Standard Pacific prices, pops in secondary; Claire's up on Q2 results; funds add $223 million

By Paul Deckelman and Paul A. Harris

New York, Sept. 10 - Standard Pacific Corp. priced an upsized offering of six-year notes on Thursday, high yield syndicate sources said. The California-based homebuilder's deal was the only domestic offering of the session, which also saw Bermuda-based Central European Media Enterprises Ltd. bring a euro-denominated deal, also upsized, to market - a slowdown of the busy new-issue pace seen in the previous two session, particularly Wednesday.

Besides the pricings, market participants heard price talk on Global Crossing Ltd.'s senior secured notes deal, which is expected to come to market during Friday's session.

When the new Standard Pacific bonds were freed for secondary dealings, they firmed smartly, tacking on 3 to 4 points from the deeply discounted level at which the issue had priced. Another new deal seen doing well in the aftermarket was Wednesday's offering from Ferrellgas LP/Ferrellgas Finance Corp., which had already firmed by a point immediately after its pricing and which proceeded to push up about another 2 points on Thursday.

Among names with no new-deal connections, Claire's Stores Inc.'s whole capital structure was up by multiple points, and on busy trading, after the Pembroke Pines, Fla.-based specialty retailer reported better-than-expected fiscal second-quarter results.

Freescale Semiconductor Inc.'s bonds rose for a second straight session in apparent response to news the computer chip manufacturer will be bringing back some of its laid-off workers as orders increase. Sector peer NXP BV was seen coming along for the upside ride.

Junk funds up by $223 million

And as trading was finishing up for the session, market participants familiar with the high yield mutual fund-flow statistics generated by AMG Data Services of Arcata, Calif. - a key barometer of overall market liquidity trends - said that in the week ended Wednesday some $223 million more came into the weekly-reporting funds than left them.

It was the third consecutive gain, following the $283.5 million cash inflow seen in the previous week, ended Wednesday, Sept. 2, and was the 10th week in the last 11 in which inflows were seen, dating back to mid-June. Some $4.316 billion of net inflows have been seen during that stretch, according to a Prospect News analysis of the AMG figures, interrupted only by the $89.9 million outflow recorded in the week ended Aug. 19.

Counting the latest week's number, the year-to-date net inflow for the weekly-reporting funds rose to $15.87 billion, according to the analysis - a new peak level for the year so far, eclipsing the old mark of $15.647 billion recorded in the Sept. 2 week.

With 2009 now more than two-thirds over, inflows, including the latest weekly gain, have been seen in 31 weeks out of the 36 since the start of the year, according to the analysis, against just five outflows - the Aug. 19 retreat, a $110 million outflow in the week ended June 24, and three weeks of outflows in late February and early March, totaling $969 million. The inflows, on the other hand, include an incredible 14-week run of consecutive gains, dating from mid-March through mid-June, during which time the funds grew by a record $9.1 billion.

Such sustained inflows have helped the junk market come roaring back from last year's staggering 25%-plus loss and sharply reduced primary activity totals. Total returns so far this year totaled 41.234% as of Wednesday's close, according to the authoritative Merrill Lynch High Yield Master II index, up from 40.096% a week earlier, handily beating virtually every other major investment asset class. Meanwhile, the $86.506 billion of new high yield debt issued so far this year globally, as of Wednesday's close -- $73.991 billion of it domestic-is running over 41% ahead of the anemic pace of last year's global primary tally. Domestic new issuance is more than 52% ahead of its year-ago levels.

EPFR sees inflows continuing

Meanwhile, another fund-tracking service, Cambridge, Mass.-based EPFR Global, which uses a different methodology, calculated a $265 million inflow for the week, following the $425 million gain seen the week before. The latest inflow was the 11th week in a row, its analysts said - although they did note that the figure was "well below the $606 million a week this fund group has averaged since mid-March," a function, they said, of a risk-averse trend among fixed-income investors, who gave the lion's share of their inflows to "bond funds investing in the more conservative fixed income asset classes," such as non-high yield U.S. bond funds.

Even though the inflow was smaller than the previous week's however, it was still the 25th such cash infusion in the last 26 weeks.

The inflow brought the year-to-date total up to $17.68 billion from $17.41 billion the week before, EPFR said.

While the EPFR junk figures most weeks point essentially in the same direction as AMG's, the precise weekly and year-to-date numbers almost always differ somewhat due to EPFR's inclusion of some non-U.S. funds in its universe. Cumulative fund-flow totals, whether for AMG or EPFR, can include unannounced revisions and adjustments to figures from prior weeks.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they comprise less of the total monies floating around the high yield universe.

Standard Pacific upsizes

In the primary, Standard Pacific priced an upsized $250 million issue of 10¾% seven-year senior notes (Caa1/CCC-) at 91.997 to yield 12½% on Thursday.

Early in the New York morning the new Standard Pacific notes due September 2016 were being discussed in the context of a 12½% yield, a source said.

The deal was increased from an initial size of $200 million.

Citigroup ran the books.

Central European Media comes tight to talk

Meanwhile Czech Republic-based Central European Media Enterprises priced an upsized €200 million issue of 11 5/8% seven-year senior secured fixed-rate notes (B2/B) at 98.261 to yield 12%.

The yield printed on the tight end of the 12% to 12¼% price talk while the size was increased from €150 million.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch and BNP Paribas ran the books.

Global Crossing sets talk

Looking ahead to the final session of the post-Labor Day week, Global Crossing set price talk for its $650 million offering of six-year senior secured notes (B2/B-) at 12½% to 12¾%, with approximately 2 points of original issue discount on Thursday.

The books close at 10 a.m. ET on Friday, with pricing expected after that.

Goldman Sachs & Co. is the left lead bookrunner for the debt refinancing deal. Credit Suisse and J.P. Morgan Securities Inc. are joint bookrunners.

Standard Pacific soars in secondary

When the new Standard Pacific 10¾% notes due 2015 were freed for secondary dealings, the Irvine, Calif.-based homebuilder's issue immediately began moving up, traders said.

One saw them having moved up to around 94½ bid, 95½ offered, after pricing earlier in the session at 91.997 to yield 12½ bid, while another saw them later in the afternoon get as good as 95½ bid. Yet another pegged the new bonds at 95 bid, 96 offered.

The third trader - noting the fact that Standard Pacific will use the deal proceeds to take out up to $175 million of its existing bonds - it is soliciting tenders from the holders of its 6½% notes due Aug. 15, 2010, its 6 7/8% notes due May 15, 2011 and its 7¾% notes due March 15, 2013 - saw those bonds all trading up by multiple points.

He saw the 73/4s up 5 points at 90 bid, 92 offered, while the 6 7/8s gained 4 points to end at 99 bid, par offered and the 61/2s were up a deuce at 101 bid, 102 offered.

"Their whole [capital] structure was up," he declared.

Among the Standard Pacific bonds not being tendered for, a trader at another desk saw its 7¾% notes due 2017 at 74 bid, up a point, on $4 million traded. Its 7% notes due 2011 also gained a point to 93, on $8 million traded.

Homebuilders mostly higher

One of the traders meantime saw bonds of some other homebuilders better, suggesting they may have been carried along by Standard Pacific's momentum. He quoted Beazer Homes USA Inc.'s 8 5/8% notes due 2011 up 2 points at 91 bid, 92 offered, while Hovnanian Enterprises Inc.'s 6½% notes due 2014 were a point better at 62½ bid, 63½ offered.

Another market source saw Red Bank, N.J.-based builder Hovnanian's 6 3/8% notes due 2014 up by more than a point at the 64 level.

Among the better-quality homebuilding credits, KB Home's 5 7/8% notes due 2015 gained a point to end at 91 bid, while D.R. Horton Inc.'s 6½% notes due 2016 were likewise a point up at 96.

However, Pulte Homes Inc.'s 6¼% notes due 2013 - which had popped as much as 5 points on Wednesday to end at just above par in brisk trading - gave almost all of that gain back on Thursday, a source quoting the bonds down more than 4 points at the 96 level.

The Bloomfield Hills Mich.-based homebuilder's paper was gyrating in the wake of Pulte's announcement Wednesday morning of the results of its just-ended tender offer for up to $1.5 billion of its own bonds and those of Dallas-based rival builder Centex Corp., which Pulte recently acquired for $1.5 billion in stock, to create the largest U.S. homebuilder.

New Ferrellgas issue stays hot...

A trader called Ferrellgas' new 9 1/8% notes due 2017 "clearly the best performer" among the slew of bonds which priced on Tuesday and Wednesday.

He saw the Overland Park., Kan.-based propane distributor's $300 million issue of bonds - upsized from the originally announced $250 million -- at 101 bid, 101 1/8 offered. A second trader saw them at 100¾ bid, 101¼ offered, while yet another saw the issue going home at 101 bid, 101½ offered.

Those bonds had priced Wednesday at 98.599 to yield 9 3/8%, and had moved up to around 99¾ bid by the end of Wednesday's dealings.

...But Petroplus is not

One the other hand, Petroplus Finance Finance 3 Ltd.'s $400 million offering of 9 3/8% notes due 2019 "were stuck" around 98¾ bid, 99 offered "for most of the day," a trader said. That was about where the Zug, Switzerland-based petroleum refinery operator's new deal had finished on Wednesday, after having priced earlier in the day at 98.419 to yield 9 5/8%.

A second trader didn't even see them trading, although at another desk, the bonds were quoted late in the day having firmed a little to about 99 bid, 99½ offered.

Plains 'pretty quiet'

A trader said that another new energy credit, Plains Exploration & Petroleum Co.'s 8 5/8% notes due 2019 "just kind of died" in terms of market activity on Thursday, although he noted that the Houston-based independent oil and gas operator's bonds did get as good as 99½ bid - up from the 98.335 level at which the deal priced on Tuesday, yielding 8 7/8%.

"They were pretty quiet," remarked.

Another trader saw the bonds at 99¼ bid, 99¾ offered.

Cablevision firms a little

A trader saw Cablevision Systems Corp.'s 8 5/8% senior notes due 2017 "up nicely" at 99½ bid, 99¾ offered, versus the 98.596 level at which the Bethpage, N.Y.-based media operator and sports team owner's $900 million of the bonds - upsized from $600 million originally - had priced on Wednesday, to yield 8 7/8%.

Another trader saw those bonds get as good as 99½ bid, par offered.

Harrah's hangs in there

Harrah's Operating Co. Inc.'s $720 million add-on issue of 11¼% senior secured notes due 2017 were seen by a trader at 101 bid, 102 offered - up a point from the par level at which the Las Vegas-based gaming operator priced those bonds on Tuesday, yielding 11¼%.

Another trader saw the bonds even better, at 101½ bid, 102¼ offered.

Huntsman moves higher

Huntsman International LLC's 5 ½ notes due 2016 were seen having improved by around 3 or 4 points to about the 83 bid, 84 offered level, up from 80, where Credit Suisse and Deutsche Bank priced $600 million of the bonds on Wednesday.

The Salt Lake City, Utah-based chemical manufacturer had issued those bonds to the banks as part of the settlement of a lawsuit arising out of the unsuccessful leveraged buyout of Huntsman by Hexion Specialty Chemicals.

Market indicators pour it on

Back among the established issues not connected to new-deal issuance, a trader saw the CDX Series 12 High Yield index up a full point at 90½ bid, 91 offered - the fourth consecutive gain for the index, including its 5/8 point advance on Wednesday.

The KDP High Yield Daily Index rose by 35 basis points on Thursday to finish at an even 67.00, while its yield tightened by 12 bps to 9.04%, continuing the positive momentum seen on Wednesday when the index had firmed by 21 bps and its yield had come in by 9 bps.

In the broader market, advancing issues led decliners for a sixth consecutive session on Thursday, holding a roughly eight-to-five advantage.

Overall market activity, reflected in dollar-volume totals, jumped some 50% from Tuesday's post-holiday level.

A trader said that there has been "a huge difference" the last several days, with heavier volume and firm upside movements. "It's almost like the floodgates were opened."

He speculated that "either accounts have come to the realization that they need to be more invested and be long less cash if they want to compete as far as their returns go, going into year-end - or there was that much of a significant amount of accounts that were out a couple of weeks on vacation.

"But the last couple of days, there's been a huge uptick in volume, and also names coming out of the woodwork that you haven't seen quoted or traded in a month."

DirecTV dominates Most Actives

The trader said that by far the busiest bond of the day was DirecTV Holdings LLC's 7 5/8% notes due 2016, with $106 million traded. The bonds moved up to 107½ bid from 106¼ offered.

There was no fresh news seen out on the El Segundo, Calif.-based satellite TV broadcaster, whose split rating of Ba2/BBB-/BBB- also attracts attention from many high-grade accounts, perhaps explaining the unusually heavy volume.

The 7 5/8s, the trader said "were the only [DirecTV] issue with that kind of volume."

"There was some buying interest when we came in today," a trader at another shop offered. He saw the 7 5/8s having gained 1½ points to the 107 bid, 108 offered region.

Meanwhile, the company's 6 5/8% notes due 2015 moved up to 103¼ bid, 104¼ offered.

Claire's climbs on numbers

Claire's Stores' bonds were sharply higher on favorable second-quarter numbers, with a trader seeing its 9 5/8% notes due 2015 up more than 7 points on the day at 48¾ bid, on volume of $32 million, making it one of the most active junk issues.

He saw its 9¼% notes due 2015 up some 7 points on the day at 60, though on only $5 million traded, while its 10½% notes due 2017 were 6 points better at 46 bid, on $6 million bonds traded.

He suggested that short covering might also be playing a role, as well as reaction to the results.

A second trader saw the 9 5/8s up 8 points at 49 bid, 50 offered, saw its 91/4s at 59 bid, 60 offered, up some 7½ points, and saw its 101/2s nine points better at 48 bid, 49 offered .

For the quarter, the company reported a net loss of 3.7 million, versus a net loss of $16.9 million in the second quarter of 2008.

And, net sales for the quarter were $314.2 million, down 12.7% from $360 million in the comparable period last year.

Claire's also reported adjusted EBITDA for the second quarter of $50.5 million, compared to $58.1 million in the prior year.

"While we continue to feel the effect of a challenging retail environment as well as the impact of negative consumer confidence, our second quarter sales performance had monthly sequential same store sales improvement," said chief executive officer Gene Kahn, in a news release.

"While it is difficult to compare our third quarter performance at this point, because of various changes in the calendar, our quarter to date same store sales are in the negative low single digits. Looking forward, we see no reason to believe the retail environment will see significant near-term improvement and, therefore, will continue to focus on controlling expenses and maximizing available sales while generating positive free cash flow," Kahn added.

Freescale firmer

For a second consecutive session, Freescale Semiconductor's bonds rose on the news that the Austin, Tex.-based computer chip company will be hiring back some workers it had previously let go, in response to stronger orders. They were also helped by optimistic statements from a senior company executive indicating that the recession might be ending, if not already over.

A trader saw Freescale's bonds, and those of sector peer NXP "both up pretty significantly." He quoted the Freescale 8 7/8% notes due 2014 as having jumped to 75 bid, 76 offered from 71 bid, 72 offered on Wednesday, while its 10 1/8% subordinated notes due 2016 rose to 64 bid, 65 offered from prior levels at 60 bid, 61 offered.

At another desk, a market source saw the Freescale 8 7/8s rise to 76 bid, calling that a 4½ point gain on the session.

The first trader said that the bonds rose "because news is out on them, they're going to hire more people." He said that Holland-based NXP, meantime, "is the same kind of company, so they both ran together."

He quoted NXP's 9½% subordinated notes due 2015 up 5 points on the day at 59 bid, 60 offered, while its 7 7/8% senior notes due 2014 advanced 3 points to 75 bid, 76 0ffered.

Stephanie N. Rotondo contributed to this report

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