Interval, HSN, Ticketmaster slate new deals; Penn Gaming rebounds; GM, GMAC gyrate

By Paul Deckelman and Paul A. Harris

New York, July 7 - With the July Fourth holiday break now behind us, the previously moribund high yield primary market showed some signs of life on Monday. No new deals priced - but syndicate sources saw offerings from several prospective issuers put onto the forward calendar, notably for Interval Leisure Group, Inc., for Ticketmaster and for HSN, Inc. - the Home Shopping Network-all of which are owned by Barry Diller's IAC/InterActive Corp., now in the process of spinning off some of its units.

Secondary market activity was seen relatively quiet and sluggish as people straggled back to work after the long holiday break, which saw U.S. fixed-income markets close early on Thursday and remain closed completely on Friday, Independence Day. Market data measures mostly showed declines.

But one of Thursday's more noteworthy names, Penn National Gaming Inc., was seen having rebounded Monday somewhat from the levels to which its bonds retreated on Thursday after the Wyomissing, Pa.-based racetrack and casino operator announced that its pending leveraged buyout transaction had been cancelled - although the would-be buyers did agree to give the company what amounts to an interest-free seven-year loan, which it will use for debt repayment and other purposes.

And there was some activity seen in the bonds of General Motors Corp. and its 49%-owned GMAC LLC automotive financing arm after The Wall Street Journal reported that the troubled carmaker may look to cut thousands of additional white-collar jobs and could also decided to sell or close down one or more of its iconic car brands. Bonds of GMAC's opposite number, Ford Motor Credit Co., were also seen actively traded.

A high-yield syndicate official said that junk began the post-Independence Day session flat, rallied a little and then closed lower.

The syndicate source quipped that lately the high-yield somewhat resembles movie screen boxer Rocky Balboa: the secondary keeps getting walloped but the primary continues to punch.

Diller deals

Three deals dominated Monday's primary market news, and all three of them - HSN, Inc., Interval Leisure Group, Inc. and Ticketmaster - are related to spin offs from IAC/InterActiveCorp.

Ticketmaster launched a $400 million offering of eight-year senior notes via JP Morgan, Merrill Lynch and Banc of America Securities.

That offering is expected to price on July 15.

Proceeds will be used to fund a dividend in conjunction with the spin off of the New York-based live entertainment ticketing and marketing services provider.

Interval Acquisition Corp. will make an internet roadshow available beginning on Tuesday for its $300 million offering of eight-year senior notes (B1/BB), via left bookrunner Morgan Stanley and joint bookrunners Barclays Capital and Wachovia Securities.

Proceeds will be used to fund a dividend prior to the spin off.

Meanwhile HSN, Inc., formerly the Home Shopping Network, will host an investor call on Wednesday for its $250 million offering of eight-year senior notes via Banc of America Securities, JP Morgan and Morgan Stanley.

Proceeds are to be used in conjunction with spin off.

IAC is spinning off a fourth entity, Tree.com, Inc. However an informed source said that there is no debt financing involved in that transaction.

A slow start

Apart from that trio of interrelated launches, the Monday primary was quiet.

No news was heard on a trio of deals that had been pushed from last week into this week, sources said.

They include AEI's $250 million offering 10-year senior bullet notes (B2/B), which are talked at the 10¼% area. AEI is being simultaneously marketed to high-yield and emerging markets accounts.

The AEI deal is being led by Credit Suisse, as is Ferro Corp.'s $200 million offering of eight-year senior notes (B2) which is talked at 8¾% to 9%, and has also been pushed into the July 7 week.

Likewise pushed is Ferrellgas, LP and Ferrellgas Finance Corp.'s $250 million offering of notes mirroring the company's existing 6¾% senior notes due May 1, 2014 (Ba3/B+) via Banc of America Securities LLC and JP Morgan. No price talk has yet been heard on the Ferrellgas deal.

Meanwhile sell-side sources said that while there is visibility on new issue business beyond that which was announced on Monday, or had already been known to be in the market, most if not all of that "shadow calendar" is contingent upon market conditions.

Market indicators again decline

Back among the established issues, a trader said that with "not much going on," the widely followed CDX junk bond performance index was down another 3/8 point Monday, seeing it around the 92¼ bid, 92 5/8 offered level. The KDP High Yield Daily Index was also once again down, retreating 18 basis points to end at 71.56, while its yield widened by 3 bps to 10.42%.

In the broader market, advancing issues trailed decliners for yet another day, by around a five-to-three margin. Activity was about triple the anemic levels seen in Thursday's truncated session.

A trader saw the junk market "pretty much around the lows where it went out" at the end of that abbreviated session on Thursday.

He opined that there was "not a lot of trading today - you came back from a long holiday weekend after the end of the quarter. There doesn't seem to be a compelling reason for the buyside to do anything right now." He said that "there's a lethargy" in the market, and "there doesn't seem to be a reason to break in the moment."

"It just seemed like," he added, "there was just a strike - a buy strike, or a sell strike." The market "looks like it's sort of laying on its lows, trying to figure what's going to happen next."

Another trader concurred that "it seemed like only about maybe three-quarters of the guys came back for today" after the long weekend. "It seems like a lot of people took a lot of time off.

"It was reasonably quiet today, pretty boring," although he did see "a couple of big spurts were and there."

New Rite Aid, Fox bonds remain firm

One of the traders noted that "we came off week when we had three deals that didn't get done in the marketplace" - the offerings for AEI, Ferro Corp. and Ferrellgas LP and Ferrellgas Finance Corp., any of which could have come last week but did not, instead being relegated to day-to-day status, "and two deals which got done, but at extraordinary rates that you wouldn't have thought would be required, prior to last week," for Fox Acquisition Sub LLC and for Rite Aid Corp. Both priced at a discount to par to boost yield to the desired levels, with Rite Aid at a particularly steep discount.

A trader saw the Rite Aid 10 3/8% secured notes due 2016 - which had priced a week ago at 90.586 in order to yield 12¼% and which had moved up about a point after that - as having gained another ¼ point on Monday to 92 bid, 93 offered. The Camp Hill, Pa.-based drugstore operator's 8 5/8% notes due 2015 were also up ½ point at 66 bid.

And a trader saw the Fox Acquisition Sub 13 3/8% notes due 2016, which priced last Wednesday at 98.803 for a yield of 13 5/8%, treading at about 100.5 bid, 101.5 offered.

Penn National bonds see a bounce

A trader said of Penn National Gaming - whose bonds had been on the slide Thursday on news it was pulling the plug on its failed LBO - that "both tranches moved up," the 6¾% notes due 2015, which he saw at 89 bid, 90 offered, up 1¼ point, and the 6 7/8% notes due 2011, which he quoted up a point at 93.5 bid, 94.5 offered.

At another desk, a market source pegged the 63/4s up 1½ points at 90 bid.

Another trader saw the Penn bonds mixed - while he said that the 6 7/8s were pretty much unchanged "the 6¾ looked to be the active ones." With the bonds having fallen all the way to about 86.5 on Thursday from prior levels in the lower 90s before ending around 88.25-88.5, "they were actually off the bottom" on Monday. He saw the bonds circulating between a low of 89.5 and a high around 90, "with the bulk of the trades at 90, so they're 1½ points off the bottom."

He also noted that "there were some equity guys out there, raising the stock to a buy" - notably Sterne Agee - with the shares buoyed by the new funding as well as the likelihood, stated by company executives on Thursday, that Penn National will use a portion of the more than $1.4 billion of new funding it is getting from its erstwhile suitors to buy back up to $200 million of its shares over the next 24 months. In the wake of the now-defunct LBO deal, would-be-buyers Fortress Investment Group LLC and Centerbridge Partners LP, along with Wachovia Corp. and Deutsche Bank, agreed to pay Penn National $225 million in cash as a break-up fee, in addition to making a $1.25 billion preferred stock investment.

Penn National announced Monday that it had purchased an 18-month option on a 36-acre tract of land along Route I-95 near Chesapeake Bay in Maryland, about halfway between Baltimore and Philadelphia, in anticipation that Maryland voters may approve a statewide referendum measure this November that would allow the establishment of slot-machine gambling in some Baltimore-area locations. The company intends to apply for a gaming license and proposes to invest approximately $125 million in the development of an entertainment center at the site that would include 2,500 slot machines.

Elsewhere in the gaming sphere, the trader "saw some Harrah's [Entertainment Inc.] trade in the morning, up and down" at levels around 82.75 bid for its 10¾% bonds. "They left a seller - nothing happened the rest of the day that I can tell."

At another desk, a market source saw the company's 5¾% notes due 2017 up 1 point at 52. Its Caesars Entertainment 7 7/8% notes due 2010 gained more than a point to the 92 level.

Station Casinos Inc.'s 6 7/8% notes due 2016 lost about a point to end at 53, while its 6% notes due 2012 gained ½ point to finish at 81.

GM bouncing around; eyes job cuts, brand sales

In the autosphere, traders saw a good deal of activity in General Motors bonds, and those of its GMAC financing arm, as investors digested news reports that the struggling Detroit giant may look to sell or if need be even close down one or more of its well-known brands, and will also consider possibly thousands of additional cuts in its white-collar workforce.

The Wall Street Journal reported that only Chevrolet - which accounts for some 60% of GM's sales - and the small-selling but highly prestigious Cadillac division are safe from possible sale or shutdown; the others - any of the others - Buick, Pontiac, Hummer, Saab, GMC and Saturn - could be on the auction block, or the chopping block. GM will only acknowledge that Hummer is actively for sale. Earlier in the decade, GM abolished its venerable Oldsmobile franchise, while competitor Chrysler did away with its equally iconic Plymouth nameplate.

Traders saw GM's bonds, and 49%-owned GMAC's, trading all over the place; one saw GM's benchmark 8 3/8% bonds due 2033 having fallen to 56.5 bid from prior levels around 58 or 59.

Another said that the GM bonds were up 1½ points in a 55-57 context, while GMAC's 8% bonds due 2031 were unchanged at 57.5 bid, 58.5 offered. He also saw Ford Motor Co.'s 7.45% bonds due 2031 at 54 bid, 56 offered, up "maybe 1/2" point.

At another desk, a trader said that "it looked like that stuff opened down 1½ points," and at the end of the day, "looks like they're down a few." He saw the GMAC '31s going home at 57 bid, 58.5 offered, after "bouncing all over the lot. [It was a] wild day." He said the bonds had traded around 60 on Thursday, and traded at levels between 57 and 60.5," reiterating that the bonds were "kind of all over the lot."

But another trader saw GM's bonds, and GMAC's, "unchanged to off 1/2," adding that "there was not really any trading though."

Among some of the shorter-dated paper, GM's 7 1/8% notes due 2013 were quoted down more than 2 points at the 60 level, while GMAC's 6 7/8% notes due 2012 lost a point to 63, and its 6¾% notes due 2014 closed at 60, down 1½ points.

Ford Motor Credit's 7% notes due 2013 lost ½ point and ended at 71.

A market source saw the Ford Credit bonds among the day's busier issues, with its 12% notes due 2015 down 1½ points to 84 in very active dealings, and its 7 7/8% notes due 2010 likewise down 1½ points at 82.5. The source also saw GMAC's 6 7/8% notes due 2011actively traded and up more than 4 points at 64.

Hertz drives higher; not so Avis

After having pushed lower more or less in tandem last week after Avis Budget Group Inc. issued bearish financial guidance, Avis' bonds, and those of rival car-rental operator Hertz Corp. seemed to come to a parting of the ways Monday.

A market source saw Hertz's 10½% notes due 2016 up ½ point at 87 bid. However, Avis continued to skid, its 7¾% notes due 2016 quoted down more than a point on the session at around the 72 level.

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