Ford Credit, UPC lead drive-by motorcade on almost $3 billion day; split-rated Toll trades up

By Paul Deckelman and Paul A. Harris

New York, Jan. 30 - The high-yield primary sphere was back with a vengeance on Tuesday, following Monday's lull, as nearly $2.9 billion of new paper priced making the day one of the busiest junk sessions of the year so far.

All of the day's five deals that priced were opportunistically timed, quickly-shopped transactions, led by familiar issuer Ford Motor Credit Co. LLC's $1 billion of five-year notes; as is usually the case when carmaker Ford Motor Co.'s loan-financing arm comes to Junkbondland for fresh money, the bonds priced at an unjunk-like low yield, and were not much moved in secondary dealings.

Also driving by was Dutch cable and broadband operator UPC, with a $750 million offering of 10-year secured bonds.

Out of that same media sector, domestic cable operator Mediacom Communications Corp. did an upsized $250 million of 10-year notes, while a pair of Spanish-language broadcasters also brought deals - Univision Communications Inc. with a $600 million add-on to its 2019 bonds, and Spanish Broadcasting System Inc.'s $275 million tranche of five-year secured notes. The new UPC and Mediacom paper moved up a little from their par issue price, although Spanish Broadcasting's bonds firmed by several points from their deeply discounted pricing level.

Traders also saw homebuilder Toll Brothers Inc.'s upsized $300 million split-rated offering of 10-year notes trading around after pricing. Although the deal priced off the investment-grade desks, some junk investors played in it, taking the bonds several points higher in the aftermarket.

Apart from the deals that actually priced, Endeavor International Corp., Energy Future Intermediate Holding Co. and M&G Group were heard by syndicate sources to be getting ready to hit the road with new offerings., and price talk emerged on Aurora USA Oil & Gas Inc., whose $200 million 5.25-year deal could price as soon as Wednesday morning.

Apart from the new issues, Radio Shack Corp.'s bonds were down by several points, after the electronics retailer reported disappointing quarterly numbers

Ford drives by

Five issuers, each one bringing a single junk-rated tranche of notes, raised $2.86 billion on Tuesday.

Ford Motor Credit priced a $1 billion issue of five-year senior notes (Ba1/BB+/BB+) at par to yield 4¼% on Tuesday, according to an informed source.

The yield printed on top of price talk.

Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Bank of America Merrill Lynch and RBC Capital Markets were the joint bookrunners for the quick-to-market deal.

UPCB at the tight end

UPCB Finance VI Ltd. priced a $750 million issue of 10-year notes at par to yield 6 7/8%.

The yield printed at the tight end of the 6 7/8% to 7% price talk.

J.P. Morgan, BNP Paribas, Citigroup, Credit Agricole CIB, Deutsche Bank, Morgan Stanley, RBS and UBS Investment Bank were the joint bookrunners for the quick-to-market deal.

Proceeds will be used to repay bank debt.

Univision upsizes

Univision Communications priced an upsized $600 million fungible add-on to its 6 7/8% senior secured notes due May 15, 2019 (existing ratings B2/B+) at 99.25 to yield 7.006%.

The reoffer price came on top of price talk. The size was increased from $400 million initially.

Deutsche Bank Securities Inc. was the left bookrunner for the quick-to-market add-on. Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Barclays Capital Inc., Morgan Stanley & Co. and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds will be used to repay a portion of the company's non-extended term loan B due 2014.

Spanish Broadcasting prices

Spanish Broadcasting priced a $275 million issue of 12½% five-year first-priority senior secured notes (Caa1/B-) at 97 to yield 13.332%.

Goldman Sachs & Co. ran the books.

The Coconut Grove, Fla.-based Spanish language broadcaster plans to use the proceeds to refinance its existing first-lien credit agreement due June 10, 2012.

Mediacom upsizes

Mediacom LLC and Mediacom Capital Corp. priced an upsized $250 million issue of 10-year senior notes (existing ratings B3/B-) at par to yield 7¼%.

The yield printed at the tight end of the 7¼% to 7½% yield talk. Mediacom raised the size from $200 million.

Bank of America Merrill Lynch, J.P. Morgan Securities LC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and SunTrust Robinson Humphrey were the joint bookrunners for the quick-to-market issue.

The Middletown. N.Y.-based cable television company plans to use the proceeds to repay bank debt.

Codere sets talk

Looking to what promises to be a busy Wednesday session in the primary, Spanish gaming firm Grupo Codere talked its $250 million offering of seven-year senior notes (B2) with a 9¼% area yield.

The books close at 10 a.m. ET on Wednesday, and the deal is set to price after that.

Joint bookrunner Credit Suisse Securities (USA) LLC will bill and deliver. Barclays Capital Inc. and Banco Itau are also joint bookrunners.

The Madrid-based company plans to use the proceeds to acquire an additional 35.8% stake in ICELA from Corporacion Interamericana de Entretenimiento, SAB de CV and for general corporate purposes.

Aurora talks $200 million

Aurora USA Oil & Gas talked its $200 million offering of 51/4-year senior notes (Caa1) with a yield in the 10¼% area.

The books close at 10 p.m. ET on Wednesday, and the deal is set to price after.

Credit Suisse Securities (USA) LLC and UBS Securities LLC are the joint bookrunners.

The Traverse, Mich.-based independent energy company plans to use the proceeds to fund the development of acreage, for general corporate purposes and to fund acquisitions.

TXU plans $400 million

Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc. plan to price a $400 million offering of 10-year senior secured second lien notes on Wednesday.

Goldman Sachs & Co., Citigroup Global Markets, J.P. Morgan Securities LLC, Morgan Stanley & Co. and Credit Suisse Securities (USA) LLC are the joint bookrunners.

Proceeds will be used to pay a dividend to Energy Future Holdings Corp., which will use the proceeds to repay a portion of a loan in the form of demand notes owed to its wholly-owned subsidiary Texas Competitive Electric Holdings Co. LLC.

Endeavor marketing Wednesday

Endeavor International will start a roadshow on Wednesday for a $500 million offering of eight-year senior notes (expected ratings Caa1/CCC).

Citigroup Global Markets Inc. is the sole bookrunner.

Proceeds will be used to fund the acquisition of ConocoPhillips' interest in three producing U.K. oil fields in the Central North Sea and to retire existing term loan debt.

M&G brings $500 million

M&G Finance Corp. will start a roadshow on Wednesday for a $500 million offering of seven-year senior secured notes (expected B3//BB).

J.P. Morgan Securities LLC has the books.

The polyethylene terephthalate producer plans to use the proceeds to finance construction of new PET and PTA production facilities, pay back intercompany debt and fund working capital.

Orange starts roadshow

Orange Switzerland began a roadshow on Tuesday for a CHF 550 million equivalent two-part notes transaction, coming in Swiss francs and euros.

Matterhorn Mobile SA, a special-purpose vehicle, plans to issue CHF 325 million senior secured notes due May 2019. Those notes come with three years of call protection.

Matterhorn Mobile Holdings SA, another special purpose vehicle, plans to issue CHF 225 million equivalent of euro-denominated senior unsecured notes due February 2020. Those notes come with four years of call protection.

The deal is set to price during the Feb. 6 week.

Global coordinator and joint bookrunner Credit Suisse will bill and deliver. Deutsche Bank AG is also a global coordinator and joint bookrunner.

Citigroup, JP Morgan, Morgan Stanley and UBS are also joint bookrunners.

Proceeds from the Rule 144A and Regulation S for life notes will be used to help fund the €1.6 billion LBO of Orange Switzerland by Apax Partners from France Telecom.

Orange Switzerland is an Arcueil, France-based wireless telecommunications company.

Ford trades near issue

When the new Ford Motor Credit five-year notes were freed for secondary market activity, a junk trader saw the Dearborn, Mich.-based auto-loan financing company's new bonds trading in a tight pattern between 100¼ and 100 3/8, after the drive-by mega-deal had priced at par.

"So that kind of tightened up," he said.

A second trader said that the new Ford Credits "went nowhere," seeing them around par bid, 100 3/8 offered. Yet another trader had them at 100 1/8 bid, 100 3/8 offered.

A market source at another desk meantime saw the company's existing 5 5/8% notes due 2015 down nearly 1½ points at 106 5/16 bid.

But its 7% notes due 2013 were quoted slightly better at 107¼ bid.

Parent Ford Motor Co.'s benchmark 7.45% bonds due 2031 were up by ¼ point at 123¼ bid, 124¼ offered.

Mediacom moves up

A trader saw Mediacom Communications' new 10-year notes at 100½ bid, 101 offered, "a little bit wide, but it's still got a nice bid to it in the secondary."

He characterized the Middletown , N.Y.-based cable and broadband provider as "a good name - a lot of guys that I know played it. It's a better high-yield 'go-go' name, so a lot of guys want to be part of it."

A second trader saw the bonds even better, at 100¾ bid, 101¼ offered.

UPC up a little in trading

Dutch cable operator UPC's $750 million of 10-year secured bonds were seen up around ¼ to 3/8 point on the break, a trader seeing them "a little bit wide" at 100 3/8 bid, 100 7/8 offered.

Another trader saw both cable names, Mediacom and UPC, get as good as a 100½ bid, 101 offered level.

Still another trader located UPC around 100 5/8 bid, 100 7/8 offered.

Spanish Broadcasting better

Spanish Broadcasting System's five-year secured notes were seen by a trader to have moved up to around par bid, 101 offered, after the Coconut Grove, Fla.-based Hispanic media company's $275 million issue priced at a deeply discounted 97 bid earlier in the session.

But he said that there was "not a lot trading at all."

Traders did not see any immediate aftermarket in the relatively late-pricing upsized add-on deal from Los Angeles-based Spanish-language television broadcaster Univision.

Toll trades up

Although there was plenty of new high-yield paper around, some investors gravitated into crossover territory, after Horsham, Pa.-based homebuilder Toll Brothers priced an upsized $300 million split-rated (Ba1/BB+/BBB-) offering of 10-year notes through its Toll Brothers Finance Corp. unit.

A junk trader said that "those bonds rallied nicely," seeing them move up to the 102 bid area from their 99.998 pricing level.

Although the deal was priced off the investment-grade desks and much of the aftermarket activity came from high-grade players reaching for yield by buying a quasi-junk bond, he said that there were also some high-yield accounts showing interest in it despite its relatively thin 5 7/8% coupon.

Sallie Mae moving around

Another split-rated (Ba1/BBB-) offering, the recently priced SLM Corp. 7¼% notes due 2022, was seen continuing to attract some junk interest on Tuesday, when in fact it was one of the busiest bonds traded, with turnover topping $35 million at mid-afternoon.

A market source saw those bonds trading at the 101 level, up from Monday's 100¼ bid, and well up from the 98.264 level at which that upsized $750 million deal had priced last Tuesday to yield 7½%.

Traders did not see the other half of the Newark, Del.-based education financing company's upsized $1.5 billion two-part offering, the $750 million of 6% notes due 2017. Those bonds had priced 98.942 to yield 6¼%, and had also gotten to 100¼ bid by Monday.

Traders noted that much of the activity in those credits likely came from the high-grade crossover space, but said that there had been some junk accounts buying the bonds as well.

Sallie Mae's 5 3/8% notes due 2013 were also busy on Tuesday, with over $28 million traded. A market source pegged those bonds down about 7/8 point from prior levels, finishing at 102.

New deal market revives

After having not priced anything on Monday, traders noted the return of the primary Tuesday with its nearly $3.9 billion of new paper, comparable to last Wednesday's more than $2.8 billion and Friday's nearly $3 billion.

"The new-issue parade is rolling," one said.

A second trader opined that "they [the issuers and underwriters] are trying to jam 'em in, number one for month's end, and number two, guys still have cash to put to work."

He added: "Number three, you're going to have a lot of guys going to these new issues because they have to - there's a penalty if they don't put their money to work."

He predicted that "this theme is going to continue for the next week or two. It's a heavy calendar from what I'm being told," possibly topping $6 billion in the immediate pipeline.

Radio Shack under attack

Away from the new deals, a trader noted that Radio Shack's bonds were down 4 points on the day after the Fort Worth-based electronics retailer reported "weak numbers overnight."

He saw its 6¾% notes falling to 84 bid, and noted that the company's shares had slid 30%.

For the quarter ending Dec. 31, RadioShack's unaudited preliminary results showed total net sales and operating revenues gaining 6% to $1.39 billion. Same-store sales were up about 2%.

Earnings per share were expected to be between 11 cents per share and 13 cents per share.

The real bad news was that gross margins were on the decline. RadioShack attributed the decrease to "a shift in mix within mobility sales towards certain lower margin smartphones and mobile devices; a higher percentage of mobility sales in the overall revenue mix, largely driven by the company's expansion of Target mobile centers; and the impact of a more promotional holiday season," according to a press release.

The company also pointed to the "underperformance" of Sprint Nextel Corp.'s postpaid wireless business and further "unanticipated" changes in Sprint's customer and credit models.

RadioShack ended the quarter with about $590 million of cash and equivalents, u from $569 million the year before. There was also $421 million available under its $450 million revolving credit facility.

Final results will be reported Feb. 21.

Bon-Ton is busy

A trader said that "Bon-Ton [Department Stores Inc.] is one of the names of the day," seeing the York, Pa.-based retailer's 10¼% notes due 2014 trading actively around a 63-64 context "virtually all day long."

He said that was "pretty much where they went out [Monday], or maybe up a half point - but good volume."

Over $12 million of the bonds were seen having traded by mid-afternoon.

Market is mixed

Statistical measures of junk market performance, which were lower on Monday, turned mixed on Tuesday.

A trader saw the CDX North American Series 17 High Yield index up by ¼ point on Tuesday to end at 97¼ bid, 97½ offered, after having lost ½ point on Monday.

The KDP High Yield Daily Index eased by 3 basis points Tuesday to close at 73.75, on top of Monday's 2 bps retreat. Its yield increased by 2 bps to 6.87%, after having been 1 bp lower Monday.

Stephanie N. Rotondo contributed to this report

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