the Tuesday session in the new issue market, HCA priced an upsized $1.4 billion issue of 7¼% 10.5-year senior secured first-lien notes (Ba3/BB) at 99.095 to yield 7 3/8%.

The yield printed on top of price talk. The amount was increased from $1 billion.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to repay part of the company's senior secured term loans.

Heading into Tuesday, accounts expected that the HCA deal would be upsized to as much as $1.5 billion, according to a high-yield mutual fund manager based in the Midwest.

Solutia drives by

The only deal to be announced during the Tuesday session was Solutia's $300 million issue of 10-year senior notes (B2/B).

The deal priced in an a.m.-to-p.m. drive-by with a coupon of 7 7/8% at 99.5 to yield 7.948%.

The yield towards the high end of the 7 7/8% to 8% price talk.

Jefferies & Co., Inc., Deutsche Bank Securities Inc., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc. and Fifth Third Securities, Inc. were the underwriters.

Proceeds will be used for general corporate purposes, which may include the funding of potential acquisitions, including the planned purchase of Etimex Solar, and the repayment of debt.

Express upsizes

Finally on Tuesday, Express, LLC and Express Finance Corp. priced an upsized $250 million issue of 8¾% eight-year senior notes (B3/B) at 98.599 to yield 9%.

The yield printed on top of the price talk. Express increased the amount to $200 million.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co. Inc. were joint bookrunners.

Proceeds, together with cash on hand, will be used to prepay all of the term C loans of Express Topco LLC, the indirect parent, and to fund a distribution to equity holders.

The additional $50 million of proceeds generated by the upsizing will be used for general corporate purposes.

HCA trades around issue

The HCA mega-deal was "keeping everyone occupied" for much of the session, a trader said, as market participants waited for the Nashville-based hospital operator's offering to finally come to market.

When it did, another trader said "people got full allocations" of the $1.4 billion of new 7¼% senior secured first-lien notes due 2020. He saw it trading a little below its 99.095 issue price at an even 99.

The first trader, however, predicted that "it will do just fine."

The Express LLC and Solutia deals priced too late in the session for any kind of real aftermarket dealings.

Recent issues hold around Monday levels

A trader said that "really didn't see much going on" in the recently priced deals which had come to market last week.

For instance, he saw Reddy Ice Holdings, Inc.'s 11¼% first-lien senior secured notes due 2015 at 101¼ bid, 1021/4, "just kind of where they've been" since their late-Friday pricing and their firming on Monday to above the 101 level. The Dallas-based packaged ice company priced $270 million of the bonds, downsized from the originally announced $300 million, at par on Friday to yield 11¼%

A trader saw Oshkosh Corp.'s two tranches of bonds - its $250 million of 8¼% notes due 2017 and its $250 million of 8½% notes due 2020 - "trading right on top of each other," around a 103-104 context, which he called "about the same" level where they had been on Monday.

The Oshkosh, Wis.-based maker of fire trucks and other special-access vehicles had priced that $500 million two part deal on Friday, with both halves coming to market at par, and then moving up between 2 and 3 points in initial aftermarket dealings later that session, and then up further on Monday.

A trader saw Niska Gas Storage's 8 7/8% notes due 2018 at 102 1/8 bid 102 3/8 offered. The Calgary, Alta.-based natural gas storage company's bonds -- $800 million of which had priced at par on Friday - had moved up to the 102ish area on Monday.

A trader saw ArvinMeritor Inc.'s 10 5/8% notes due 2018 "about the same, or maybe a little better," at 101½ bid, 102 offered.

The Troy, Mich.-based automotive components company had priced the $250 million issue at 98.024 on Friday to yield 11%, and they had moved up above the par level in initial aftermarket dealings, and then to around 101 on Monday.

A trader also saw ArvinMeritor's existing 8¾% notes due 2012 - most of which are to be taken out via a tender offer funded by the proceeds from the new bond deal - hovering around a 1081/2-109 context, which "I don't think is any better than they've been."

The bonds had surged about 3 points to those levels on Monday, from prior levels around 1061/2, after the company announced plans after the market close on Friday to sweeten the total consideration it is willing to pay for those bonds tendered before the March 8 early tender deadline to $1,097.50 per $1,000 principal amount, versus $1,065 originally. Arvin Meritor is offering to purchase $175 million of the $276 million outstanding, and will buy the bonds on a pro-rata basis if the offer is oversubscribed.

Market indicators mostly firm

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index off by 1/8 point on Tuesday to end at 97½ bid, 98 offered, after having risen by ½ point on Monday.

The KDP High Yield Daily Index meanwhile pushed upward by 15 basis points on Tuesday to finish at 70.88, after having gained 22 bps on Monday. Its yield tightened by 7 bps on Tuesday at 8.25%, after having come in by 6 bps on Monday.

Advancing issues notched their third victory in a row against decliners on Tuesday, by a better than eight-to-five margin for a second straight day.

Traders again noted that the annual J.P. Morgan high yield and leveraged finance conference in Miami had drawn many buyside players, reducing overall junk market activity. One said that high yield activity was "muted" because of the well-attended conference.

That having been said, activity, measured by dollar-volume levels, activity rose some 38% from Monday's pace.

A trader said that "there was some activity, higher on most things. Some people are really loving credit" - and he added that "Visteon is just out of control."

Visteon very strong, once again

A trader saw Visteon's 7% notes due 2014 trading at 89 5/8 bid, which he called a 6 point gain on the session, while its 8¼% notes due 2010 were "actually trading right on top of it" at 89, which he called up 7 points, "again," referencing the similarly sized gain seen in Monday's dealings. He said that the 7s "had more action than the 81/4s," with "not much action, only a couple of trades that I could see" in the latter bonds.

At another shop, a trader called the 7s up 10 to 12 points on the day to around 90 bid, on "decent volume."

He saw the company's 8¼% notes due 2010 up 8 points on the day in the high 80s, but he agreed with the first trader that there was not as much trading in it as in the 7s.

Visteon's bonds have risen nearly 40 points in three days - from the lower 50s to around 90 - in the wake of solid quarterly numbers. Visteon late Thursday reported fourth-quarter sales of $2.03 billion, up from $1.65 billion the year before. Net income came to $276 million, or $2.12 per share - an improvement over the net loss of $346 million, or $2.67 per share, for the fourth quarter of 2008.

For the year, Visteon - spun off from Ford Motor Co. a decade ago - reported its first-ever yearly profit, with net income coming to $128 million, or 98 cents per share, on sales of $6.68 billion. In 2008, the Van Buren Township, Mich.-based auto components company reported a full-year loss of $681 million, or $5.26 per share, on sales of $9.54 billion.

Ford firms on sales surge

Also in the automotive parking lot, a trader said that Ford's 7.45% bonds due 2031 were up by 2 points at 89½ bid, 90½ offered, apparently helped by strong February sales numbers.

A second trader said that the 7.45s were around 90 bid, "up a couple of points, on not a lot of trading, but it's feeling better." He had the same assessment of the company's shorter paper.

However, another trader, while saying that Ford's 8.70% notes due 2014 was "one of the more active issues," saw them trading at 102½ bid. He said that "if anything, it's probably down a little, maybe off a half" versus its Monday close. He opined that the Number-Two U.S. car manufacturer "was expecting better sales, even though the sales numbers weren't bad."

Ford had posted a 43% year-over-year sales gain in February -- and actually sold 334 more vehicles in the United States during the month than chief competitor General Motors did, the first time that has happened since August 1998, when GM was hobbled by a strike. Ford sold 142,006 cars and light trucks, including its popular F-series pickup trucks, its Fusion sedan and Escape SUV.

Sales of Ford cars alone, absent other types of vehicles such as light trucks, were a sizzling 54% better than its admittedly weak year-earlier numbers. Ford cited strong customer demand for its fuel-efficient cars like the Fusion hybrid model, as well as strong fleet sales to rental-car companies and other commercial and construction fleet customers. Ford's share of the U.S. car market climbed to 17.5%, versus around 14% a year ago.

GM steady even on better sales

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 down ½ point at 31½ bid, 32½ offered, even though the Detroit giant had posted a 12% sales gain in February versus a year earlier.

However, at another desk, a trader took a more sanguine view, seeing GM "feeling better," with the long bonds getting as high as a 32-33¼ range before going home around the latter level, "probably up a point." He said there had been "decent trading in the credit."

A trader meantime said that he "didn't see a whole lot of action" in GM, although he did see some activity in GMAC LLC, with the Detroit-based automotive and (through its Residential Capital LLC division) mortgage lender's 6 7/8% notes due 2012 trading at 991/2, which he called unchanged, with almost $10 million of the bonds having changed hands.

Freeport busy as it calls a big issue

One of the most active junk names of the day was Freeport-McMoRan Copper & Gold Inc.

A trader said there were "a lot of Freeports trading," seeing the Phoenix-based metals mining concern's 8 3/8% notes due 2017 as "by far the most active, with at least $70 million changing hands.

He quoted the bonds around 109 7/8 bid at the close, which he said was up around a point on the day.

Freeport, he said, usually trades actively - "but not like this."

He saw no fresh news out on the company that might explain the heavier than usual volume. The company did announce plans for a bond redemption on April 1 - but it's another issue that's being called, Freeport's $1 billion of senior floating-rate notes due 2015, which will be redeemed at a price of 101 plus accrued and unpaid interest since last Oct. 1. Freeport expects to save some $58 million per year in interest costs over the remaining life of the notes. With expectations that the bonds would be taken out already baked into their trading levels, the floaters were pretty much unchanged on the day, holding at levels slightly above 101 bid, with about $10 million of turnover.

Another trader, however, said that "FCX always trades between $30 million and $50 million a day, day in and day out, no matter what." He explained that "it's a bond that has always been used as a trade versus CDS and it trades in big swings. It's a trade people just put on and off and that's a CDS trade much more than it has anything to do with the actual individual bond" or the company's fundamentals, "which is why you'll see that it is the usually single most active issue daily in high yield."

Freescale firmer as it touts new chip

A trader saw Freescale Semiconductor Ltd.'s floating-rate notes trading at 82 3/8 bid, which he called "up a couple" of points, while its 8 7/8% notes due 2014 were at 91½ going home, up 1¼ points.

He said the Austin, Tex.-based semiconductor maker's bonds were "all up a buck to two bucks, across the board." He saw its 9 1/8% notes due 2014 up to 90 bid, a 1½ point gain.

Another market source saw the 8 7/8s up nearly a point at 91¼ bid.

Freescale announced the introduction of a new computer chip which it said would revolutionize the production of electronic readers such as the popular Amazon Kindle and Sony's competing Reader. It said that its new i.MX508 processor will double eReader speed, support large color screens, improve battery life and lower the retail cost of a unit to consumers by about $30, which could bring the Kindle and its rivals down to below $150 - giving the devices an edge in the battle against new tablet computers like Apple's iPad, which also include eReader -like functions.

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