Market dips, holidays blamed; LINN prices $1.3 billion; AIG better as ILFC prices add-on deal

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., March 30 - The Passover and Easter holidays continued to weigh on the high yield market, in as much as there was less to do and less people to do it with, traders reported.

Still, new issues - such as LINN Energy LLC - managed to get some attention. LINN's upsized $1.3 billion new issue, for example, priced Tuesday and quickly headed for higher ground.

In other new issue news, American International Group Inc.'s bonds were unchanged to better as subsidiary International Lease Finance Corp. priced a $750 million add-on is to the notes that came to market last week.

In the secondary world, Sprint Nextel Inc.'s debt finished the session mixed, according to market sources. There was no fresh news out, though there was some rumors floating around internet regarding a mandatory employee meeting scheduled for Wednesday.

Rite Aid Corp. saw its bonds slipping during Tuesday trading. The losses came one day ahead of the company's earnings release.

Issuance hits record

Already the biggest month ever in the high-yield new issue market, March continued to roar out like a lion on Tuesday, market sources said, adding to the $30 billion-plus already priced this month.

Five issuers, bringing a combined half dozen tranches, raised $2.67 billion proceeds of new bonds.

LINN Energy massively upsized

Leading the day, LINN Energy, LLC and LINN Energy Finance Corp. priced a massively upsized $1.3 billion issue of 8 5/8% 10-year senior notes (B3/B) at 97.552 to yield 9%, on Tuesday.

The yield printed on top of yield talk. The reoffer price came cheap to discount talk of about 2 points.

RBC Capital Markets Corp., Barclays Capital Inc., BNP Paribas, Citigroup Global Markets Inc., Credit Agricole, RBS Securities Inc. and Wells Fargo Securities were joint bookrunners for the deal, which was upsized from $750 million, after having previously been upsized from $500 million.

The notes, which priced at slightly more than 97.55, rocketed to par ½ bid, in the secondary, according to a capital markets banker in New York.

ILFC upsizes two-part tap

Meanwhile, less than two weeks after pricing $2 billion in two tranches of high-yield notes, International Lease Finance Corp. returned Tuesday to tap both deals in an upsized $750 million transaction.

ILFC prices a $250 million add-on to its 8 5/8% senior notes due Sept. 15, 2015 at 101.00 to yield 8.392%. The reoffer price came on top of price talk.

The Los Angeles-based leaser and remarketer of advanced aircraft technology also priced an upsized $500 million add-on to its 8¾% senior notes due March 15, 2017 at 100.75 to yield 8.604%.

The 8¾% notes tap, which was upsized from $250 million, also priced on top of price talk.

Bank of America Securities LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and UBS Securities LLC were joint bookrunners for the quick-to-market Tuesday add-on transaction.

Great Wolf prices

GWR Operating Partnership, LLLP and Great Wolf Finance Corp. priced a $230 million issue of 10 7/8% seven-year first mortgage notes (B3/BB-) at 95.347 to yield 11 7/8%.

Deutsche Bank Securities, Bank of America Merrill Lynch, Wells Fargo Securities and Credit Agricole were joint bookrunners for the debt refinancing and general corporate purposes deal.

Freedom Group sells dividend deal

Elsewhere, FGI Holding, Inc., the parent of Freedom Group, priced a $225 million issue of five-year senior PIK notes (B3/B-) at 98.00.

The notes feature an 11¼% cash coupon and an 11¾% PIK coupon.

Bank of America Merrill Lynch and Deutsche Bank Securities were joint bookrunners for the quick-to-market deal.

Proceeds will be used to fund a dividend to FGI, which will use the cash to redeem a significant portion of its series A preferred stock.

Continental Resources at the tight end

Continental Resources, Inc. priced a $200 million issue of 7 3/8% 10.5-year senior notes (B1/BB) at 99.105 to yield 7½%.

The yield printed at the tight end of the 7½% to 7 5/8% price talk.

Bank of America Merrill Lynch, RBS Securities and JP Morgan Securities Inc. were joint bookrunners for the bank debt refinancing.

Talking the deals

Meanwhile there was news on upcoming offerings.

Maxim Crane Works, LP talked its $250 million issue of five-year senior secured second-lien notes (Caa1/B) to yield in the 13% area, on Tuesday.

The Rule 144A and Regulation S for life deal is set to price on Wednesday morning.

J.P. Morgan Securities Inc., Morgan Stanley & Co., Inc., and Wells Fargo Securities, LLC are joint bookrunners.

PharmaNet Development Group, Inc. talked its $175 million offering of seven-year senior secured notes to yield 10¾% to 11%.

Also a Rule 144A for life deal, it is set to price on Wednesday.

Jefferies & Co. and Deutsche Bank Securities, Inc. are joint bookrunners.

And Stratus Technologies, Inc. set price talk for its $215 million offering of five-year senior secured notes.

The notes are talked with a 12% coupon, to price at 96.40, and yield 13%. The deal also includes 10% of the company's equity.

Books close at 3 p.m. ET on Wednesday. Pricing will follow after that.

The deal comes to market via bookrunner Jefferies & Co.

Ferrellgas to hold Wednesday call

Ferrellgas Partners, LP and Ferrellgas Partners Finance Corp. will host an 11 a.m. ET investor call on Wednesday for their $280 million offering of 10-year senior unsecured notes (expected ratings B2/B-).

The deal is set to price on Wednesday afternoon.

Wells Fargo Securities, Bank of America Merrill Lynch and JP Morgan are joint bookrunners.

Proceeds will be used to finance the tender for the company's 8¾% senior notes due 2012.

Lyondell higher on loan news

Meanwhile in the secondary market, news that Lyondell Chemical Co. priced a $500 million six-year senior secured term loan (Ba2//) with a Libor plus 400 basis points coupon at a reoffer price of 99.00 on Tuesday sent the bankrupt chemical company's notes higher in the secondary.

The Lyondell Chemical Co. (LBI Escrow Corp.) 8% senior secured notes due November 2017, which priced at par on March 24, remained well bid, trading at 103 5/8 bid, 103 7/8 offered, according to a trader who focuses on the sector.

That helped lift the rest of the chemicals names, the trader remarked, noting that the bonds of Huntsman, Hexion and Momentive were all up ¼ to ½ point on the day, although very little was trading.

Market indexes dip, holidays blamed

High yield market indexes dropped some weight Tuesday, despite traders' contentions that the overall market was firm.

The CDX High Yield Index fall ¼ point to par 3/8 bid, par ¾ offered.

The KDP High Yield Index meantime slipped back to Friday's levels at 72.10 with a 7.80% yield. That compared to Monday's reading of 72.15, yielding 7.79%.

Still, a trader deemed the market as "firm but not that much better. It's better bid for than offered."

Traders were still lamenting the holiday week, which has resulted in empty desks early on for Passover and is expected to continue through Easter.

"The combination of the two holidays has got volumes down," a trader said.

"It's hard to push the secondary market any higher than it is unless we get a big influx of cash," he added.

"There was no real rhyme or reason to anything," another trader said.

The second trader noted that Friday will be a half day in observance of the upcoming holiday.

AIG better with ILFC add-on

American International Group was dubbed one of the day's most active credits, as the company priced an add-on to its recent International Lease Finance Corp. deal.

The trader saw AIG's 8 5/8% notes due 2015 at 101 bid, 101½ offered, which he called unchanged. However, he added that AIG paper was up "½ point or so" in "various places."

"I don't think it's an exaggeration to say that $300 million of AIG traded today," another trader said.

The second trader quoted AIG's 5.65% notes due 2014 at 92 bid, 92½ offered, on about $20 million traded. The 6.90% notes due 2017 also traded about that much "up and down" around 85, while the 5¾% notes due 2016 closed in an "83¼ range."

New issues head higher

Among other new issues, LINN Energy was seen higher.

According to one market source, the new bonds were "going to a bit of a premium," quoting them at 98½ bid, 99½ offered.

Continental Resources' new debt was seen up at par ¼ bid, 101¼ offered.

Sprint notes up, down

Sprint Nextel bonds were "all within an 1/8 [of a point] up or down" from where they had been, a market source said.

The source saw the 7 5/8% notes due 2011 at 1023/4, the 8 3/8% notes due 2012 at 104 3/8 and the 6% notes due 2016 at 901/2.

Another source called the debt down about ¼ point, also placing the 6% notes at 901/2.

"They were quoted lower by half a point and then buyers came in," he said.

At another desk, the 6% notes were seen at 903/4.

Rumor has it that Sprint employees received an internal memo informing them of a mandatory meeting on Wednesday. It is not known what will be said at the meeting, but the bloggers were speculated everything from a recently reported change in the employee stock options program to the unveiling of a new WiMAX phone.

Sprint Nextel is an Overland Park, Kan.-based wireless telecommunications provider.

Rite Aid slips ahead of numbers

Rite Aid debt ended unchanged to "a little bit weaker," according to a trader, just a day before the company is set to release its March sales and fourth-quarter results.

The trader called the 9 3/8% notes due 2015 "pretty much unchanged" at 861/2, while the 9½% notes due 2017 closed about ½ point softer at 841/2.

Another trader pegged the 9 3/8% notes at 86 and the 9½% notes at 85. He also saw the 10 3/8% notes due 2016 at 107.

The Camp Hill, Pa.-based pharmacy chain will hold a conference call to discuss the results at 8:30 a.m. ET on Wednesday.

Broad market mixed

Elsewhere in the market, General Motors Corp.'s benchmark 8 3/8% notes due 2033 were unchanged, a trader said, at 37¾ bid, 38¾ offered. Another trader also placed the paper around the 38 mark.

Rival Ford Motor Co. meantime saw its 7.45% notes due 2031 nearly a point better at 94 ½ bid, 95 ½ offered.

Also in the autosphere, a trader said Visteon Corp.'s 8¼% notes due 2010 and 7% notes due 2014 were "still in the high-90s, like 97-ish."

Away from that arena, Washington Mutual Inc.'s bank seniors, such as the 5.55% notes due 2010, were "for the most part unchanged," the trader said, at 46½ bid, 47. The "holdco" seniors were "marginally better," the 4.20% note due 2010 at 103 bid, 103¾ offered and the 5¼% notes due 2017 at 105¼ bid, 105½ offered.

And, Wynn Resorts LLC's 6 5/8% notes due 2014 were "right where it has been," a trader said at 101. He noted that about "$20-odd million" changed hands.

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