Quicksilver Resources' bonds jump on news of MLP; Kodak gains continue; Borgata active, better

By Stephanie N. Rotondo and Paul A. Harris

Portland, Ore., Oct. 20 - Traders said it was a "lackluster day" for the secondary high-yield market on Thursday.

"It seemed quiet," said one trader. "I don't know if it was necessarily holiday related," referring to the Jewish holiday Simchat Torah, which began on Thursday.

While market indicators did move up on the day, a trader opined that the market was "in a holding pattern until we hear something out of Europe or something from Greece."

The day's big mover was Quicksilver Resources Inc. Those bonds gained as much as 8 points on the day on news the company was planning to form a master limited partnership to hold some of its shale assets.

Eastman Kodak Co. paper was also on the rise, extending gains that began earlier in the week on news it had licensed some of its patents.

In the gaming arena, Marina District Finance Co. Inc. - or as it is more commonly known, Borgata Hotel Casino & Spa - experienced "unusually high volume," a trader said, although there was no news out. Conversely, the usually active Caesars Entertainment Corp. bonds were lagging in terms of volume.

Clearwire Corp. debt was on the rebound after several sessions of pressure. The company's debt is the second-biggest loser of the month as investors worry about its future with Sprint Nextel Corp.

Record inflows

Cash bonds finished half a point to 1 point higher on Thursday, according to a syndicate banker.

The CDX HY17 index finished at 90½ bid, 90¾ offered, up 1/8 point.

The KDP High Yield index, meantime, rose to 71.94, as yields fell under 8% to 7.98%. The index was at 71.59 with an 8% yield on Wednesday.

Signs of the high-yield market's technical strength continued to be persuasive.

Global high-yield funds saw their biggest-ever weekly inflow of cash: $3.16 billion for the week to Wednesday's close, according to EPFR Global.

The high-yield mutual funds saw $2.275 billion of inflows for the week to Wednesday, according to a debt capital markets banker who was citing a weekly report by Lipper-AMG. That was the biggest inflow since August 2003.

It follows the previous week's $635 million inflow.

For the year as a whole, inflows reported by Lipper-AMG have been seen in 27 weeks versus 15 weekly outflows, according to a Prospect News analysis of the data.

Market trades higher

Among bellwether market names, Community Health Systems Inc.'s 8 7/8% notes due 2015 were unchanged at 101¼ bid, 101¾ offered, a source said. Ford Motor Co.'s 7% notes due 2031 gained a point to 117 bid, 118 offered.

J.M. Huber sets talk

The primary market news flow was thin on Thursday.

J.M. Huber Corp. talked its $225 million offering of eight-year senior notes (B2/BB-/) with a yield in the 9¾% area.

Books close at noon ET on Friday, and the deal is set to price thereafter.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC are the joint bookrunners.

River Rock $205 million

River Rock Entertainment Authority plans to sell $205 million of seven-year senior notes (B3/B-) in two tranches.

The deal, which features $110 million of series A taxable notes and $95 million of series B tax-exempt notes, is being led by Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC.

Syndicate sources declined to furnish any details on the how or when the Rule 144A notes will be marketed.

Proceeds, in addition to proceeds from the private placement of $27.6 million private placement of 6½% senior subordinated notes due 2019, will be used to retire the authority's 9¾% senior notes due 2011 and the outstanding notes of the Dry Creek Rancheria Band of Pomo Indians, and to fund construction of an emergency access road over the tribe's reservation and a piece of newly acquired property.

Quicksilver pops on MLP

Quicksilver Resources bonds jumped as much as 8 points on the day on news the company was planning to form a master limited partnership to hold some of its Barnett Shale assets.

"The bonds had been easing [previously]," a trader said. On the news, however, he saw the 7 1/8% notes due 2016 moving up to 97½ bid, 98½ offered, down from the intraday high around 102, but up from previous levels around 90.

The trader noted there were "30 trades or so - well over the usual one to two trades a day," he said.

He also saw the 9 1/8% notes due 2019 at 105½ bid, 106½ offered, up from 981/2.

"There were not as many trades [as the 7 1/8% notes], but they were active nonetheless," he said.

Another trader called the 7 1/8% notes up 7 to 8 points, seeing them trade above par, versus levels around 91 a couple of days prior.

He also deemed the 9 1/8% notes up 3 points to 1053/4.

In connection with the partnership agreement, Quicksilver plans to launch an initial public offering, the proceeds of which will be used to buy the shale assets. The company hopes the plan will also generate enough proceeds to retire some of its debt, $940 million of which is callable between now and the end of 2012.

The partnership will receive 18% of the Barnett Shale productions and 15% of proved 2010 reserves.

"The creation of this MLP achieves several goals for Quicksilver," said Glenn Darden, president and chief executive officer, in a press release.

"We believe we will be able to monetize a large maturing asset base at attractive prices, which can eliminate all of Quicksilver's existing public debt over the next few years. At the same time, the MLP will be growing organically and looking for new opportunities that will provide further upside for all of our shareholders."

Kodak extends gains

A trader said that Kodak's 7¼% notes due 2013 were "up a little bit," trading around 43.

"I see a lot of markets, but it doesn't trade much," he said.

Another trader also called the paper "better," quoting the notes at 42 bid, 43 offered.

The Rochester, N.Y.-based company's bonds have been on the rise since Monday on news that company had licensed its laser-projection patents to Imax Corp. The licensing will provide Kodak with cash upfront, as well as milestone payments and royalty revenues over the next 10 years, helping the struggling 131-year-old company to narrow a cash shortfall and increase royalty revenues.

Also, Kodak recently filed a breach of contract lawsuit against Collins Ink Corp., which had been the sole provider of ink for certain of Kodak's printers. Collins reportedly wants out of its 10-year agreement, citing concerns about Kodak's financial viability.

Borgata 'unusually' active

Borgata Hotel's 9½% notes due 2015 experienced "unusually high volume," according to a trader, though there was no news out to explain the surge in activity.

He said the issue was "up a shade" at 971/2.

Caesars Entertainment's usually active 10% notes due 2018, however, were "virtually unchanged" at 69½ bid, 70½ offered.

The trader noted that for the second day in a row, the notes "weren't in the top 10" most actively traded issues.

Clearwire on the rebound

Clearwire's debt has been under pressure recently as investors worry about what could happen to the already struggling company if Sprint Nextel makes good on its plans to stop using Clearwire's network by the end of 2012.

However, the bonds rebounded some on Thursday, according to traders.

One trader said the 12% notes due 2017 moved up to 45 bid, 47 offered, compared to 42 bid, 45 offered previously.

"So maybe they're off the deck a little bit," he said.

Another trader said the 12% notes due 2015 were "a little better" at 761/2, compared to 75½ bid, 76 offered on Wednesday.

On Oct. 7, Sprint told its investors that it intends to stop selling products compatible with Clearwire's network as it moves to its own LTE network. With Sprint potentially dropping its support, the Kirkland, Wash.-based company could struggle to find other financing options in the current market environment.

Clear Channel gives back

Clear Channel Communications Inc.'s 11% notes due 2017 fell "about a point" to 58½ bid, 59 offered, according to a trader.

There was no fresh news out, however, to act as catalyst.

Clear Channel is a San Antonio-based multimedia company.

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