Autos seen perhaps a little higher as Ford, Chrysler match GM incentives; Cirsa deal prices

By Paul Deckelman and Paul A. Harris

New York, July 5 - It was back-to-business day Tuesday, after the long Independence Day holiday weekend that saw an abbreviated pre-holiday session Friday and a full market close Monday - but apparently nobody felt much like working, according to traders who saw the junk bond secondary market little changed and prices for most issues range-bound.

This was even true for the automotive names, which were pretty much unchanged from their previous levels to perhaps just a little bit higher, traders said, despite General Motors Corp.'s announcement that it will extend its wildly successful "Employee Discount Price" program for most models through Aug. 1, and announcements from rival Ford Motor Co. and the Chrysler division of DaimlerChrysler that they will offer similar incentives through the end of this month in an effort to lure car buyers back into their showrooms.

Outside of the autosphere, Young Broadcasting Inc.'s bonds were seen lower as The New York-based television station operator lowered its 2005 revenue and station operating performance guidance.

In the new-deal arena, the only offering on the forward calendar for the week, a euro-denominated issue for Cirsa Capital Lux SA, was heard to have priced during morning trading. Roadshow details emerged on two other calendar deals, for Clayton Williams Energy Inc. and Mylan Laboratories Inc., while CCM Merger Inc., which is purchasing the MotorCity Casino in Detroit from the recently merged MGM Mandalay, will be hitting the road soon with an issue of eight-year notes.

Cirsa comes mid-talk

Overall Tuesday's primary market session came with a light news load. No dollar-denominated deals priced during the session. Indeed, as of Tuesday's close there were none on the calendar as business expected to price this week.

But terms did emerge on the euro-denominated deal from Spanish gaming company Cirsa.

Cirsa Capital Lux SA priced a €130 million issue of seven-year senior notes (B2/B) at par to yield 7 7/8%, in the middle of the 7¾%-8% price talk.

Deutsche Bank Securities ran the books for the debt refinancing deal.

Three for the road

Meanwhile three companies headed for the starting line for deals expected to price during the July 11 week.

Mylan Laboratories Inc. will start a roadshow Wednesday for its $500 million two-part offering of senior notes (Ba1/BB+).

The Canonsburg, Pa., pharmaceutical company is in the market with a five-year bullet and a 10-year non-call-five note via Merrill Lynch.

Proceeds from the bonds will be used as part of the funding for the company's share buyback.

Elsewhere CCM Merger, Inc. (MotorCity Casino) will begin a roadshow on Thursday for its $200 million offering of eight-year senior unsecured notes (B3/B-), via Deutsche Bank Securities and Merrill Lynch.

The proceeds will help to fund the acquisition of the Detroit-based gaming company.

And Clayton Williams Energy, Inc. will begin a roadshow on Wednesday for its $200 million offering of eight-year senior notes (B3/B-), with JP Morgan in the lead.

The Midland, Texas oil and gas exploration and production company will use the proceeds to repay debt and for general corporate purposes.

Summer doldrums?

One source on a high-yield syndicate desk said that with no deals positioned on the forward calendar at Tuesday's close that are expected this week the market appears to be in "summer mode."

Elsewhere, however, the rumor mill was grinding.

The biggest portion of grist for that mill came from SunGard Data Systems, which will launch its $5 billion credit facility on Thursday.

A source told Prospect News that an anticipated $3 billion of bonds, which are also an anticipated piece of the company's overall $11.3 billion LBO package, could launch as early as the week of July 18. Deutsche Bank Securities is known to be involved in the bond portion of the financing, with JP Morgan and Citigroup also expected to be in the deal.

However Prospect News has also heard that the company will initially obtain a $3 billion 12-month high-yield bridge loan, so the bonds may not come anytime soon.

The $3 billion question, sources say, is 'Will the junk market swallow such a lump of issuance?'

Finally, one source from a high-yield syndicate desk advised Prospect News to be alert for drive-by business during the Wednesday session.

Trading slow

Back in secondary dealings, things were so slow on the first day back after the July 4th break that one trader lamented: "I wish I was off today. It was really dead."

"It feels like today pretty much is still a holiday," another trader agreed. "Trading was anemic."

Auto names little changed to higher

The first trader saw little positive impact from GM's announcement that it will extend its popular incentive program that offers most of its cars to the general public at the same discounted price that a GM employee would pay - meaning a savings of several thousand dollars on some models.

That helped to boost June sales a staggering 41% over year-ago levels, prompting the auto giant to extend the program, which had been scheduled to expire Tuesday, until Aug. 1. Chrysler and Ford each hurriedly announced similar programs, timed to run through Aug. 1.

The trader said that "the consensus [in the market] is that even though they may sell more cars and gain share, a price war would negate any benefits from the increased sales by squeezing margins."

Accordingly, he saw GM's benchmark 8 3/8% notes due 2033 down about a quarter-point at 83.75 bid, 84.75 offered, off from 84 previously.

However, at another desk, a market source said that from where he sat, the GM bonds were actually firmer from their recent levels, with the 8 3/8s at 84.5, up about ¾ point from the levels they finished at on Friday. He also saw GM's 7 3/8% notes due 2048 "up in the last couple of days" at 72.25, a ¾ point gain.

Another market source agreed that the GMs did feel a little firmer, quoting the company's 7 1/8% notes due 2013 at 90 bid, up half a point.

The first trader also saw Ford's flagship 7.45% notes due 2031 unchanged on the day at 82 bid, 83 offered.

Another source, though, saw the Number-Two carmaker's 7.40% notes due 2046 "up just a tad," at 83, a gain of half a point, while its 9.215% notes due 2021 saw "some volume but not a lot of bids." He saw those bonds ending on "a slight rise from a couple of days ago" at 94.75 bid, up ¾ point.

Suppliers edge up

In auto-related junk names, a trader saw Delphi Corp.'s 7 1/8% notes due 2029 up half a point at 69.25. He thought that the news from GM and its rivals perhaps "gives a bid to the auto parts guys," although he did see the Troy, Mich.-based automotive electronics maker's 6.55% notes due 2006 unchanged at 97.5 bid, 98.5 offered.

Visteon Corp.'s 8¼% notes due 2010 were meantime "pretty much unchanged" at 91.5 bid, 92.5 offered, while the Van Buren Township, Mich.-based auto components maker's 7% notes due 2014 held steady around 82.5 bid.

A trader saw Collins & Aikman Products Co.'s 10¾% notes due 2011 up a point from Friday's levels at 24 bid, 25 offered, although another trader pegged the bankrupt Troy, Mich.-based automotive components maker's senior bonds unchanged at 23 bid, 24 offered.

Collins' bonds went on a wild ride last week, amid reports - which later were confirmed - that the company was having trouble getting the unused portion of its debtor-in-possession financing from its bank lenders.

On Tuesday, a Collins & Aikman spokesman tried to explain why the lenders, with J.P. Morgan in the lead, pulled the plug on providing the second $150 million of its $300 million of DIP money.

"Because we have been successful in obtaining accelerated payments from our customers," he told Prospect News, even following the demise of its structured "fast-pay" programs with GM and other major automakers, the company's estimate of its projected borrowing base indicated that it "wouldn't be able to support the $300 million, but would be able to support the $150 million [i.e. the first half of the DIP loan, which was provided]."

J.P. Morgan's refusal to release the final $150 million - the first tranche, granted on an interim basis, was "exhausted," the spokesman said - put the company into a position where it had to turn to its customers for bridge financing. The $30 million that the customers granted the company on an emergency basis late last month "demonstrates the support we have from our customers," even as the company tries to wade through bankruptcy amid liquidity problems.

He said that Collins & Aikman is negotiating with its customers and with J.P. Morgan "to establish longer-term financing to meet our liquidity needs."

This has not been without its problems. There has been some friction between the company's creditors, including J.P. Morgan, and the customers fronting Collins & Aikman the money, mostly on whether that new loan should be given administrative priority claim status, in effect bumping it ahead of other claimants, such as the unsecured creditors. Even so, the spokesman said, all of the parties, including J.P. Morgan as lead bank and the lending customers, are sitting at the same table trying to cobble together the long-term financing package, which likely will be larger than the $150 million DIP second installment that J.P. Morgan refused to release.

With the bridge finding scheduled to run out sometime around Thursday, there will be a bankruptcy court hearing in Detroit that day on the latest financing efforts.

Sealy gains

Elsewhere, a trader saw better levels on Sealy Mattress' 8¼% notes due 2014, quoting the Trinity, N.C.-based mattress company's bonds as high as 104.5 bid, 105.5 offered, before they settled back into a range about a point below that. He said the bonds were getting belated boost from last week's announcement of an upcoming equity IPO, which could take place within six months, as well as optimistic pronouncements from the CEO of rival Simmons Bedding.

Another source quoted the bonds at 104, up more than three points on the session.

Young lower

Young Broadcasting's 10% notes due 2011 were seen lower, with a market source pegging them two points lower at 94 bid, 95 offered, after the company lowered its 2005 revenue and station operating performance guidance from the levels it announced in early May.

A trader at another desk saw the bonds at 95, estimating them down 1½ points on the day, while its 8¾% notes due 2014 were down half a point to 87.5.

Young is now estimating that its 2005 net revenue will be between $200 and $204 million, about $5 million less than originally forecast, and that its 2005 station operating performance will be between $40 and $42 million, $7 million to $8 million below its earlier predictions.

The company said that while it was posting strong local sales in most markets as a result of new business initiatives at the stations, this local sales growth has been offset by continued weakness in the San Francisco market and in its national sales across the country.

While Young turned bearish in the short-run, it said that its new 2005 outlook does not alter "our optimistic view of 2006."

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