Quicksilver Resources, B/E Aero lead calendar-building; Visteon slides as autos move lower

By Paul Deckelman and Paul A. Harris

New York, June 23 - Quicksilver Resources, Inc. and B/E Aerospace, Inc. were among the names heard floating around on Monday in the primary market, which saw a number of issues either announced or taken on the road for marketing to potential investors. Quicksilver was heard to be getting ready to price a $300 million issue of seven-year notes, perhaps as soon as Tuesday, while B/E Aerospace is expected to do a deal on Thursday.

Elsewhere in the new-deal arena, Stats ChipPAC Ltd. and Ferro Corp. were heard by syndicate sources to be beginning roadshows for their respective offers. Atlas Pipeline Partners, LP began shopping around a new offering of senior notes. Price talk emerged on Linn Energy LLC's offering of 10-year notes.

In the secondary market, automotive names were seen lower, particularly such parts manufacturers as Visteon Corp., Metaldyne Corp. and Delphi Corp., amid new signs of weakness in the whole industry; domestic leader General Motors Corp. announced plans for further production cutbacks in the face of sagging sales, and is also seen readying a sweeping incentive program - a sign of how serious the sales downturn has become.

Outside of the autosphere, traders saw an essentially featureless market, with many names just drifting lower on small volume and overall lack of conviction. They contrasted what the market has turned into with what it was just a couple of weeks ago, when spreads were tightening and prices rising on relatively good volume, buoyed by hopes that the worst of the credit industry/banking crisis had passed, with the financial industry looking forward to a recovery mode.

A syndicate official said that the CDX High Yield 10 index traded a little lower on Monday.

Primary preparations

No issues were priced in the primary market. However on the new issue-front the news flow was brisk as the final full week of June got underway.

Business on the high yield forward calendar came to just under $3.5 billion at Monday's close, as one syndicate official professed the expectation that people will be "jamming" the primary market ahead of the July 4 weekend.

However a decent portion of the business that turned up on Monday is expected to be priced by Tuesday's close.

Energy deals on Tuesday

Three issuers, all from the energy sector, are expected to price deals on Tuesday.

Atlas Pipeline Partners is offering $300 million of 10-year senior notes.

Wachovia Securities and JP Morgan are joint bookrunners for the debt refinancing deal from the Moon Township, Pa.-based midstream energy services provider.

Quicksilver Resources also expects to price a $300 million offering of seven-year senior notes before the Tuesday close.

Credit Suisse and Banc of America Securities are joint bookrunners for the debt refinancing deal from the Fort Worth, Texas-based natural gas and crude oil exploration and production company.

Both Atlas and Quicksilver are quick-to-market deals.

Also expected to price Tuesday is Linn Energy's $400 million offering of 10-year senior notes (B3/B-), which has been marketed on an investor roadshow.

On Monday the company talked the notes at 9¾% area.

Lehman Brothers is the lead bookrunner for the debt refinancing deal from the Houston-based independent oil and gas company. BNP Paribas, Credit Suisse, Deutsche Bank Securities and RBC Capital Markets are joint bookrunners.

B/E Aerospace in market

Elsewhere on Monday B/E Aerospace was heard to be in the market with a $500 million offering of 10-year senior notes, in a deal that is expected to price on Thursday.

JP Morgan, Credit Suisse and UBS Investment Bank are joint bookrunners for the acquisition financing deal from the Wellington, Fla.-based manufacturer of aircraft cabin interior products.

Stats ChipPAC launches $1 billion

Singapore-based microchip testing and packaging firm, Stats ChipPAC started a roadshow on Monday for its $1 billion two-part offering of senior notes (Ba1/BB+).

Tranche sizes remain to be determined.

The dividend funding and debt refinancing deal is expected to price next week via Credit Suisse and Deutsche Bank Securities.

Elsewhere Ferro Corp. launched its $200 million offering of eight-year senior notes on Monday.

Credit Suisse, Citigroup and JP Morgan are joint bookrunners for the debt refinancing and general corporate purposes deal from Cleveland-based supplier of technology-based performance materials for manufacturers.

Ferro is also next week's business.

Late Monday Prospect News asked one senior high yield syndicate official whether a further build-out in the new issue calendar is anticipated during the run-up to the July 4 break.

"Maybe a few more deals this week," the official replied, "but nothing crazy."

Recent deals little moved

Back among the recently priced issues, a trader saw Expedia Inc.'s 8½% notes due 2016 at 97.75 bid, 98.5 offered - down from the 98.573 level at which the Bellevue, Wash.-based on-line travel company priced a downsized $400 million offering of the notes on Thursday, but not much changed from the levels down to which the bonds had meandered on Friday.

Another trader called the bonds essentially unchanged on the day at 97.875 bid, 98.25 offered.

That trader also saw the new Petrohawk Energy Corp. 7 7/8% notes due 2015 up perhaps ¼ point at 98.25 bid, 99.5 offered. The Houston-based independent oil and gas exploration and production company priced an upsized $300 million of the notes at 98.25 last Monday as an add-on to its existing tranche of like notes.

Market indicators remain in retreat

Back among the established issues, a trader said that the widely followed CDX junk bond performance index was "about unchanged - maybe off a little bit" during Monday's session, quoting it at 95 bid, 95½ offered. The KDP High Yield Daily Index meantime plunged 37 bps to 74.90, while its yield jumped out by 9 bps to 9.82%.

In the broader market, advancing issues once again trailed decliners by a more-than two-to-one margin.

The high yield market, a trader said, "has definitely cracked." He said that "there's definitely a black cloud over our market right now - a pessimistic tone, with very few buyers around," and many of the buyers who are still in the market "are yield to call-type buyers" getting into issues three to six months before their maturity or their likely call for redemption by the issuer.

"There's a very negative tone," he said, adding that "it's amazing, the 180 that the market has done here" versus the kind of positive sentiment that prevailed as little as a couple of weeks or so ago.

He qualified his assessment, noting that "as pessimistic as the tone is, there's very little volume and very few trades taking place." He noted the emergence of a new phenomenon - "Mondays and Fridays being totally dead, with [just about] all trades taking place Tuesday through Thursday." He said that he had talked to a few buy-side accounts, and they had observed the same sentiment - "nobody wants to do anything on Friday or Monday."

A second trader said that there was not much happening at all beyond Quicksilver Resources' announcement of its deal. "The market was just a little weaker today."

He described the session as "listless, drifting lower on very little volume."

"It was just one of those days when it feels like the market didn't open."

Autos skid lower

One of the few features in the market was the automotive sector, which turned lower against a backdrop of more bad news, including industry leader General Motors' announcement of major production cutbacks at the plants that produce its sport-utility vehicles and full-sized pickup trucks. Those once-profitable vehicles have now become an albatross around GM's neck thanks to high fuel prices that have diminished customer demand for such gas-guzzlers.

GM - beset with sagging sales levels all around and fighting to hold off rival Toyota, currently the Number-Two car and light truck seller in North America and charging hard to try to topple GM from the Number One spot, was reported ready to announce a plan of sweeping incentives in hopes of boosting sales and holding market share - a sign of how serious its sales decline has become, since the expensive incentives could cut into overall earnings.

A market source saw GM's benchmark 3 7/8% notes due 2033 down nearly 2 points at 63 bid, on very active volume, while its 49%-owned GMAC LLC funding arm's 8% bonds due 2031 were also off 2 points to just below the 68 level, also in very active dealings.

Rival Ford Motor Credit Co.'s 8% notes due 2016 were down nearly a point at the 75 level.

Among the automotive parts companies, American Axle & Manufacturing's 7 7/8% notes due 2017 lost a point in busy dealings to 74. The Detroit company is heavily dependent on sales of truck axles to GM.

Maybe the biggest loser in the sector was Visteon. A trader saw its 7% notes due 2014 down 5 points on the day at 59 bid, 61 offered, while its 8¼% notes due 2010 were steady at 92. He did not know the reason for the drop in the 7s.

Another trader also saw the 7% bonds fall to those levels, but had likewise seen no news. He speculated that the fall was linked to overall auto-sector weakness.

A market source at another desk saw the bonds at 60, down 4 points.

Metaldyne Corp.'s 10% notes due 2013 were at 55 bid, 57 offered and its 11% notes due 2012 were at 29 bid, 31 offered, both down 2 points on the day.

Delphi's 6.55% notes that were to have come due in 2006 dropped nearly 3 points to the 30.5 level.

Allied Waste easier as deal is clinched

A trader saw Allied Waste North America's 6½% notes due 2010 at 100.5 bid, 101.5 offered, unchanged on the day, while its 6 7/8% notes due 2013 were up ½ point at 100 bid, 101 offered in the wake of news that the Scottsdale, Ariz.-based waste-management company is to be acquired by Republic Services. Another trader saw the bonds drifting lower on Monday.

A trader said that Allied Waste's bonds had "definitely tightened" last week on the news that the company was in talks with Republic on such an acquisition. However, now, "with the weakness in our market" over the past few days, "that paper has widened out from its tights - it's still tighter from where it was trading pre-acquisition discussion. But it's definitely widened out. There are very few buyers around."

Constellation bonds drift down

A trader said Constellation Brands Inc. "was weaker, and nobody can understand why." He saw its Canandaigua Wines 7¼% notes due 2016 "just drifting with the rest of the market". The bonds were around par "a couple of days ago," but now are around 96.5 bid, 97 offered.

"Everybody's asking me why" the Fairport, N.Y.-based wine and liquor importer, manufacturer and distributor's bonds are lower, he said. "And to tell you the truth, I don't know."

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