Inmarsat, Antero price, Alliance, Dollar slate deals; AMD up on settlement; funds gain $346 million

By Paul Deckelman and Paul A. Harris

New York, Nov. 12 - It was back to work in Junkbondland on Thursday after Wednesday's Veterans' Day holiday hiatus, and issuers returned to the task of taking care of their financing needs before the inevitable onset of the traditional year-end turndown.

Two dollar-denominated deals actually priced, with Inmarsat Finance plc coming to market with a $650 million issue of eight-year notes, high yield syndicate sources said. While the London-based communications satellite operator was successfully getting its deal to fly, junk market participants noted the pricing of a second offering, by Denver-based energy exploration and production company Antero Resources Corp. That transaction, from the company's Antero Resources Finance Corp. unit, was upsized to $375 million. Neither deal was seen in secondary market dealings on Thursday.

The biggest pricing of the day was a euro-denominated two-part deal from Irish paper and packaging concern Smurfit Kappa Group plc, which upsized its planned senior secured notes offering to €1 billion and restructured it to add a tranche of 10-year notes to the originally scheduled eight-year issue.

Back among the dollar-denominated deals, Dollar Financial Corp. announced plans for a $250 million offering of senior notes, which syndicate sources indicated is likely to be December business.

A little more immediately, Alliance Healthcare Services Inc. was heard to be beginning a roadshow Friday for its planned $200 million offering of seven-year notes.

Also hitting the road with a $200 million bond deal was Altra Holdings Inc., a Braintree, Mass.-based provider of mechanical power transmission and motor control systems. Cleaning and sanitation services provider JohnsonDiversey Inc. will begin shopping a $400 million deal to investors beginning Monday.

Price talk meantime emerged on Revlon Consumer Products Corp.'s pending issue of six-year senior secured notes. Although some traders anticipated that the New York-based cosmetics company's $330 million deal might price on Thursday, by the end of the day, it was a no-show.

Traders saw some firming among the bonds which priced Tuesday, with Toys 'R' Us Property Co. II LLC, Belo Corp., Triumph Group Inc. and Viasystems Inc.'s new paper all being quoted as having firmed to levels at or slightly above par.

Away from the new-deal realm, there was brisk activity to the upside in Advanced Micro Devices Inc.'s bonds, as well as its shares. They got a boost on the news that the Sunnyvale, Calif.-based computer-chip maker will get a $1.25 billion settlement from larger rival Intel Corp., in exchange for dropping its antitrust lawsuit against Intel, which was facing the prospect of paying out triple damages in the billions if it had gone to trial and lost.

Dollar General Corp.'s bonds were better after the discount retailer's initial public equity offering, ahead of its stock market debut on Friday.

Junk funds up by $346 million

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 $346 million more came into the weekly-reporting funds than left them.

It was the 12th consecutive advance, and followed the $26.3 million cash inflow seen in the previous week, ended Wednesday, Nov. 4. It was also the 19th week in the last 20 in which inflows were seen, dating back to mid-June. Some $6.769 billion of net inflows have been seen during that stretch, according to a Prospect News analysis of the AMG figures, interrupted only by a lonely $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 $18.352 billion, according to the analysis - a new peak level for the year so far, eclipsing the old mark of $18.006 billion recorded in the Nov. 4 week.

With 2009 now well into its fourth and final quarter, inflows, including the latest weekly gain, have been seen in 40 weeks out of the 45 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. Including another category of funds - those which report on a monthly basis, rather than weekly - aggregate inflows for the year so far have mounted up to some $28 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 an eye-popping 51.752% as of Wednesday's close, according to the authoritative Merrill Lynch High Yield Master II index, a new peak level for 2009, handily beating virtually every other major investment asset class. Meanwhile, the $130.349 billion of new high yield debt issued so far this year globally, as of Wednesday's close -- $107.961 billion of it domestic - is running some 82.6% ahead of the feeble pace of last year's global primary tally. Domestic new issuance is 83.7% ahead of its year-ago levels.

EPFR sees inflows resume

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, which uses a different methodology, calculated a $200.8 million inflow on the week, reversing the trend seen the previous week, ended Nov. 4, when it had reported a $175 million outflow; EPFR said that downturn had snapped a stunning string of 18 straight weeks of inflows dating back to June and had been only the second which EPFR had seen in the last 35 weeks.

The cash infusion in the latest week brought the year-to-date cumulative inflow total back up to an even $21 billion for the year, its peak 2009 level, from around $20.7 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. Any and all 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.

Inmarsat prices tight to talk

Thursday's primary market saw a mix of European and U.S. issuers complete $975 million and €1.405 billion in five tranches.

London-based Inmarsat Finance plc priced a $650 million issue of 7 3/8% eight-year senior unsecured notes (Ba2/BB+) at 99.256 to yield 7½% on Thursday.

The yield printed at the tight end of the 7½% to 7¾% price talk.

Credit Suisse and Barclays Capital Inc. were global coordinators. BNP Paribas and RBS Securities Inc. were the bookrunners.

Proceeds will be used to refinance existing debt.

A high-yield mutual fund manager declined to put in for the deal. The reason: allocations would have been horrendous, the buy-sider said, adding that it was heard to be a huge blowout.

A lot of higher quality buyers did play the deal, the fund manager added.

The Inmarsat 7 3/8% notes due 2017, which priced at 99.256, broke to par ½ bid, 101½ offered, a hedge fund manager said.

Antero beats talk

Meanwhile, Denver-based Antero Resources Finance Corp. priced a twice-upsized $375 million issue of 9 3/8% eight-year senior notes (Caa1/B+) at 99.299 to yield 9½%.

The yield printed 12.5 bps inside of the 9¾% area price talk. The deal was initially increased to $350 million from $300 million, and then further upsized by another $25 million.

J.P. Morgan Securities Inc., Barclays Capital Inc. and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to repay bank debt.

Soon after terms circulated the new Antero notes were up ¾ to 1 point, according to a buy-side source.

Smurfit Kappa doubled in size

A generous portion of Thursday's primary market news emanated from Europe, and source expect that portion of the market, which was slow to rekindle after last spring's sell-off, to continue to generate substantial news.

Along with the above-mentioned Inmarsat deal, Smurfit Kappa Group plc and Smurfit Kappa Acquisitions priced an upsized €1 billion two-part senior unsecured notes transaction (Ba2/BB-) on Thursday.

The Dublin-based paperboard and packaging company priced €500 million of 7¾% 10-year notes at 99.15 to yield 7 7/8%, at the tight end of the 8% area price talk.

Smurfit Kappa also priced €500 million of 7¼% eight-year notes at 98.52 to yield 7½%, at the tight end of the 7½% to 7¾% price talk.

Citigroup, Credit Suisse, Deutsche Bank and JP Morgan were joint bookrunners for the debt refinancing.

Poland's TVN prices atop talk

Meanwhile Poland-based cable TV operator TVN Finance Corp. II AB priced a €405 million issue of 10¾% eight-year senior unsecured notes (B1/B+) at 98.696 to yield 11%, on top of the price talk.

JPMorgan, Nomura and Calyon Securities were joint bookrunners for the debt refinancing and general corporate purposes deal.

Central European marketing €580 million

Central European Distribution Corp. is marketing a €580 million equivalent offering of dollar- and euro-denominated seven-year senior notes.

The deal, which is being led by left bookrunner Goldman Sachs & Co., roadshows in the United States this week, then moves to Europe next week, and is scheduled to wrap up on Nov. 19.

Citigroup and Deutsche Bank Securities are joint bookrunners.

The Poland-based beverage producer and distributor is also marketing a concurrent offering of 9.5 million common shares.

Proceeds from the bonds and stock will be used to purchase Lion Capital's remaining stake in Russian Alcohol Group and to repay debt including Central European's outstanding secured notes due 2012.

Revlon price talk

The red hot primary market might pass a quiet Friday, with only one U.S.-based issuer expected to price a deal.

Revlon Consumer Products Corp. talked its $330 million offering of senior secured notes due 2015 at the 10% area on Thursday.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities and J.P. Morgan Securities Inc. are joint bookrunners for the debt refinancing.

Altra starts roadshow

Meanwhile the active forward calendar continued to build.

Altra Holdings, Inc. began a roadshow on Thursday for its $200 million offering of seven-year senior secured notes (expected ratings B1/B+).

A global investor call is set for 11 a.m. ET on Friday.

The roadshow wraps up on Tuesday.

Jefferies & Co., Bank of America Merrill Lynch and JPMorgan are joint bookrunners.

Proceeds will be used to repurchase or redeem Altra's 9% notes and to repay the revolver of TB Wood, which Altra acquired in spring 2007.

Alliance Healthcare marketing starts Friday

Elsewhere, Alliance Healthcare Services, Inc. will start a roadshow on Friday for its $200 million offering of seven-year senior notes.

The deal is expected to price next week.

Deutsche Bank Securities, Barclays Capital and Morgan Stanley are the underwriters for debt refinancing.

JohnsonDiversey starts Monday

Meanwhile JohnsonDiversey, Inc. will begin a roadshow on Monday for its $400 million offering of 10-year senior notes (expected ratings B3/B-).

The roadshow runs through Nov. 19, with the notes expected to price after that.

Goldman Sachs & Co. is the left-lead bookrunner. Citigroup, Barclays Capital, HSBC and JPMorgan are joint bookrunners.

Proceeds, together with new credit facilities, will be used to fund recapitalization transactions, including the repurchase or redemption of the company's outstanding senior subordinated notes, and to repay existing credit facilities.

Tuesday issues move up

Traders said the Inmarsat and Antero deals priced too late in Thursday's session for any meaningful aftermarket activity.

A trader said that among the bonds which priced on Tuesday, heading into the Wednesday holiday, a trader saw Toys 'R' Us' new 8½% senior secured notes due 2017 "wrapped around par," although his shop "did not do very much" in the name.

Another trader saw the bonds at par bid, 100½ offered, while a third was quoting them at 99¾ bid, without any offering, in Thursday morning dealings

The Wayne, N.J-based specialty retailer had priced $725 million of the bonds, up from $650 million, at 98.5753 to yield 8¾%.

Another gainer, a trader said, was Belo Corp., whose 8% senior notes due 2016 were "wrapped around 101," after the Dallas-based TV station ownership company had priced that $275 million of bonds at 98.045 to yield 8 3/8%. A second trader quoted the Belo bonds at 100½ bid, 101½ offered.

A trader said that Viasystems' $220 million of 12% senior secured notes due 2015 had firmed to par bid, 100½ offered, well up from the 96.269 level at which the bonds had priced to yield 13%.

Another trader said its bonds had hit 100¼ "a couple of times," and had been left at that bid.

And a trader said that Triumph Group's 8% senior subordinated notes due 2017 traded up to 100 bid, 101 offered. The Wayne, Pa.-based aerospace systems and components supplier's $175 million of the bonds priced at 98.558% to yield 8¼%.

United Rentals busy and steady

A trader said Tuesday's United Rentals Inc. 9¼% notes due 2019 were very busy, with "a ton of trading" in them on Thursday. He said that the Trace bond-tracking service had estimated turnover of $47 million in the credit.

He saw them continuing in a 99 3/8 - 991/2; the Greenwich, Conn.-based industrial and construction equipment company's $500 million of the bonds, upsized from $400 million originally, had priced at 98.382 to yield 9½%.

Norwegian Cruise Line treads water

Going back to last week, a trader saw Norwegian Cruise Line's recently priced bonds "drifting lower and trading below issue today."

He quoted the Miami-based cruise ship operator's 11¾% senior secured notes due 2016 left at 971/2-981/2. The company priced $450 million of the notes on Nov. 4 at 98.834 to yield 12%

Market indicators turn mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ¼ point at 93 3/8 bid, 93 7/8 offered on Thursday, after having been up ½ point on Tuesday.

Meanwhile, the KDP High Yield Daily Index was unchanged on Thursday to end at 69.54, after having gained 3 bps in Tuesday's dealings. Its yield likewise held steady at 8.64%, following the 2 bps tightening seen on Tuesday.

In the broader market, however, advancing issues overtook decliners on Thursday, although their margin of victory was literally just a handful of issues - less than two dozen out of the nearly 1,500 tracked. That was virtually a negative image of Tuesday's activity, when the decliners had been the ones pushing past the advancers, again by only a relatively few issues.

Overall market activity, as measured by dollar-volume, fell nearly 2% from Tuesday's pre-holiday pace.

A trader said that "things opened up slightly softer," but as time wore on, he said the market felt "unchanged to a touch better."

Noting that the rare mid-week holiday had interrupted the usual rhythm of a trading week, he said that "a lot of people are still trying to screw their heads on and figure out what day it is - it felt like a Monday, with the day off [Wednesday]."

He said that "even with equities off at the end of the day" - the bellwether Dow Jones Industrial Average dropped 93.79 points, or 0.91%, to finish at 10,197.47 - "I didn't really see much softness in our market, but it was tough to tell if things were on the light side in terms of volume."

He added that "earnings and new-issues continue to be the themes - same story, different day."

AMD up as Intel gives in

Among specific issues, a market source saw Advanced Micro Devices' 7¾% notes due 2012 finishing up by nearly 6 points on the day at 97 bid, after having gotten as good as par earlier in the session before coming off that peak level.

A source at another desk meantime saw AMD's bonds as having been among the most active junk issues, with nearly $30 million having changed hands by mid-afternoon. That source had seen the bonds get up to just below the 99 area.

The boom in the Silicon Valley company's bonds was mirrored by the surge in its shares, up $1.16, or $21.80, on the New York Stock Exchange, to end at $6.48. At one point intraday, the shares were up as much as 26.5%. Volume of 163 million shares was more than five times the norm.

Those movements were sparked by the news that Intel Corp., the world's largest computer-chip maker, had agreed to settle AMD's antitrust lawsuit for $1.25 billion. AMD, which has been fighting a guerilla war in the courts against its bigger rival for years, had alleged that Intel was trying to crush its competition by alternately rewarding computer makers who used only Intel chips with large rebates and co-marketing arrangements - and punishing those who also bought from AMD by denying them these goodies.

Intel, even in announcing the settlement, denied any such improper conduct - but it also agreed in the settlement not to take such steps in the future. While asserting its innocence, Intel acknowledged that it was choosing to settle with its pesky smaller competitor rather than gamble on letting the suit go to a jury trial next year in Delaware, where both California based-companies are legally incorporated, and risk getting socked with triple damages totaling in the billions in the event that it lost.

AMD's suit against Intel has also attracted the attention of regulators in the United States, including the Attorney General in New York State, who has also sued the company on antitrust grounds, as well as in Europe and Asia.

Elsewhere in the high-tech junk sector, another chip-maker, Freescale Semiconductor Inc.'s 8 7/8% notes due 2014, were seen up about a point at the 83 level.

Dollar General up after IPO

Elsewhere, Dollar General's 10 5/8% notes due 2015 gained more than a point to hover around the 110 mark.

That firming followed the news that the Goodlettsville, Tenn.-based low-priced chain retailer had successfully priced its initial public offering ahead of its Friday stock-trading debut.

The company and its controlling owner, Kohlberg Kravis Roberts, sold 34.1 million shares at $21 per share for total gross proceeds of $716.1 million. KKR, which acquired the company in a leveraged buyout in 2007, sold 11.4 million shares, for gross proceeds of $231.84 million, and will still hold 89% of the company, post sale.

Meanwhile, Dollar General sold 22.7 million shares for gross proceeds of $476.7 million, which the company will use to pay down debt.

Although the IPO priced at the low end of the anticipated $21 to $23 range, some observers suggested that the shares were priced a little cheaply so that they will rise when "DG" starts trading on the NYSE on Friday and will outpace the lackluster debuts of other bought-out company IPOs in recent months.

TXU improves on failed debt swap

Energy Future Holdings - better known by its former moniker TXU Corp. - announced the results of its tender offer Thursday.

The company validly tendered $357.5 million principal amount of notes, but in the end did not receive the consents necessary to amend the indentures.

Still, the company's bonds traded actively - and at least 1 to 2 points higher - as one source opined that TXU and its owners might "sweeten the offer with another offer."

"It failed from a company standpoint, but not necessarily from a bondholder standpoint," the source said. In choosing "not to follow [private equity owners] KKR," bondholders overwhelmingly said they believe there is more value in their debt than the "30% haircut" being offered in the exchange, he said.

"Perhaps [bondholders] and the owners think the numbers will improve going forward," he added.

A trader called TXU's debt "quite active," its 10 7/8% notes due 2017 around 74.5, compared with levels around 71 previously. He also saw the 10¼% notes due 2015 around 74, up from 73.5.

"That's a little higher, but not much different," he said.

At another desk, the 10 7/8% notes were deemed 2 points better at 74.25 bid, 75 offered. The 6.55% notes due 2034 were also 2 points better at 47 bid, 47.75 offered.

TXU was looking to cut its debt by swapping $6 billion in notes for $4 billion in new notes. Despite the overwhelming rejection of the offer, the company said it remains committed to improving its bottom line.

"We remain committed to improving our balance sheet," said Paul Keglevic, chief financial officer, in a press release. "We will continue to explore all options available to us to achieve this objective."

Some market players were not shocked that the deal fell through.

"We weren't surprised because the proposed offer wouldn't have guaranteed bondholders a superior recovery, nor would it have done much to reduce EFH's untenable debt load," wrote Gimme Credit analyst Carl Blake in an afternoon comment. "What is clear to us from this development is that the company will need to come up with a more comprehensive solution next time around to gain the support of bondholders."

Energy Future Holdings is a Dallas-based energy holding company.

Stephanie N. Rotondo contributed to this report.

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