Upsized Sprint, Tenet deals price, Lyondell also, in almost $6 billion day; MF debacle resumes

By Paul Deckelman and Paul A. Harris

New York, Nov. 4 - The junk bond primary market put on a furious burst of energy on Friday to price nearly $6 billion of new paper - Junkbondland's busiest new-issue day in more than three months, easily eclipsing the $4.6 billion that priced one day last week.

A hugely upsized $4 billion offering from wireless provider Sprint Nextel Corp. was the key transaction for the day; the two-part issue was the biggest mega-deal since HCA Corp.'s $5 billion behemoth in late July.

Also upsizing was hospital operator Tenet Healthcare Corp., which was admitted with a $900 million offering of seven-year secured notes.

The only deal not being enlarged came from chemical manufacturer LyondellBasell Industries NV, although at $1 billion, the tranche of 10-year bonds was already big by anyone's standard.

The Tenet and Lyondell deals gained modestly in the aftermarket, but Sprint crossed the finish line too late to have any dealings. The company's existing bonds, however, moved lower on the new-deal news.

Combined with the $3 billion of new paper that had already priced during the week, the day's heavy issuance brought primary activity for the week up to almost the $10 billion level, The primaryside - which priced nearly $7 billion last week - hasn't been this busy since it racked up $10 billion in late July.

Like the other deals this week, Friday's transactions were drive-by offerings reflecting market uncertainty over the troubling economic news from Europe and elsewhere and the resulting volatile, quickly-changing conditions that make traditional roadshow deals difficult.

But one such prospective deal did emerge from the session, as Petroleum Geo-Services ASA, a provider of seismic services to the energy industry, was heard by syndicate sources preparing to hit the road Monday with a $300 million seven-year deal.

Away from the new-issue realm, MF Global Holdings Inc.'s bonds continued to dominate the proceedings, amid new developments including the resignation of chief executive officer Jon Corzine and conflicting reports about the supposed whereabouts of the more than $600 million in apparently missing customer funds.

Sprint prices $4 billion

In Friday's dollar-denominated junk market three issuers brought a combined four tranches raising a total of $5.9 billion.

All of Friday's deals were oversubscribed, playing to huge demand, market sources said.

Sprint Nextel priced a massively upsized $4 billion two-part note transaction.

The deal included $3 billion of junior guaranteed notes (/BB-/BB) which priced at par to yield 9%. The tranche was upsized from the originally contemplated range of $2 billion to $2.5 billion.

Sprint Nextel also priced $1 billion of non-guaranteed notes (/B+/B+) at par to yield 11½%. The non-guaranteed tranche was doubled in size from $500 million.

Both pieces on top of price talk.

J.P. Morgan Securities LLC ran the books.

The Overland Park, Kan.-based wireless services provider plans to use the proceeds for general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire Corp. and its subsidiary Clearwire Communications LLC.

The Sprint Nextel deal was the biggest to hit the high-yield primary since HCA, Inc. priced $5 billion in two tranches on July 26.

LyondellBasell inside of talk

LyondellBasell Industries priced a $1 billion issue of 10-year senior notes (Ba2/BB+) at par to yield 6%.

The yield printed 12.5 basis points inside of price talk that was set in the 6¼% area.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Barclays Capital, Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and UBS Investment Bank were the joint bookrunners for the quick-to-market issue.

Proceeds, together with available cash, will be used to pay a special dividend of up to $2.6 billion.

Tenet upsizes

Tenet HealthCare priced an upsized $900 million issue of seven-year senior secured notes (B1/BB-) at par to yield 6¼%.

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

Bank of America Merrill Lynch, Barclays Capital, Citigroup Global Markets and Wells Fargo Securities LLC were the joint bookrunners for the quick-to-market issue.

Proceeds will be used to purchase Tenet's 9% senior secured notes due 2015 in a tender offer, and for general corporate purposes including debt repayment.

Com Hem's unsecured deal

In Europe on Friday, Swedish cable operator Com Hem priced a €287 million issue of 10¾% eight-year senior notes (Caa1/CCC+) at 94.98 to yield 11¾%.

The yield printed on top of yield talk. The reoffer price came cheap to original issue discount talk of 4 points.

Goldman Sachs International, the global coordinator and joint bookrunner, will bill and deliver. Deutsche Bank AG, Morgan Stanley, UBS AG, Bank of America Merrill Lynch and Nordea were joint bookrunners.

Proceeds will be used to help fund BC Partners' acquisition of Com Hem from Carlyle Group.

On Oct. 27 Com Hem priced an SEK 3.5 billion issue of 9¼% seven-year senior secured notes (B1/B) at 96.938 to yield 9 7/8%. That deal was also part of the acquisition financing.

$9.82 billion week

With Friday's mass of issuance factored into the total the October-November crossover week saw $9.8 billion of issuance in 11 junk-rated dollar-denominated tranches.

It was the biggest week since the week of July 25 which saw $10.5 billion, also in 11 tranches.

At Friday's close the 2011 primary market had cleared $235 billion in 508 tranches.

The week ahead

Petroleum Geo-Services plans to commence a roadshow on Monday for a $300 million offering of seven-year senior notes.

The deal is set to price on Wednesday.

Barclays Capital Inc., RBS Securities Inc. and UBS Investment Bank are the joint bookrunners. Barclays will bill and deliver.

Moody's Investor Services assigns its Ba2 issuer rating to the company. The Standard & Poor's issuer rating is BB. Ratings on the notes remain to be determined.

Proceeds will be used for general corporate purposes. The company intends to repurchase or repay its outstanding convertible notes on or before maturity with cash on hand plus the proceeds of this offering.

Also in the week ahead Amerigroup Corp. is expected to price its $450 million offering of eight-year senior notes (expected ratings Ba3/BB+) via bookrunner Goldman Sachs.

And Health Management Associates, Inc. plans to sell $1 billion of eight-year senior notes (B3/B-/), via Deutsche Bank Securities Inc.

Tenet trades higher

When Tenet Healthcare's upsized new issue of secured notes was freed for secondary dealings, a trader saw the Dallas-based hospital operator's new bonds having gotten as good as 100 5/8 bid, 100¾ offered in initial trading, up from their par issue price.

He saw the $900 million tranche going out at 100¼ bid, 100¾ offered.

A second trader also saw the bonds closing at that level.

A trader said that "the bonds being tendered for rallied," referring to the company's 9% senior secured notes due 2015; Tenet separately announced a tender offer for the $700 million issue, to be funded with the bulk of the proceeds from the new deal.

The 9s moved up to around the 108½ level after having traded at 106¼ earlier in the week.

However, activity was limited, with only a couple of round-lot trades having taken place.

Tenet's 10% notes due 2018 were seen down by ¼ point at the 115 level.

Lyondell a little better

A trader saw the new LyondellBasell 10-year notes at 100½ bid, but "no right side," indicating a dearth of offerings for the chemical company's $1 billion of paper.

A second trader saw the bonds at 100½ bid, but likewise did not see any actual two-way dealings.

Sprint too late to trade

Sprint Nextel's giant-sized two-part deal hit the tape too late for dealings on Friday - but traders said that the Overland Park, Kan.-based Number-3 U.S. wireless operator's existing bonds were mostly lower, as investors expressed dismay over the already considerably-levered Sprint taking on such a big block of additional debt.

Sprint had total debt outstanding as of Sept. 30 of about $18.5 billion.

Another negative for the name was Standard & Poor's downgrade to B+ from BB- previously.

A trader said that Sprint was "obviously" down on indications it could use some of its new-deal proceeds to provide more funding for its majority-owned network operator, the underperforming Kirkland-Wash.-based Clearwire Corp.

A market source said that Sprint's 6% notes due 2016 was one of the most actively traded issues on the day, with over $20 million having changed hands, last around the 88 level.

Its 8 3/8% notes due 2017 lost 1¾ points to end at 92½ bid, while affiliate Sprint Capital Corp.'s 6.9% notes due 2019 dropped 3½ points to around the 82.5 mark. Over $15 million of the latter issue traded, also putting that issue on the most-actives list.

At another desk, a trader said that Sprint's short-dated bonds traded up, while the longer-dated debt fell, citing the news of the bond deal.

"At least the company will have money to fund the maturity to at least 2012," one trader reasoned.

"The front end's up about half a point," a trader said.

He saw Sprint's 8.3/8% notes due 2012 up ½ point to 101¼ bid, 101¾ offered Friday afternoon, while its 6 7/8% notes due 2013 also were up a half-point to 99 ½ bid, par offered, the trader said.

The trader saw the longer-dated issues down about ½ point on the day, pegging the Sprint Capital 6.9% issue off by ¾ point to 82.75 bid, 83.75 offered.

Sally Beauty looking good

Among other recently priced deals, a trader said that the new Sally Holdings LLC 6 7/8% notes due 2019 "traded well," pushing up to the 103 bid level after having priced late Thursday at par.

There had been no aftermarket seen on Thursday in the Denton, Tex.-based retail and wholesale beauty products distributor's $750 million deal, which had been upsized from the originally announced $450 million.

SM Energy solid

A trader said that SM Energy Co.'s 6½% notes due 2021 were holding their own at the 102 bid, 102½ offered level at which the Denver-based natural gas exploration and production company's $350 million deal had traded at on Thursday after pricing at par. The tranche was upsized from the originally planned $300 million.

Drive-by domination continues

SM Energy and Sally Beauty - like Tenet, Lyondell and Sprint Nextel - were drive-by offerings, being announced early in the session and pricing later that same day.

So were the week's other new deals from Cablevision Systems Corp., American Axle & Manufacturing Holdings, Inc., Spectrum Brands Inc., and CNH Capital LLC.

A trader said that given all of the uncertainty roiling the financial markets currently, between the rapidly changing situation with the eurozone debt crisis to unpleasant surprises rocking the market on the domestic front, such as the MF Global meltdown and, stemming from that, the Jefferies Group gyrations, "if you're a corporation that has a name that is known and a structure that is known, I wouldn't expect you'd see those companies doing long roadshows.

"There is so much uncertainty, in terms of what's going on in Europe - Greece and stuff like that - that you've got to melt the butter when the toast is hot. If you can get a deal done, you do it. You're not going to put a long roadshow on, even if it costs you a couple of investors, because things in this world have the appearance that they can change so much over the span of 72 hours that it's just not worth the risk."

He said that "if the market tone is good, as it was today - we didn't run away, but it was clearly a stable day in high yield - you get the deal done."

Jefferies, MF saga goes on

Away from the new deals, traders said that what one called the MF Global "soap opera" continued on Friday, on the news that chief executive officer John Corzine had resigned his post at the failed New York-based broker-dealer firm.

There was also news out on the apparently missing $600 million-plus of client cash, with a news report that the money had been found in an account at J.P. Morgan & Co.

However, J.P. Morgan later clarified that this was not the missing cash that everyone was looking for, leaving things back at Square One.

"It's just one ridiculous news story after another," an exasperated trader exclaimed.

A trader said that the company's 6½% notes due 2016 were "on a bit of a rollercoaster," trading down to 40, then moving back up into the mid-40s Another once again saw active volume in the notes, quoting them down ½ point on the day to around 45.

Investment bank Jefferies' nominally investment-grade debt was meantime "seesawing all over the place" on Friday, following the trend set Thursday as market participants pushed the bonds all the way into distressed territory before bringing them back, traders said.

One saw the company's 5 1/8% notes due 2018 trading in an 84 to 86 context, while the 7¾% notes due 2012 were "slightly higher" at 98 bid, 99 offered.

Even so, a trader pointed out that the spread on that four-month paper - it matures in March - was well into distressed-debt territory, at over 1,300 basis points over comparable Treasury paper.

Stephanie N. Rotondo and Cristal Cody contributed to this report

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