McClatchy, CNG, Omega price deals, market awaits Media General; Kodak gains on guidance

By Paul Deckelman and Paul A. Harris

New York, Feb. 4 - The high-yield primary market successfully priced nearly $1.3 billion of new paper on Thursday, with the big deal of the day coming from McClatchy Co., which brought an $875 million offering of seven-year secured notes to market. When the Sacramento, Calif.-based newspaper company's new issue was freed for secondary trading, traders saw the new bonds pop up by almost a point.

CNG Holdings, Inc. priced a $200 million offering of five-year secured paper. The Cincinnati-based alternative financial services provider's new deal firmed slightly in the aftermarket.

Late in the day, Omega Healthcare Investors Inc. priced a quickly shopped $200 million offering of seven-year notes. The Hunt Valley, Md.-based healthcare-oriented real estate investment trust's new issue came too late in the session for any kind of aftermarket.

High yield syndicate sources meantime said that price talk emerged on Media General Inc.'s $350 million offering of seven-year secured notes, which is expected to price after the order books are closed on Friday morning. Talk was also heard on oilfield contractor Songa Offshore SE's $200 million seven-year deal, another likely candidate for a Friday pricing.

Among issues which priced Wednesday, traders saw heavy volume in Denbury Resources Inc. and Manitowoc Co.'s new bonds; that paper, along with Crosstex Energy, LP/Crosstex Energy Finance Corp.'s deal, more than held its own in Thursday's dealings. But Hilcorp Energy I, LP/Hilcorp Finance Corp.'s new bonds dropped more than a point below their issue price.

Away from the new deals, Eastman Kodak Co.'s bonds were better on optimistic 2010 earnings projections. But MGM Mirage moved lower, after the Las Vegas-based casino giant proposed changes to its credit facility, including giving the company authorization to issue up to $800 million of new secured notes.

Overall, traders said that despite the gains in most of the new issues and in isolated names like Kodak, it generally was "a tough day," in the words of one - an assessment backed up by mostly lower numerical indexes.

AMG absent, but EPFR sees junk funds rebound

As the day's trading was winding down, market participants awaited the high yield mutual fund-flow statistics generated by AMG Data Services of Arcata, Calif. - a key barometer of overall market liquidity trends - which normally make the rounds of trading desks on Thursday afternoon or early evening, though that was not the case this week. Several reported hearing that the numbers had been delayed.

In the previous week, ended Wednesday Jan. 27, some $75 million more was heard to have left the weekly-reporting funds than came into them, the first outflow of the new calendar year, against three prior weeks of inflows totaling $1.576 billion, according to a Prospect News analysis of the AMG numbers; last week's outflow brought that total down to $1.501 billion. The outflow had been seen as a reflection of a cooling off in the junk market after a torrid first two weeks.

But while the AMG statistics were nowhere to be found, another fund-tracking service, EPFR Global of Cambridge, Mass., which uses a different methodology from AMG, saw an inflow for the week ended Wednesday of $335 million, which stood in sharp contrast to the previous week's $137.4 million outflow. The latest week's cash infusion brought its year-to-date inflow total back up to $2.195 billion, after it had fallen in the Jan. 27 week to $1.86 billion.

The company's analysts said that high yield bond funds bounced back from the previous week's outflows "as central banks around the world showed an inclination to keep interest rates on hold in the face of mixed economic data, suggesting that refinancing costs for issuers of this debt will not become crippling any time soon."

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.

The positive fund-flow trends seen so far this year - even acknowledging last week's cash exodus - have been seen by market-watchers as a key factor in the continued relative strength of both the junk primary and secondary markets, looking to extend the stunning new-issuance totals and secondary returns seen in 2009 - a record $160.028 million of new paper issued, and a 57.512% secondary advance, also a record, as high yield handily beat virtually every other major investment asset class, fueled by ample liquidity typified by last year's record more than $20 billion of inflows to the weekly-reporting funds and over $30 billion to all junk mutual funds.

In the new-deal market, as of the close on Wednesday, there had been $19.76 billion of new dollar-denominated high yield debt issued in the U.S. market so far this year -- $14.718 billion of it from domestic issuers - running some 305% ahead of the sedate pace of early 2009, while the domestic issuance represented a 258% gain over the 2009 year-to-date levels. Industrialized-country global issuance this year in all major currencies of $24.085 billion equivalent was running a healthy 354% ahead of 2009's pace.

In the secondary market, as of the close on Wednesday, the authoritative Merrill Lynch High Yield Master II index showed a year-to-date return of 1.60%, up from 1.429% seen the seen the previous Wednesday, though still down from the 2010 peak level to date of 2.292%, seen on Thursday, Jan. 14.

McClatchy prices $875 million

During Thursday's primary market session, McClatchy Co. priced an $875 million issue of 11½% seven-year senior secured first-lien notes (B1/B-) at 98.824 to yield 11¾%.

The yield printed on top of yield talk. The reoffer price came slightly cheap to the zero to 2 points of discount talk.

J.P. Morgan Securities Inc., Bank of America Merrill Lynch and Credit Suisse were joint bookrunners for the debt refinancing deal.

Check 'n Go prices five-years

Meanwhile,. CNG Holdings, Inc., the holding company for alternative financial services provider Check 'n Go, priced a $200 million issue of 12¼% five-year senior secured notes (B3/B) at 95.00 to yield 13.657%.

The coupon printed at the wide end of the 12% to 12¼% coupon talk. The reoffer price came on top of price talk. And the notes yield at the wide end of the 13.399% to 13.657% yield talk.

Jefferies & Co. ran the books.

Proceeds will be used to repay debt and for general corporate purposes.

Omega brings drive-by

Elsewhere, Omega Healthcare Investors, Inc. priced a $200 million issue of 7½% 10-year senior unsecured notes (Ba3/BB+) at 98.278 to yield 7¾%.

The yield printed on top of yield talk. The reoffer price came toward the cheap end of the 1 to 2 points of discount talk.

Deutsche Bank, Bank of America Merrill Lynch and UBS Investment Bank ran the books for the quick-to-market deal.

Proceeds will be used to repay mortgage debt assumed in connection with the company's recent acquisition of 40 facilities, to repay outstanding revolver debt, and for general corporate purposes.

A quiet Friday ahead

Syndicate bankers were looking for a relatively quiet Friday session, even before volatility took hold of the U.S. and European capital markets on Thursday.

Friday figures to see a pair of deals price.

Media General, Inc. talked its $350 million offering of seven-year senior secured notes (/B/) at 10½% to 10¾%, with about 2 points of original issue discount.

The books close at 11 a.m. ET on Friday, and the notes are expected to price after that.

Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc. are joint bookrunners for the debt refinancing.

Elsewhere, Cyprus's Songa Offshore SE talked its $200 million offering of seven-year senior notes (Caa1/B+) at 10 ¼% area.

The deal is set to price on Friday.

Citigroup is leading the Rule 144A and Regulation S offering.

Proceeds will be used to refinance debt and for general corporate purposes.

McClatchy moves up

When the new McClatchy Co. 11½% senior secured notes due 2017 were freed for secondary dealings, a trader said that "right out of the box," the bonds traded up at 99¾ bid, from the 98.824 level at which the newspaper publisher's deal had priced.

After that, he said the bonds "settled in," trading on either side of par, at 99 7/8 bid, 100¼ offered.

"So those had a nice pop to them," he said.

A market source at another desk meantime saw McClatchy's established 7 1/8% notes due 2011 up more than 2 points on the day to the 105 level. The company plans to use some of the new-deal proceeds to fund its currently ongoing tender offer for the $166 million of 7 1/8s issued in 2001 by predecessor company Knight Ridder Inc.

CNG holds a bit higher

A trader saw CNG Holdings' offering of 12¼% senior secured notes due 2015 at 95½ bid, 96½ offered. That was up modestly from the 95 level at which the financial services company had priced its deal.

However, another trader opined that the $200 million deal "may be too small to see," with the bonds likely already put away.

The day's other $200 million offering - Omega Healthcare Investors' 7½% notes due 2017 - priced too late in the session for any kind of aftermarket dealings.

New Manitowoc, Denbury deals trade actively

Among the deals which priced during Wednesday's very active session - which saw almost $2.5 billion of new paper come to market - a trader said that Manitowoc Co.'s 9½% notes due 2018 got as good as 100¾ bid, 101¼ offered, though they later on backed off ¼ point, at least on the offered side, to 100¾ bid, 101 offered.

"That one performed nicely," he said, especially considering the overall soggy market Thursday.

He noted that the Manitowoc, Wis.-based crane manufacturer's $400 million issue had priced right at par on Wednesday to yield 9½%, while volume in the new credit, according to Trace, was "north of $50 million."

Another extremely active new issue was Denbury Resources' $1 billion issue of 8¼% notes due 2020; the bonds were trading between 102 and 102¼ on volume estimated at $70 million. A trader last saw the bonds going home at 102 1/8 bid.

Denbury, a Plano, Tex.-based energy exploration and production operator, priced its mega-deal on Wednesday at par to yield 8¼%, and the bonds immediately began moving up as soon as they were freed.

Crosstex Energy is hot...

A trader said that Crosstex Energy's 8 7/8% senior notes due 2018 "did OK,' with the Dallas-based natural gas company's $725 million issue of new bonds hanging in at 100 5/8 bid.

That was well above the 97.970 level at which the bonds priced on Wednesday to yield 9¼%.

However the trader opined that "a lot of people thought the deal came [too] cheap."

...but Hilcorp is not

But while Wednesday's other new-deal names all more than held their own in Thursday's secondary, a trader said Hilcorp Energy's 8% notes due 2020 "did not do as well."

He saw the Houston E&P operator's issue having retreated to 96½ bid, 97 offered - well down from the 98.315 level at which they had priced on Wednesday to 8¼% .

Market measures get mauled

Back among the established bonds with no new-deal connections, a trader saw the CDX Series 13 index fall more than a point on Thursday to 96 5/8 bid, after having gained ¼ point on Tuesday. He said that the index "gave back" whatever gains it had cautiously notched over the previous several days.

The KDP High Yield Daily Index meanwhile slid by 34 basis points on Thursday to end at 70.73, after having risen by 2 bps on Wednesday. Its yield ballooned out by 11 bps to 8.32, after having tightened by 1 bp the session before.

Advancing issues fell behind decliners Thursday after two straight days on the upside, by a nearly four-to-three margin.

Overall market activity, as measured by dollar-volume levels, fell about 7% from Wednesday's pace.

A trader said that "the word of the day was PIGS" - Portugal, Ireland, Greece and Spain, whose mounting debt woes have thrown a blanket of gloom over financial markets worldwide, including U.S. stocks, which slid badly (the bellwether Dow Jones Industrial Average swooned by 268.37 points, or 2,61%, to end at 10,002.18, and briefly nosed below the psychologically significant 10,000 mark), along with both junk, which retreated, and regular corporate bonds, which widened out.

Those countries, he said, "caused a nice little sell-off." He said that overall in Junkbondland, "everything was down by ¾ to 1 point. Bids were getting hit."

Another trader declared that Thursday's session was "kind of a tough day."

Kodak 'still higher'

Among specific issues, a trader declared that "there was a lot of action" in Eastman Kodak's 7¼% notes due 2013, seeing the iconic Rochester, N.Y.-based photographic technology company's notes "still higher" around 94, up "a good point or two from [Wednesday]."

Another source said the debt improved by about 3 points to 94½ bid, while yet a third - also seeing a 3 point rise - pegged the bonds as high as 96¼ bid.

The company - whose bonds rose last week upon the release of not-so-bad earnings data, released its 2010 guidance Thursday, which anticipate earnings between negative $50 million and positive $50 million. Total revenue is expected to be between $7.5 billion to $7.7 billion.

MGM slips on debt amendment plan

MGM Mirage's bonds were unchanged to weaker just one day after the company sought to extend its $5.55 billion credit facility.

A trader called the name "pretty active," dubbing the 5 7/8% notes due 2014 "the most active" under the MGM umbrella. He deemed the debt down a deuce at 82 bid, 83 offered.

But another trader said it was the 6¾% notes due 2012 that were the most active at 94½ bid, 95 offered. He called the about unchanged on the day.

The second trader also saw the 8½% notes due 2010 "up and down around par."

At another desk, the 6 5/8% notes due 2015 were seen dropping about 3 points to 80¾ bid.

Late Wednesday, the Las Vegas-based casino operator was reported to be seeking an amendment to its credit facility. The extension would push out the maturity of the facility to February 2014 from October 2011. The request was said to be released to lenders on Wednesday, with response due by Feb. 16.

Also, the amendment would allow for the issuance of up to $800 million in new secured notes.

Cooper in a comeback

A trader said that Cooper- Standard Automotive Inc. "did move," after having "moved big" on Tuesday and then having held steady on Wednesday.

He saw "a lot of volume" in the bankrupt Novi, Mich.-based automotive components company's 8 3/8% notes due 2014, which moved up about 5 points on the day to the 46 bid area.

"Last week, they were in the high 20s, and then they jumped," moving up to the lower 40s by Tuesday, and continuing that climb Thursday on "a lot of volume."

Another trader, who was looking at the 7% of 2012, said the issue "had come in by a couple" of points, dropping to 115 bid, 115½ offered from prior levels around 119 bid, 119½ offered. Over $15 million of the 8 3/8% notes had changed hands by mid afternoon, and around $10 million of the 7s. The trader suggested that now that the company had filed its reorganization plan with the Wilmington bankruptcy court, and as investors sorted out who would get what, the bonds might start to move close to one another, with the 8 3/8s up about 10% on the day and the 7s down 3% or 4% on the day.

Another trader suggested jokingly that the Cooper 12s were up because "maybe they have the good parts - not the ones that caused the faulty [Toyota] acceleration," while admitting that he had no hard information that might explain the bonds' rise.

Also in the automotive realm, a trader said that General Motors Corp.'s benchmark 8 3/8% 2033 bonds were trading around 28-29, "sort of where they've been," while domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were at 88-90.

"There was some volume in GM, and some trading in the long Fords, which he said were "maybe up a point from the other day, but no great shakes."

The bonds of both U.S. auto giants were seen to have improved over the last few sessions - GM's especially from prior lows in the middle 20s -- helped by investor perception that Toyota's well publicized stuck-accelerator pedal troubles, and now, news of a U.S. probe of brake problems on its hot-selling Prius hybrid, could continue to boost the allure of GM and Ford cars. Both reported sharp January sales gains while Toyota's sales fell in the double-digits year-over-year following its Jan. 21 recall of over 2 million cars.

Blockbuster bonds busy

A trader called Blockbuster Inc. "another big name today," seeing the Dallas-based movie-rental company's 9% subordinated notes due 2012 about a point lower on the day in a 23-24 context, while its 11¾% senior secured notes due 2014 were around a point to 1½ points lower on the day at 69-70.

"There was a decent amount of trading on the 9s," he said, and while he noted that the 11¾% notes don't show up on Trace, "so you don't know, it looks like it was active. I saw quotes all day long on it."

Smurfit-Stone continues retreat

A trader said that Smurfit-Stone Container Corp. - whose bonds had fallen on Wednesday in response to lackluster numbers and some bearish guidance from sector peer International Paper Co., according to traders - was "active," with the bankrupt Chicago-based packaging company's paper down about 2½ points to the 78-79 level pretty much across the board, other than its 7 3/8% notes due 2014, which were quoted in an "87ish" area, "but there really wasn't much volume - you don't see the 7 3/8s trade," since it's a smaller, less-liquid deal than the others.

. He said that there was "active trading in a few of [its other issues]." For instance, there was "a lot of volume" in the 78-79 area in the 8% notes due 2017, "and the shorter ones traded as well," such as its 8¼% notes due 2012, which were seen down a deuce at 79 bid.

-Stephanie N. Rotondo contributed to this report

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