Nuveen deal prices, moves up in aftermarket; auto credit names better; Iron Mountain gains on earnings

By Paul Deckelman and Paul A. Harris

New York, Oct. 31 - Nuveen Investments priced a downsized $785 million offering of eight-year bonds on the tight end of price talk Wednesday, high yield syndicate sources reported. Those bonds were seen having firmed solidly when they went into the aftermarket, as did the new add-on offering priced Tuesday by Susser Holdings.

And the forward calendar grew substantially as United Rentals Inc. launched a $2.55 billion offering of seven-year second-priority notes via Credit Suisse.

In the secondary market, GMAC LLC's bonds, and those of its Residential Capital Corp. mortgage unit were seen higher ahead of Thursday's scheduled release of GMAC's third-quarter earnings. Rival Ford Motor Credit Co.'s bonds were also seen better, likely on sector strength.

Jones Apparel Group Inc.'s bonds initially firmed after the clothing designer and marketer posted solidly higher third-quarter numbers, but then eased later in the session.

Quicksilver Inc.'s bonds were up on the news that the company has agreed to sell its Cleveland Golf Co. Inc. subsidiary.

By the end of the day, the widely expected Federal Reserve rate cut was seen having little or no real impact on the junk market - which also had been widely expected.

The broad high yield market eased in the immediate aftermath of news that the Federal Open Market Committee cut its benchmark fed funds rate by 25 basis points to 4½%, according to one high yield syndicate official.

Just before the announcement the source was marking junk at 98¼ bid.

In the immediate aftermath the official saw a print as low as 97 7/8 bid.

"It was a little soft immediately afterward, but then it came back in the evening," said the official, who added that the market closed Wednesday at 98 1/8 bid.

Nuveen downsizes to $785 million

In the primary, Nuveen Investments priced a downsized $785 million issue of eight-year senior notes (B3/B-) at par to yield 10½% on Wednesday - at the tight end of the 10½% to 10¾% price talk.

The issue was downsized from $885 million, with $100 million shifted to the company's bank loan.

Merrill Lynch & Co, Deutsche Bank Securities, Wachovia Securities and Morgan Stanley were joint bookrunners for the Chicago-based investment services provider's LBO financing.

United Rentals launches $2.55 billion

Elsewhere United Rentals launched a $2.55 billion offering of seven-year second-priority senior secured notes during the mid-week session.

Credit Suisse, Banc of America Securities LLC, Lehman Brothers and Morgan Stanley are joint bookrunners for the acquisition deal from the Greenwich, Conn., equipment rental company.

Meanwhile Ace Cash Express Inc. plans to price a $45 million add-on to its 10¼% senior notes due Oct. 1, 2014 (existing ratings Caa1/B-) on Thursday via Bear Stearns.

Closing in on a record

With Nuveen having cleared and United Rentals in the market, a high yield syndicate official reckoned, Wednesday, that the bond portion of the hung LBO risk is now below $80 billion, after having been as high as $115 billion to $116 billion.

This source expects another mega-LBO deal to be rolled out in short order, but declined to furnish a name.

Meanwhile, October 2007 closed Wednesday having seen $142.7 billion of year-to-date U.S. market high-yield issuance.

At the Halloween close during the record-setting year of 2006, the market had seen just under $110.4 billion of issuance.

And the $142.7 billion of issuance for 2007 through October is less than $14 billion shy of the $156.6 billion seen in the entire year of 2006.

With more than $70 billion of hung LBO bond financing pending it is a near certainty, therefore, that 2007 will see a new record for dollar-amount of issuance set in the U.S. market.

Nuveen, Susser gain in secondary

When the new Nuveen Investments 10½% senior notes due 2015 were freed for secondary dealings, a trader saw the bonds head up to 101.5 bid, 101.75 offered from their par issue price before coming off that peak to end at 101.25 bid, 101.5 offered.

At another desk, a trader saw the new bonds end at 101.375 bid, 102 offered.

The first trader also saw the new Susser Holdings' 10 5/8% notes due 2013 enjoy "a nice little pop as well," moving up to 104 bid, 104.75 offered from their 102.5 issue price Tuesday. He said that the bonds had firmed even though the add-on deal was relatively small and illiquid at just $150 million. The original issue was $170 million.

"I think [the issuer and its underwriters] priced them to move," he opined. "They're not taking any chances."

Auto credit bonds move up

Back among the established issues, GMAC's widely traded 8% bonds due 2031 were being quoted at 93.75 bid, up 1¼ points, in what was described as fairly active trading. Its 6 5/8% notes due 2012, also busily traded, were seen nearly 1 point better at 91 bid. GMAC's wholly owned ResCap mortgage unit's 7 7/8% notes due 2015 were up a point on the session at 73 bid, spiked as high as 77 at one point in the session before coming back down to end at 73, up 1 point.

That rise comes ahead of the scheduled mid-morning release Thursday of the companies' third-quarter results, and the following conference call with senior executives.

While GMAC's bonds were up, so were Ford Motor Credit's, its 8% notes due 2016 seen up more than 1 point in busy dealings at 93 bid.

A trader meantime saw GMAC's former corporate parent, General Motors Corp.'s 8 3/8% benchmark bonds due 2033 up ½ point at 91 bid, 92 offered.

Iron Mountain gains

A trader saw Iron Mountain's 9 5/8% notes due 2016 up 1 point at 95.5 bid, 96.5 offered. A market source at another shop pegged the Boston-based information storage company's 8 5/8% notes due 2013 up about ½ point at 102.5.

That rise followed the company's announcement that its third-quarter earnings nearly doubled to $51.3 million, or 25 cents per share, from $26.6 million, or 13 cents per share, in the year-ago period. That easily beat Wall Street's expectations of 18 cents per share.

Iron Mountain reported that its revenues rose on favorable exchange rates and acquisitions, and the company's tax bill eased.

It further announced that it will acquire the e-discovery company Startify for $158 million.

Jones lags despite better earnings

Also on the earnings front, Jones Apparel's 6 1/8% bonds due 2034 were seen having pushed up to around the 81 bid level from Tuesday's finish at 79.5, propelled by several sizable trades, although after that, there were several small odd-lot transactions that actually pulled the bonds about 1 point lower on the day.

The company - known for its Nine West shoe line, Anne Klein clothes and its eponymous Jones New York clothing brand - said third-quarter net income rose to $400.1 million, or $3.97 a share, from $63 million, or 56 cents, a year earlier

Its profit surge was given a boost by Jones' sale of its Barneys New York luxury retail chain for $942.3 million, more than triple the $294.3 million that it paid for the retailer three years ago. Excluding the gain from that sale of Barneys to Istithimar, the Dubai government's investment arm, as well as other special items, the company made 51 cents per share, better than the approximately 35 cents per share that Wall Street was looking for. While sales fell 4.6% year-over-year to $1.03 billion, they were still good enough to beat the $1 billion average estimate of analysts.

Jones reaffirmed its 2007 profit forecast of as much as $1.25 a share. Company executives also said on their conference call with investors and analysts following the release of the numbers that Jones will continue its ongoing campaign to shed less-profitable brands in order to concentrate on its flagship nameplates like Nine West, Jones New York and Anne Klein. The company's chief executive officer, Wesley Card, predicted on the call that Jones will sell or otherwise exit some $300 million in brands by year's end.

"We have laid a strong foundation for operational improvements and we will begin to see results into 2008 and beyond," Card declared on the call.

Quicksilver up on asset sale

A trader quoted Quicksilver's 6 7/8% notes due 2015 at 93 bid, 94 offered, citing the news that the Huntington Beach, Calif.-based outdoor apparel and equipment maker has agreed to sell its Cleveland Golf subsidiary to Japanese sporting goods retailer SRI Sports Ltd. for $132.5 million.

Overall, trading was fairly quiet, with advancing issues outpacing decliners about five-to-four. Traders saw no discernable impact from the Fed rate cut, which was widely expected and had been pretty well priced in.

A trader saw the CDX junk bond performance index up 3/16 point at 98 1/8 bid, 98 3/8 offered. Among other market barometers, the KDP High Yield Daily Index was essentially unchanged at 79.77, its yield 1 basis point wider at 8.01%.

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