Prospect Medical prices, Basic Energy rejigs, Greif slates; CIT mostly lower, again active

By Paul Deckelman and Paul A. Harris

New York, July 22 - Prospect Medical Holdings, Inc. successfully brought an issue of five-year senior secured notes to market on Wednesday, high yield syndicate sources said.

The sources also heard that Basic Energy Services Inc. - whose $225 million bond offer, announced early in July, seemed to have gotten lost in the ozone for a couple of weeks - has also decided to sell five-year secureds, restructuring its original deal. Price talk emerged on the revamped offering Wednesday evening and it could price as soon as Thursday.

Primaryside players also heard talk on MTR Gaming Group Inc.'s upcoming five-year secured notes transaction.

Meantime, Delaware, Ohio-based packaging concern Greif, Inc. put a new 10-year offering on the forward calendar - but it isn't going to be there very long, with pricing anticipated for Thursday.

In the secondary arena, CIT Group Inc. - who else? - was the busiest name for an unprecedented 10th consecutive session on Wednesday, with the New York-based commercial lender's bonds mostly quoted lower, particularly its heavily traded floating-rate notes coming due on Aug. 17, whose levels declined to fall pretty much into line with the price which the company is offering to pay for those bonds under its recently announced cash tender offer.

Apart from CIT, though, the overall market tone remained generally positive, with some issues, like MetroPCS Communications Inc. and Ford Motor Co. seen to have firmed by several points - Ford ahead of the scheduled release of its second-quarter earnings data on Thursday

Cash bonds finished the Wednesday session ¼ to ½ point higher on the day, according to a high-yield syndicate official.

Prospect Medical prices

Prospect Medical Holdings priced a $160 million issue of 12¾% five-year senior secured first-lien notes (B3/B) at 92.335 to yield 15% - the only deal to price on Wednesday.

The yield was printed 62.5 basis points beyond the wide end of the 14¼% area price talk.

RBC Capital Markets was left bookrunner. Jefferies & Co. was joint bookrunner.

The Los Angeles-based hospital and health management services company will use the proceeds to repay amounts outstanding under its credit facility.

MTR Gaming talks $250 million

Meanwhile news surfaced on several deals already in the market.

MTR Gaming Group set price talk for its $250 million offering of five-year senior secured notes (expected B2/confirmed B) at 13½% to 13¾%.

The debt refinancing deal, via left lead bookrunner Goldman Sachs, is expected to price on Thursday. Deutsche Bank Securities is joint bookrunner.

Basic Energy restructures

The order book closed late Wednesday on Basic Energy Services's substantially restructured $225 million offering of five-year senior secured notes.

Price talk is for a yield in the 13¼% area.

Final terms are expected on Thursday morning.

Once again, Goldman Sachs is left lead bookrunner for the Midland, Tex.-based oilfield services company's debt refinancing deal. Banc of America Securities LLC/Merrill Lynch & Co. and UBS Investment Bank are joint bookrunners.

Prior to Wednesday's restructuring, the company was marketing eight-year senior unsecured notes, which it offered with four years of call protection.

The unsecured deal kicked off on July 6, at the same $225 million size.

Meanwhile, although no official price talk surfaced on the Sappi Ltd. $500 million equivalent offering of five-year senior secured notes (Ba2/expected BB), the rough guidance is 12½% to 13%, market sources say.

The Johannesburg, South Africa, coated paper producer is expected to price its dollar- and euro-denominated notes before the end of the week.

JP Morgan, Calyon Securities, Citigroup, HSBC and RBS Securities are joint bookrunners.

Apart from those deals, the information stream gets even thinner.

Duane Reade Inc.'s $325 million two-part offering of high-yield notes, which launched on July 15, may be about to become a single tranche deal, according to market sources.

The New York City-based drugstore company went out with $215 million of six-year senior secured notes, and $110 million of seven-year senior subordinated notes.

However interest is concentrated in the secured paper, market sources say, intimating that the subordinated notes might be withdrawn.

Greif for Thursday

Finally, Greif launched a new offering on Wednesday.

The Delaware, Ohio-based producer of industrial packaging products will host an investor conference call on Thursday morning for its $250 million offering of 10-year senior notes (expected ratings Ba2/BB+).

The deal is expected to price later in the day.

Banc of America Securities/Merrill Lynch, Deutsche Bank Securities and JP Morgan are joint bookrunners for the debt refinancing and general corporate purposes deal.

New Prospect Medical offered better

When the new Prospect Medical Holdings 12¾% senior secured notes due 2014 were freed for secondary dealings, a trader saw those bonds offered at 93½ -- versus the 92.33 level at which the bonds had priced earlier. However, he did not see a bid level on the bonds.

Another trader said he had not seen any sign of the new bonds either on the Trace bond-tracking system or in the over-the-counter market, noting that there might not be much trading in it because of its relatively small size.

New SBA notes hold most gains

A trader said that SBA Telecommunications Inc.'s new two-part offering, which priced on Tuesday, "hung in there OK."

He saw the Boca Raton, Fla.-based communications antenna tower operator's $375 million of 8% notes due 2016 at 99½ bid, 100½ offered, versus the 99.33 level at which the bonds had priced to yield 8 1/8%.

He saw the company's $375 million of 8¼% notes due 2019 at 100½ bid, 100¾ offered, versus the 99.152 at which the bonds had priced to yield 8 3/8%.

He said the two tranches of the $750 million issue - upsized from the originally planned $500 million -- "were off their tops" seen in initial aftermarket dealings Tuesday afternoon, "which were near 101 for each of them - but they did hang in."

New CapitalSource bonds better

The trader also said that Chevy Chase, Md.-based commercial lender and money manager CapitalSource Inc.'s $300 million issue of 12¾% senior secured notes due 2014 "actually did quite well, up quite a bit at one point."

He said the bonds - which had priced on Tuesday evening, long after trading had wound down, at 93.966 to yield 14½% -- traded "up close to 97" when they opened for trading on Wednesday morning.

However, after that, he said they "died pretty early in the day."

He saw the bonds going out at 96½ bid, 97½ offered.

Market indicators stay strong

Back among the more established issues, the CDX Series 12 High Yield index - which had edged up 1/8 point on Tuesday - gained another 3/16 point on Wednesday, a trader said, to end at around the 86.42 mark.

The KDP High Yield Daily Index, which had zoomed by 50 basis points on Tuesday, was up an additional 19 bps on Wednesday to end at 64.24, while its yield tightened by 11bps to 9.95%.

In the broader market, advancing issues - which had led declining issues on Tuesday for a third straight session, made it four in a row on Wednesday, holding a nearly seven-to-six advantage.

Overall market activity, measured by dollar-volume totals, fell 18% from Tuesday's level.

"I would say we're in the pause mode," a trader said. "We had evidence of a little mini-rally [Tuesday], but with the abrupt turnaround in stocks" - although he noted that the bellwether Dow Jones Industrial Average was only down 34.68 points, versus its 67.79-point gain on Tuesday - "and also Treasuries getting hit, there was sort of this pause feeling."

CIT slippage continues

A trader said that CIT Group's bonds were "a little less dominating" on Trace, although a CIT bond was certainly still the most active issue, CIT was well-represented on most of the Most Actives lists, and "the financials - CIT, AIG and Sallie Mae - were still one-third of all the bonds traded."

CIT, another trader said, "was again the most active bond, but it wasn't like five of their issues [at the top of the Most Actives lists], but only the floaters" coming due on Aug, 17.

He saw a final round-lot trade in the issue of 831/2, down from Tuesday's 85¼ price, on market volume of $68 million. He also saw the 7 5/8% notes due 2012 around 53, and said "they're all the same - they're down a bit from [Tuesday]."

The first trader, meanwhile, saw CIT "down a lot earlier in the day - though now they're off the bottom."

He saw the floating-rate notes slated to mature on Aug. 13 - "the most active issue for at least the last three or four days" - once again holding that position, and said the bonds "traded down a little," getting as low as 82½ -- the level at which CIT has proposed buying back those bonds from their holders in its tender offer - down from an 85ish context on Tuesday, before coming off the low to end around 83.

He noted the odd fact that on both Monday and Tuesday, those bonds were trading well above the 82½ total consideration it is offering to holders tendering those bonds by the early tender deadline of 5 p.m. ET on July 31, surmising that "yesterday [Tuesday] people were speculating that they were going to get more for the tender but today, they weren't so sure of that anymore."

He saw the company's 5.85% notes due 2016 trading at 48 3/8 on Wednesday morning, then firming to around 50, and later falling back to 48 3/8, which he called "off a little" from late-Tuesday levels around 50.

It was, another trader said, "the same old, same old," with CIT, on "a lot of volume."

Noting that the 2017 floaters had come down to around the takeout level envisioned in the tender offer after trading several points above that earlier in the week, he suggested that "maybe people got a little bit ahead of themselves. Maybe they didn't believe it [that the company would not offer more than 82.5 of total consideration]. They might be believing it today."

CIT compressing?

While most of the CIT paper was lower on the day - such as the 4.65% notes due 2010, which were being quoted down as much as 7 points at the 67 level, and the 6¼% notes coming due Dec. 15, down a whopping 10 points to 55 -- a market source saw certain other issues points better, including the 5.65% notes due 2017, up more than 3 points to a shade under 50, and the5 1/8% notes due 2014, seen up more than 6 points to 51 bid.

That would seem to add some credence to a theory being bandied about by the traders, that the capital structure is starting to compress, condense and converge on market anticipation of a bankruptcy filing sooner or later, pushing the lower dollar priced credits upward, while pushing the higher dollar price credits, such as the August floaters, lower.

Also among the financials, a trader saw American International Group's 4 5/8% notes due 2010 "pretty active," but said the bonds stayed around their recent 80-81 level.

Another market source saw AIG's American General Finance Corp. 5.85% notes due 2013 about 3 points firmer at the 61 mark, although its 6.90% notes due 2017 were off almost 1½ points to finish at 55.

Freeport firms up

Apart from CIT Group, the most actively traded junk credit on the day seemed to be Freeport-McMoRan Copper & Gold Inc.

The Phoenix-based metals mining company' s bonds had always traded at, or at least, near the top of the Most Actives lists before the market became riveted on the CIT saga about two weeks ago. In Wednesday's dealings, its 8¼% notes due 2015 advanced to 105 1/8 bid, well up from levels earlier in the week around 103. About $32 million of those bonds had changed hands as of mid-afternoon.

A trader saw its 8 3/8% notes due 2017 up 1½ points on the day at 1061/4, on volume of $17 million.

PCS operator shows some pop

A trader saw MetroPCS Wireless' 9¼% notes due 2014 at 102 1/8, which "looked like it popped up pretty good" from 101 on Tuesday, calling it "a nice little pop." Volume in the credit was $9 million.

There was no news seen out on the Dallas-based company, which offers unlimited pre-paid cellular phone service.

Also among the telecom credits, a trader saw Sprint Nextel Inc.'s 7 5/8% notes due 2011 down ¼ point at 991/2, on $10 million, although he called that "no big deal."

Ford cruises higher

Ford Motor Co.'s 7.45% bonds due 2031 were seen by a trader having firmed it advance of the Dearborn, Mich.-based carmaker's quarterly earnings figures.

He saw the bonds at 67 bid, up from 65½ on Tuesday, on some $11 million traded.

Analysts are looking for a Ford loss of a little more than 50 cents per share, versus the 62 cents it lost in the year-ago period.

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