Treasury rebound lifts junk; Sprint active, higher; Ford upped by S&P; Tenet unveils mega-deal

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Sept. 6 - The high-yield bond market saw "mostly winners" during Friday trading, a trader said.

A bounce in Treasuries was given credit for the gains.

Meanwhile, only new deal priced, a €430 million offering from Polish broadcaster TVN, but Tenet Healthcare Corp. announced a giant $4.6 billion deal that is expected to price in the week ahead. The news comes just two days after Sprint Corp. priced a $6.5 billion sale of notes in two tranches, the biggest junk transaction since June 2008.

Tenet will bring to market $1.8 billion of secured notes and $2.8 billion of unsecured notes.

Meanwhile another four issuers announced that they will begin roadshows on Monday. The companies include Pinnacle Agricultural Holdings, LLC, Natural Resource Partners LP, JBS USA and Air Canada.

In the secondary, Sprint's recently priced new notes were continuing to trade busily and better. Even the company's older debt was rebounding after taking a hit in the previous session.

Ford Motor Co. meantime inched up on news Standard & Poor's had upped the company to investment grade. One market analyst said the move was expected.

One pricing

TVN priced Friday's sole junk deal, a €430 million issue of 7 3/8% senior notes (B1/B+), which it brought at par to yield 7.378%.

The yield came in line with final guidance of 7 3/8%.

Joint bookrunner JPMorgan will bill and deliver. Deutsche Bank, Nomura and BNP Paribas were also joint bookrunners.

Proceeds will be used to repay debt.

Pinnacle lines up meetings

The market appeared to shake off news of the $416 million of weekly outflows from high-yield funds that circulated in the market on Thursday.

The Friday session was rife with new deal announcements.

Tenet to bring $4.6 billion

Tenet Healthcare Corp. announced in a Friday press release that it plans to sell $1.8 billion of secured notes and $2.8 billion of unsecured notes.

The Rule 144A and Regulation S deal will be led by BofA Merrill Lynch, and is expected to be launched during the week ahead, market sources say.

Proceeds will be used to help fund the acquisition of Vanguard Health, which is expected to close before the end of 2013, and also to refinance some of Vanguard's existing debt.

The $1.8 billion of secured debt had previously been expected to materialize in the form of a bank loan.

Pinnacle to start marketing

Pinnacle Agricultural Holdings, LLC and Pinnacle Operating Corp. plan to start a roadshow on Monday for a $300 million offering of seven-year second-lien senior secured notes.

The deal is set to price late in the week ahead.

Credit Suisse Securities (USA) LLC, BMO Securities, Citigroup Global Markets and Apollo Global Securities are the joint bookrunners.

The notes will be non-callable until 2016, at which time they will become callable at par plus 50% of the coupon. The notes feature a three-year 35% equity clawback and a 101% poison put.

The Mayfield, Ky.-based agricultural input supply and distribution company plans to use the proceeds to refinance its second-lien term loan, repay ABL borrowings and for general corporate purposes.

Natural Resource to roadshow

Natural Resource Partners LP and NRP Finance Corp. plan to start a roadshow on Monday in Los Angeles for a $300 million offering of eight-year senior notes, according to a syndicate source.

The roadshow heads to New York on Tuesday, with Wednesday presentations set for New York, New Jersey and Boston.

The deal is expected to price on Thursday.

Citigroup Global Markets and Wells Fargo Securities LLC are the joint bookrunners.

The Rule 144A and Regulation S with registration rights notes come with three years of call protection. The notes feature a three-year 35% equity clawback and a 101% poison put, as well as customary high yield covenants for master limited partnership issuers.

Proceeds will be used to repay revolver debt and a portion of the $200 million term loan entered into in connection with the company's OCI Wyoming acquisition.

JBS to sell eight-year deal

Meat producer JBS USA plans to start a roadshow on Monday for a $400 million offering of eight-year senior notes (existing ratings Ba3/BB), according to a market source.

The deal is expected to price late in the week ahead.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Wells Fargo Securities LLC, RBC Capital Markets and Credit Suisse are the joint bookrunners.

The Rule 144A and Regulation S for life notes become callable in three years at par plus 75% of the coupon.

The notes will be issued jointly with special-purpose vehicle JBS USA Finance, Inc.

The Greeley, Colo.-based company plans to use the proceeds to help finance a tender for its 11 5/8% senior notes due 2014.

Air Canada starts Monday

Air Canada plans to start a roadshow on Monday for a $300 million offering of 6.5-year senior second-lien notes (expected ratings Caa2/CCC+), according to a market source.

The deal is set to price early in the Sept. 16 week.

J.P. Morgan Securities LLC, Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. and TD Securities are the joint bookrunners.

The Rule 144A and Regulation S for life notes become callable in three years at par plus 75% of the coupon.

The issuer, Canada's largest airline, plans to use the proceeds to fund a tender offer for $600 million of its 9¼% senior notes due 2015, C$300 million 10 1/8% senior secured notes due 2015, and any and all of its 12% senior secured second-lien notes due 2016, with any remaining proceeds going to general corporate purposes.

Market better with Treasuries

In the secondary, market indexes turned positive on Friday, helped by a rebound in Treasuries, traders reported.

The KDP High Yield Daily Index moved up to 73.19, yielding 6.34%. While the yield was the same as in the previous session, the index level was higher than Thursday's reading of 73.17.

The Markit Series 20 CDX North American High Yield Index was also stronger, rising 7/32 to 104 1/8 bid, 104 5/16 offered.

Liquidity overall was on the light side, due in part to it being a Friday and in part to it being Rosh Hashana.

"A lot of the focus was still on new issues," a trader said.

Sprint stays busy, firm

Sprint's new two-tranche deal continued to be active and higher after pricing on Wednesday.

One trader said the $4.25 billion of 7 7/8% notes due 2023 moved up to 1011/2. Another trader said the deals were "very active," seeing the 7¼% notes up over a point at "1011/4-ish" and the $2.25 billion of 7¼% notes due 2021 at 1011/2, up 1½ points.

"The market being higher helped that move up," the first trader said, adding that a bounce in Treasuries were also a factor.

The second trader noted that Sprint's existing debt was also active and was rebounding from the previous day's declines.

The 6 7/8% notes due 2028 moved up to 891/4, the 7% notes due 2020 gained ½ point to 102 1/8, the 6% notes due 2022 rose a point to 92 5/8 and the 6.9% notes due 2019 increased over ½ point to 1031/4.

Ford goes investment grade

Ford Motors was upped to investment grade by Standard & Poor's on Friday, which pushed the company's debt only slightly higher.

The 7.45% notes due 2031 a point better at 118½ bid, 119½ offered, according to one market source.

Another trader said the 4 3/8% notes due 2023 were also a point higher at 971/2, though the 7% notes due 2015 inched up a touch to 108 3/8.

S&P said its rating upgrade to BBB- from BB+ was due to improved sales in North America as well as in China and Europe. Additionally, the company has improved its pension funding and is attempting to diversify its profits.

The rating agency also lifted its outlook of General Motors Co.

Gimme Credit LLC analyst Evan Mann said the rating revision was expected.

"Improved operating results and cash flow generation along with continued debt reductions should lead to stronger credit ratios over the intermediate term," he wrote in an afternoon comment. "The company has now reached its goal of restoring its investment-grade rating."

Ford has already been raised to investment grade by Moody's Investors Service and Fitch Ratings, which rate it Baa3 and BBB- respectively.

OGX pops

OGX Petroleo & Gas Participacoes SA bonds got a 5 point boost on the day after it was reported that the company's management had unanimously decided to exercise majority owner Eike Batista's $1 billion put option.

"They were all over the place," a trader said. He saw the 8½% notes due 2018 trading around 23, up from "18 and change" the day before.

"So they popped a good bit," he said.

Another trader said the 8½% notes were the "big trader" on the day, with at least $25 million in bonds changing hands. He deemed the issue up over 4½ points at 231/4.

The second trader also saw the 8 3/8% notes due 2022 rising 5 points, ending at 23.

However, the 2022 paper was not nearly as active, the trader noted.

The cash-strapped company elected to exercise the option, which will require Batista to buy more stock at 6.3 reais per share. Batista has recently been selling off his stake to raise money, and recently sold stock for 50 centavos per share.

Under the terms of the exercise, OGX is asking for $100 million upfront with an option for more dispersals in the future.

The cash injection won't be enough to stave off a restructuring, some believe.

"Fundamentally, a $3.6 billion debt is higher than OGX's asset value, which in theory leaves zero value left for the equity," said Credit Suisse AG analysts Vinicius Canheu and Andre Sobreirain a note to clients. "The outlook remains grim."

James River sinking

A trader said James River Coal Co.'s 7 7/8% notes due 2019 "keep drifting lower."

He pegged the issue around 33.

"They are slowly leaking," he commented.

In early August, the coal producer reported a profit of $52.6 million, or $1.16 per share. The company had reported a loss the year before.

However, revenues fell 42% to $160.1 million.

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