Upsized QVC, Ball deals price, ILFC, SLM, BioScrip too; Blockbuster sags on Chapter 11 talk

By Paul Deckelman and Paul A. Harris

New York, March 17 - QVC Inc. and Ball Corp. struck while the iron was hot on Wednesday, each bringing a quickly-shopped, upsized offering of new bonds to market just hours after their respective initial announcements.

Broomfield Colo.-based packaging maker Ball came in with a $500 million offering of 10-year notes, which was heard to have moved up solidly in the aftermarket, while West Chester, Pa.-based television and online retailer QVC doubled the total size of its two-part secured note offering to $1 billion, evenly split between seven- and 10-year tranches. QVC priced too late in the session for secondary dealings.

That was also the case for the day's other two-part deal, Century City, Calif.-based aircraft leasing operator International Lease Finance Corp.'s $2 billion behemoth, evenly split between five- and seven-year tranches.

Yet another mega-deal-sized transaction was SLM Corp.'s $1.5 billion 10-year deal, whose split-rating (Ba1/BBB-/BBB-) attracted attention from both high yield and high grade accounts. Despite that attention, though, traders saw the Reston, Va.-based education financing company's deal little moved in the aftermarket from its issue price.

The day's most successful offering was also its smallest - Elmsford, N.Y.-based specialty pharmaceutical health care company BioScrip Inc.'s $225 million of five-year notes. Market participants said the deal was multiple times oversubscribed, and moved up at least 2 points in the aftermarket.

Among recently priced names, Digicel Group Ltd.'s $775 million eight-year deal moved up solidly from its Tuesday pricing level, while Bombardier Inc.'s billion-dollar issue continued to move well up from where it priced on Monday. However, United States Steel Corp.'s $600 million Tuesday deal was seen underperforming.

Away from the new-deal arena, Blockbuster Inc.'s bonds took a beating, as investors digested the bleak situation the company outlined late Tuesday, including the possibility that it might have to seek Chapter 11 protection.

International Lease prices $2 billion

International Lease Finance Corp., the aircraft leasing unit of American International Group, led off a super-sized Wednesday in the high-yield primary.

The company priced $2 billion in a restructured two-part senior notes deal (B1/BB+/BB).

ILFC priced a $1 billion tranche of 8 5/8% 5.5-year notes at 98.409 to yield 9%. The yield printed on top of yield talk. The reoffer price came rich to the 2 to 3 points of discount talk.

The 5.5-year notes tranche came at the larger end of the $750 million to $1 billion amount at which the deal launched earlier on Wednesday.

The company also priced a $1 billion tranche of 8¾% seven-year notes at 97.474 to yield 9¼%. The yield on the seven-year notes came at the tight end of the 9 3/8% area price talk.

The seven-year notes tranche was launched at $500 million minimum, and was priced at double that size.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse and UBS Investment Bank were the joint bookrunners.

Proceeds will be used for general corporate purposes, including repayment of existing debt.

Ball Corp. upsizes

Meanwhile Ball Corp. priced an upsized $500 million issue of 10.5-year senior unsecured notes (Ba1/BB+) at par to yield 6¾%, in a Wednesday drive-by.

The yield printed at the tight end of the 6¾% to 7% price talk. The amount was increased from $450 million.

Deutsche Bank Securities was the left bookrunner for the quick-to-market deal.

Bank of America Merrill Lynch, JP Morgan, Goldman Sachs and Barclays Capital were joint bookrunners.

Proceeds will be used to retire the Broomfield, Colo.-based metal and plastic packaging company's 6 7/8% notes due 2012.

BioScrip at tight end of talk

BioScrip, Inc. priced a $225 million of 5.5-year senior notes (B3/B-) at par to yield 10¼%.

The yield printed at the tight end of the 10¼% to 10½% price talk.

Jefferies & Co. ran the books.

Proceeds will be used to help fund the acquisition of Critical Homecare Solutions, as well as to refinance existing debt and for general corporate purposes.

The deal from the Elmsford, N.Y.-based specialty pharmaceutical health care organization played to a $1.5 billion order book, according to a hedge fund manager, who spotted the par-pricing notes trading at 101¾ bid, 102 offered, shortly after Wednesday's New York close.

Split-rated deals

The remainder of Wednesday's super-sized primary market business came with at least one investment grade rating.

SLM Corp. priced a benchmark $1.5 billion issue of split-rated 8% 10-year senior notes (Ba1/BBB-/BBB-) at 98.318 to yield 8¼%.

The deal came on top of price talk.

J.P. Morgan Securities Inc., Bank of America Merrill Lynch and Barclays Capital Inc. were the bookrunners.

Proceeds are being used for general corporate purposes.

QVC doubles deal size

Finally, QVC, Inc. double the size of its drive-by deal to $1 billion from $500 million, and placed two tranches of senior secured first-lien notes (Ba2/BB+/BBB-) at par.

The company priced $500 million of 7 1/8% seven-year notes at the tight end of the 7 1/8% to 7¼% price talk, and $500 million of 7 3/8% 10.5-year notes also at the tight end of the 7 3/8% to 7½% price talk.

The West Chester, Pa.-based multimedia retailer doubled both tranches, each of which was announced at a size of $250 million.

J.P. Morgan, Barclays Capital, Wells Fargo Securities, Bank of America Merrill Lynch, Citigroup, Credit Agricole CIB, Morgan Stanley, RBS Securities Inc. and Scotia Capital were joint bookrunners.

Proceeds will be used to repay bank debt.

Oversubscribed BioScrip a big gainer

A trader quoted BioScrip's 10¼ % notes due 2015 at 102 bid - well up from the par level where the issue had priced at the very beginning of the trading day. He also said that he had heard that the deal had been "10 times oversubscribed."

A second trader said that at his shop "we really weren't following this one. As soon as I heard it was oversubscribed - that was it, I'm out, I'm not following this name," since he would have had to fight to get even a small piece of the relatively modest sized issue, given the intense level of demand from would-be investors.

"Are you going to try to trade for accounts? Everyone is going to be bidding against themselves" to get a piece of the action.

BioScrip "did well," despite it being "a small deal with not a ton of activity, although it was nine or 10 times over[subscribed]." He saw the bonds going home in the 101½ -102 area

Investors have a Ball

Ball Corp.'s new 6¾% notes due 2020 were trading around 101 a trader said, after the issue had priced at par.

Another trader saw the bonds break around 100¾ bid, 101¼ offered, and then move up within minutes to 101 bid, 101¼ offered.

Sallie Mae stays around issue

A trader saw the new SLM 8% notes due 2020 trading at 98½ bid, 99 offered, up a little from the 98.318 level where the $1.5 billion issue had priced earlier in the afternoon.

A second trader quoted the Sallie Maes in a 981/4-98¾ context, based upon four or five spots he'd seen, "so they're trading right upon issue price on the bid side, or maybe up 1/8 or so."

"It really didn't do much of anything," yet another trader said. "It was trading off some crossover desks, so obviously some high yield guys touched it - they tried to run it up at first, but now it's back down to trading only about ¼ point around issue, wrapped around 981/2. So there was not a whole lot of upmove on that one."

Digicel does well

A trader said that Digicel Group's offering of 10½% notes due 2018 "was well-received," trading up by 2 points when it broke during the morning.

"That was up quite well," he noted, quoting the Kingston, Jamaica-based wireless service provider's $775 million offering as bid around 102-1021/2, well up from the par level where the bonds had priced on Tuesday afternoon, too late for any effective aftermarket.

He said that "at one point," he saw the bonds up as much as 2¾ points from par. "That did well," he reiterated.

Another trader said that at his particular shop - as was the case at a number of houses - Digicel was trading off the emerging markets desks with somewhat limited high yield presence.

U.S. Steel off highs

The trader also said that U.S. Steel's new $600 million issue of 7 3/8% notes due 2020 "did okay, but not as well [as Digicel]," even though it too had priced on Tuesday.

The Pittsburgh-based steel giant's bonds had risen as high as 100 3/8 bid in Tuesday's aftermarket from the 99.125 level at which the issue - upsized from the originally announced $500 million - had priced earlier that session.

After having opened on Wednesday up between ¼ and ½ point from Tuesday's close, the bonds started to ease from their peak levels, finishing at 99 5/8 bid, par offered. "It's come in about ¼ or 3/8 [point] - but still trading holding in there" versus its issue price.

Another trader, seeing the bonds ending at 99½ bid, par offered, observed that "they're actually off a little bit from [Tuesday] - on of the few things going in that direction" in Wednesday's otherwise robust junk market.

"It's still up a little bit from issue, but clearly off from where they went out [Tuesday] night. Given today's [generally positive] market tone, they're definitely an underperformer."

Bombardier again better

A trader said that Bombardier's $1.5 billion of eight- and 10-year notes were up "about a point or so" from the already strong levels to which both tranches had moved late Monday and again on Tuesday, after having priced Monday at par.

Bombardier, declared another trader, "continued to grind tighter - you probably got another half point to a point out of Bombardier today."

He saw the Montreal-based aircraft and railroad equipment maker's $650 million of 7½% notes due 2018 and $850 million of 7¾% notes due 2020 both trading in a 1031/4-103¾ context.

Sitel seen firmer

The trader said that Sitel, LLC/Sitel Finance Corp.'s $300 million of 11½% notes due 2018 "is another deal that came recently that's grinding higher," quoting the Nashville-based business outsourcing services provider's new bonds as having "moved up toward the par level"; the issue priced Monday at 97.454 to yield 12%, and traded Tuesday around 98¼ bid, 98¾ offered.

Market indicators have firm tone

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index unchanged on Wednesday at 99¾ bid, par offered, after having been up by ¼ point at on Tuesday.

The KDP High Yield Daily Index meantime firmed by 12 basis points on Wednesday to finish at 71.92, after having lost 6 bps on Tuesday. Its yield tightened by 5 bps on Wednesday, after having widened by 2 bps on Tuesday.

Advancing issues topped decliners for a 14th straight session on Wednesday, substantially widening their winning margin to around an eight-to-five from just a couple of dozen issues in both Monday's and Tuesday's sessions.

Overall activity, measured by dollar-volume levels, rose by 31% from Tuesday's depressed pace.

A trader noted that things were fairly active even with the huge distraction of St. Patrick's Day celebrations going on, especially in New York, "with all of the drinking and having green this and that." Despite that, "there was a lot of volume today in some names."

Another trader characterized Wednesday's market as "definitely having a firmer tone to it again today. It's just unbelievable. Just when you think things are going to kind of settle in here - they keep going higher."

Ford firms on rating upgrade

A trader said he "saw some ridiculous offerings on the short end" in Ford Motor Co.'s paper after the Dearborn, Mich.-based Number-Two U.S. car manufacturer's ratings were raised by Moody's Investors Service.

"It was only one notch [the corporate family rating was raised to B2 from B3 and the secured credit facility to Ba2 from Ba3], so I wouldn't suspect that this thing was going to trade up that much."

He quoted 2013 paper and shorter up by about ¼ to ½ point.

A trader meantime saw Ford's 7.45% bonds due 2031 up 1½ points at 91½ bid, 92½ offered.

Yet another trader saw the 7.45s doing even better, up several points to around 92 bid, 93 offered, on "decent volume." He said that there was "again, another positive."

The ratings agency said the upgrade "anticipates that the company's restructured business model will generate significantly improved operating and financial performance," and it also said that it was keeping Ford under review for possibly another upgrade.

GM gains as CFO is upbeat

That trader saw Ford domestic arch-rival General Motors Corp.'s benchmark 8 3/8% bonds due 2033 "up "a point and change" at 34-341/2, on "decent volume." Another trader saw those long bonds at 34½ bid, 35 offered.

The bonds were helped by the news that GM's recently appointed chief financial officer, Christopher Liddell, is optimistic that the restructured Detroit giant might actually be able to post a profit for the 2010 fiscal year. He told reporters there was a "reasonable" chance this could happen.

"Relative to where we were a couple of years ago, that's enormous progress."

He said that GM was being buoyed by profitable overseas operations, particularly in Brazil and China, offsetting losses in Europe and mixed performance in North America.

Visteon is volatile

Also in the autosphere, a trader said that Visteon Corp.'s bonds moved up by several points on the session, starting the day in an 82-84 context and then getting up to the 84-85 area, with the last trade of the day at 851/2.

He said there was "some active trading," though qualifying that by adding "though not a whole bunch."

He called the bonds up ½ point to a point on the day. "It opened up lower. [Tuesday], they seemed like they went on a little bit of a ride. When there was news out, they traded down to the low 80s, then 83-84. Today they started at 82-4 and traded back to 84-5. So I guess it's back to the mid-80s, where it was before the news came out" Tuesday.

On Tuesday, the bankrupt Van Buren Township, Mich.-based automotive components company had submitted an amended bankruptcy reorganization plan to the Wilmington, Del., court overseeing its restructuring. The plan would hand 85% of the restructured company's new shares to its lenders, and the rest would be offered to unsecured creditors.

Blockbuster gets bashed

A trader saw Blockbuster's 9% senior subordinated notes due 2012 ending the day trading into a 20¾ bid.

Earlier in the session, the bonds had dipped as low as 18¾ bid, 19½ offered -- well off from the 24-25 range seen on Tuesday - as traders digested the announcement that the Dallas-based movie rental company had put on late Tuesday, in which it said that it will try to set up an exchange offer for those subordinated notes - but also sounded a bearish note about its prospects and raised the possibility of a Chapter 11 filing. However, they came off their lows to finish at around the 20-21 area.

Another trader said that "there was a lot of volume - big volume" on its 9s, seeing the bonds zigzag between the upper teens and the lower 20s, ending the day around 21 in "very active" dealings, ""still down a few points from [Tuesday]."

He meantime saw the 11¾% senior secured notes due 2012 ending around 75. The bonds had started the day around 75-751/2, then got down to 731/2, before ending around 75, which he called "maybe down a point. People were reviewing the news, and in the meantime, were selling them out and then buying them back.

"There was a lot of heavy volume in Blockbuster."

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