Ford Credit prices $1 billion, bonds ease in trading; Visteon jumps; Kodak up on capital plan

By Paul Deckelman and Paul A. Harris

New York, Sept. 16 - Ford Motor Credit Co. LLC drove into the Junkbondland with a quickly shopped offering of five-year notes on Wednesday and drove out a few hours later with almost $1 billion in proceeds. However, traders said that mega-deal failed to gain any traction in the aftermarket, actually ending the day trading below its issue price.

Existing automotive credits, however - including Ford Credit parent Ford Motor Co. itself - seemed to do unusually well, with Ford's troubled former parts unit, Visteon Corp., showing particular gains, though on no real news. Meanwhile, parts sector peer American Axle & Manufacturing Holdings Inc.'s bonds gained as the company reported a short extension in the credit facility covenant waivers which its lenders had previously granted it - a development seen as a sign that the Detroit-based drivetrain components company and its banks may be getting close to a debt restructuring plan that has been months in the making.

Apart from the autosphere, Eastman Kodak Co.'s paper popped as the iconic maker of cameras, film and other photographic and imaging technology products announced plans to raise $700 million to shore up its balance sheet through the sale of secured notes to private equity powerhouse Kohlberg Kravis Roberts & Co. and a separate sale of convertible debt.

Blockbuster Inc.'s bonds continued to firm ahead of Thursday's scheduled sale of new secured notes - which were sharply upsized on Wednesday, almost doubled in size, in fact, with the extra proceeds now to be used to completely refinance the company's outstanding term-loan facility.

Elsewhere on the forward calendar, New Page Corp. was heard by high yield primaryside sources to be preparing to price $1.2 billion of five-year senior secured notes on Thursday, while the sources saw Delta Air Lines Inc., QVC Inc. and North American Energy Alliance, LLC & Finance Corp. hitting the road to market upcoming deals.

Late In the session, Waste Services Inc. priced a smallish add-on offering to its existing subordinated notes due 2014.

Ford brings $1 billion

Leading Wednesday's primary market action, Ford Motor Credit priced a $1 billion issue of 8.7% five-year senior unsecured notes (Caa1/CCC+) at 98.805 to yield 9%.

The yield priced on top of yield talk. The issue price came slightly cheap to the 99 area price talk.

Bank of America Merrill Lynch, Citigroup, JP Morgan and Morgan Stanley were joint bookrunners.

The book on the deal closed when orders hit $5 billion, according to the market buzz, as related by a high-yield mutual fund manager.

Waste Services add-on

Also on Wednesday, Waste Services priced an upsized $60 million add-on to its 9½% senior subordinated notes due April 15, 2014 (Caa1/B-) at 99.01 to yield 9.77%.

Barclays Capital was the bookrunner.

The original $160 million issue priced at par in April 2004.

NewPage's $1.2 billion for Thursday

NewPage plans to price $1.2 billion of five-year senior secured notes on Thursday, according to an informed source.

An investor call was held on Wednesday.

Credit Suisse, Goldman Sachs & Co. and Citigroup are leading the Rule 144A/Regulation S offering.

Proceeds will be used to prepay part of NewPage's term loan.

NewPage is a Miamisburg, Ohio-based coated paper manufacturer

Blockbuster massively upsized

Blockbuster nearly doubled the size of its planned five-year first-lien senior secured notes offer (expected ratings B1/B) to $675 million from $340 million.

Guidance sees the deal pricing with a 12% coupon at 94.00, with quarterly amortizations at 106.0.

Pricing is expected on Thursday.

J.P. Morgan Securities Inc. is running the books for the Rule 144A and Regulation S for life deal.

The non-callable notes come with a springing maturity in May 2012 if the company's 9% senior subordinated notes are not refinanced.

The notes will rank pari passu with Blockbuster's bank debt.

Covenants include a maintenance capital expenditures covenant, a mandatory asset sale debt paydown and an excess cashflow sweep covenant.

The movie rental company plans to use the proceeds will be used to repay the revolving credit facility, to repay a Canadian revolver and to fund general corporate purposes. The upsize proceeds will be used to completely refinance the term loan B.

Delta take-off

Delta Air Lines will begin a roadshow on Thursday for its $500 million offering of five-year senior secured notes due 2014 (expected ratings Ba2/BB-).

The roadshow is scheduled to conclude on Wednesday.

JP Morgan, Barclays Capital and UBS Investment Bank are joint bookrunners for the Rule 144A for life notes offer.

Proceeds, together proceeds from new credit facilities, will be used to repay all existing senior corporate credit facilities, with any remaining proceeds to be used for general corporate purposes.

The issuer is an Atlanta-based passenger air carrier.

North American Energy Alliance

North American Energy Alliance, LLC & Finance Corp. started a roadshow on Wednesday for its $205 million offering of seven-year senior secured second-lien notes (Ba3/B+), according to an informed source.

An investor call is scheduled for 12:30 p.m. ET on Thursday. The roadshow is scheduled to conclude on Sept. 23, with the notes expected to price after that.

Barclays Capital and Bank of America Merrill Lynch are joint bookrunners for the debt refinancing.

QVC split-rated deal

In crossover action, meanwhile, QVC will host and investor call and begin a roadshow on Thursday for its $500 million offering of 10-year senior secured notes (expected Ba2/confirmed BBB), according to an informed source.

The notes are expected to price on Sept. 22.

Wells Fargo Securities and Barclays Capital are joint bookrunners.

Proceeds will be used to repay existing term loans.

New Ford paper 'a pig'

When the new Ford Credit bonds were freed for secondary action, a trader said that the new deal "is a pig," quoting the $1 billion of 8.70% notes due 2014 as having traded into a 98 3/8 bid from its 98.80 issue price earlier in the session, and going out at 98 3/8 bid, 98 5/8 offered.

"I thought the pricing was pretty aggressive," he opined. He said that a couple of the accounts he had spoken to had characterized it as "an absolute pig."

"Ford [Credit] was active, below issue," another trader said. "They were originally talking [about a yield of] 9 1/8%, then they pushed it to 9%, and it seems like we've settled back in around that original price talk, which is where they probably should have priced it. "

He quoted the new bonds going home at 98½ bid, 98¾ offered.

While the new Ford Credit bonds failed to live up to expectations, some of the issuer's existing paper seemed to be doing better. A market source said that Ford Credit's 7 3/8% notes coming due next month were up about ¼ point in active dealings to end at 100½ bid, while its 7 7/8% notes due 2010 hovered at 101 bid, slightly firmer on the session.

However, the source also saw Ford Credit's 7½% notes due 2012 losing nearly a point on the day to close at 97.

Ford Credit parent Ford Motor Co.'s 7.45% bonds due 2031 were seen by a trader having moved to 87 bid, 89 offered, up 2 points on the session.

Concho Resources deal holds gains

Back among other newly priced paper, a trader saw Concho Resources Inc.'s 8 5/8% notes due 2017 at 1013/4-101 7/8, up slightly from its morning levels around 1011/2-102, "so it was pretty much going out unchanged" from the 1011/2-102ish levels at which the bonds had gone home on Tuesday, "straddling 102."

"It just held its gains, that's all," but did not add to them, he said.

A second trader saw the bonds Wednesday at 101 5/8 bid, 102 1/8 offered.

Concho, a Midland, Tex.-based oil and gas energy exploration and production operator, had priced its $300 million deal on Tuesday - upsized from the originally planned $250 million - at 98.578 to yield 8 7/8%, and the new notes were seen having swiftly climbed at least 3 points when they were freed for secondary activity.

Toll deal rings a few bells

A trader saw the split-rated (Ba1/BBB-/BBB-) 6¾% notes due 2019 priced Tuesday by Toll Brothers Finance Corp. attracting some attention from junk accounts, despite the deal's predominantly high-grade pedigree.

He saw the Horsham, Pa.-based homebuilder's new bonds -- $250 million of which priced Tuesday at 99.986 to yield 6¾% -- as having moved up to 101 bid, 101¾ offered, after trading all day "in that 101-102 kind of neighborhood."

Blockbuster firms again ahead of deal

A trader saw Blockbuster's 9% notes due 2012 with "a few low bids" around 71- 71½ Wednesday morning, improving to around a 73 bid late in the afternoon.

"I think the stock was unchanged, nothing really happened on the equity side," while bond traders focused on the upcoming issue of senior secured notes.

"They are selling 12% notes," he said, "and I'll tell you - with [a coupon of] 12%, I'd guess there's a lot of interest up there." He also noted that the deal had been upsized from the original $340 million to $675 million, "and it might even be upsized more than that."

Another trader quipped that between Blockbuster's coming deal and Ford's (the latter's Ford Motor Credit Co. LLC arm priced $1 billion 8.70% notes due 2014 at 98.805 to yield 9%), "it seems like we're pulling out all of the old stops. I'm waiting to hear about a WorldCom deal."

Market indicators up again

Back among the existing bonds with no new-issue relations, a trader saw the CDX Series 12 index up by ½ point on Wednesday to 94¾ bid, 95¼ offered, continuing the momentum seen on Tuesday when the index had jumped more than a full point, its seventh consecutive gain.

The KDP High Yield Daily Index shot upward by 55 basis points on Wednesday to 68.61, while its yield swooned by 17 bps, falling to 8.56%. The index continued the definitively positive trend seen on Tuesday when it had climbed by 35 bps and its yield had tightened by 13 bps.

In the broader market, advancing issues led decliners for a 10th straight session on Wednesday, expanding their bulge to better than two-to-one.

Junk market activity, reflected in dollar-volume totals, eased about 5% from Tuesday's level.

"The market was somewhat quiet," a trader said.

A second said that "the market continues to be firm. It seems like accounts are just looking to put money to work, though it's hard for anyone to really sell, even at these higher levels, which is why I guess we're seeing the new-issue calendar heat up."

He said that away from the fizzling Ford Credit deal, "the market seems to push higher - there are buyers around. We may think they're silly levels - but paper keeps trading and moving higher."

Another trader declared that there was "some activity, we had a nice day in equities, there were a lot of things moving. Distressed is moving up and high yield is on fire, with all of the deals coming.

"I guess the world seems good for now, right?"

Kodak climbs on capital plan

Eastman Kodak's 7¼% notes due 2013 were seen having soared more than 5 points on the session to the 85 level, in active dealings.

That followed the news that the Rochester, N.Y-based photography and imaging products company plans to raise $700 million and shore up its balance sheet by a pair of debt sales. It will sell up to $400 million in senior secured notes due 2017 to investment vehicles managed by Kohlberg Kravis Roberts & Co. The notes will bear interest at a rate ranging from 10% to 10½% per year, based on the principal amount of the notes.

Besides that private placement transaction, Kodak will separately sell another $300 million of convertible senior notes. Proceeds from the transactions will be used to repurchase up to $575 million principal amount of Kodak's existing 3 3/8% convertible senior notes due 2033 and for general corporate purposes.

Visteon, Axle lead parts names higher

A trader said that automotive parts supplier names like American Axle & Manufacturing, Lear Corp. and Visteon "jumped out of their skins."

He saw Visteon's 8¼% notes due 2010 get as good as a 25-26 bid level, before coming down to around 20 at the close "They got up to 25, and then back down to 20, and on a lot of volume." The Van Buren Township, Mich.-based parts supplier's bonds had started the day around 15.

He also saw the same kind of movement in the company's 7% notes due 2014, which he said rose to 24, before going out quoted around 18-20, still up several points on the day.

"It was a wild ride, on a lot of trading," he said.

A market source at another desk also saw the '10s finishing up around 20 in busy round-lot dealings, up more than 5 points, after having hit highs of 22 earlier in the session, and saw heavy trading of nearly $30 million in the '14s, which ended at 18 bid, up about 4 points on the day

Traders could offer no firm explanation for the sudden upturn in the bankrupt Visteon's bonds, which had started the month way down - with the 8¼% notes trading at under 5 cents on the dollar and the 7% notes not much better, at under 7 cents on the dollar - and which have been gradually moving up since then, a rise punctuated by Wednesday's jump.

There was no fresh news seen out on the company's bankruptcy case, which was filed on May 28 in Wilmington, Del., no recent regulatory filings, and no major announcements from the company itself, other than a Wednesday press release trumpeting Visteon as having been named one of a handful of recipients of the 2009 Alfred P. Sloan Award for Business Excellence in Workplace Flexibility for companies in Michigan - nice, but hardly enough to spark the kind of wild upside gyrations, and on brisk volume, seen on Wednesday.

A trader suggested that Visteon was being carried along on a wave of overall market euphoria.

"You've got [Federal Reserve chairman Ben] Bernanke talking that we're out of the recession - though the economy isn't getting any better, we're officially out of the recession," he said, referring to the Fed boss's Tuesday declaration that the recession "probably" has ended. That, he contended may be sparking a little bit of irrational exuberance on Wall Street, with "a herd mentality, a sheep mentality - and it's nonsense."

On top of that "when things are a little bit on the quiet side, when things tend to either to go up or down, they're a little inflated."

Away from Visteon, the first trader saw a similarly "wild ride" for American Axle's bonds, and for Lear's.

He saw "plenty" of American Axle bonds trading, with the 5¼% notes due 2014 and 7 7/8% notes due 2017 trading between 71 and 72, up 5 points, helped by the news that the company's lenders had again extended the expiration deadline on the credit facility covenant waivers they had previously granted, through Thursday. The short extension was seen by some market observers as a sign that the two sides expect a debt-restructuring deal to be concluded soon.

Another trader was less impressed with American Axle's upturn, noting the covenant waiver extension news. "Big deal," he sniffed. "In light of that news, of course they're going to bounce.

A trader saw Southfield, Mich.-based interior components maker Lear's 8½% notes due 2013 get as high as 67-68, a range the bonds traded at all day before going out bid at 67, which he called a gain of almost 3 points.

Homebuilders' surge steadies

After homebuilders had notched sizable gains on Tuesday, a trader saw them Wednesday steady to slightly higher.

He pegged Beazer Homes USA Inc.'s 8 5/8% notes due 2011 around 94-6, "about where they were," its 8 3/8% notes due 2012 at in an 87-89 context, up a point or so, and the Atlanta-based builder's 8 1/8% notes due 2016 at 77 bid, 79 offered, "so that's quoted higher" on the day.

But D.R. Horton Inc.'s 5 3/8% notes due 2012 were seen better by nearly 3 points on the day, at levels above 101.

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