American Tower prices drive-by eight-year as numerous other deals slate; funds see $5 million outflow

By Paul Deckelman and Paul A. Harris

New York, Nov. 29 - Just as the day after Thanksgiving is the traditional kick-off to the holiday shopping rush, the week after Thanksgiving has emerged as the kick-off to the junk market's end-of-year new-deal rush - as numerous issuers, hoping to cruise into the new year with their financing needs taken care of, try to bring some quickly shopped late deals to market before the primaryside shuts down for the rest of the year and goes home, usually somewhere around the third week in December.

The end-of-year gold rush opened Monday as American Tower Corp. was heard by high-yield syndicate sources to have successfully priced an upsized add-on offering to its existing 7 1/8% notes due 2012. More than a half-dozen other deals were either announced or were heard readying to hit the road for marketing campaigns, including an 8-year offering from American Tower rival SBA Communications Corp., and a billion-dollar plus offering from Texas Genco, heard to be beginning a roadshow around Wednesday. A senior notes component was also heard to be part of Reliant Energy Inc.'s massive $4 billion financing package.

Secondary market activity was meantime described by one market participant as "lethargic" and featureless, taking a back seat to both the resurgent new-deal market and the retreating Treasury market, which was beaten down by trade-deficit and weaker dollar-driven worries.

The market essentially shrugged off the news that $5.0 million more left high-yield mutual funds in the week ended Wednesday than came into them; the number is a mere drop in the buck compared with the swings of hundreds of millions of dollars - or even, sometimes, of billions - usually seen in the funds. Movements in the fund flows are seen by many players as a reliable barometer to overall junk market liquidity trends - but the low volume of activity in the holiday shortened week is seen making the latest week's number a virtual fluke.

Only one issue priced during the Monday primary market session, trailing the four-day Thanksgiving break.

American Tower Corp. tapped into its 7 1/8% notes of 2012, adding on $200 million in a deal that upsized by $50 million.

Elsewhere, prospective issuers known to have been waiting in the wings during the run-up to Thanksgiving stepped into the light on Monday, led by Texas Genco which will hit the road Wednesday with a $1.125 billion 10-year deal.

American Tower $200 million drive-by add-on

Monday's sole issuance came in the form of a drive-by debt refinancing deal from Boston-based American Tower Corp.

The company priced an upsized $200 million add-on to its 7 1/8% senior notes due Oct. 15, 2012 (existing ratings Caa1/CCC) at 101.25 on to yield 6.914%. The deal was increased from $150 million.

The sale, led by bookrunner Credit Suisse First Boston, generated $202.5 million of proceeds.

The original $300 million issue priced at par on Sept. 28, so the company came away from Monday's deal with a better rate than the one it printed on its bonds in late September.

Texas Genco unwraps $1.125 billion

The remainder of Monday's news bore upon the primary market new issue calendar. And the most prominent story came from Houston-based wholesale electric power generator Texas Genco LLC.

The roadshow starts Wednesday for the company's $1.125 billion of 10-year non-call-five senior notes (B), which are expected to take price on Thursday, Dec. 9.

Goldman Sachs & Co. has the physical books for the acquisition financing.

Universal City $450 million

Next, in terms of size, was Universal City Florida Holding Co. I/Universal City Florida Holding Co. II.

The Orlando-based theme park company began a roadshow Monday for $450 million equivalent offering of 5.5-year notes due 2010 in two parts, with pricing expected late this week.

The offer will include $150 million of fixed-rate notes and $300 million of floating-rate notes.

JP Morgan and Banc of America Securities are joint bookrunners for the dividend-funding deal.

SBA Communications Corp., the Boca Raton, Fla.-based independent owner and operator of wireless communications infrastructure, is bringing its $250 million deal without a roadshow.

The company will host an investor conference call on Tuesday to present its $250 million offering of eight-year senior notes, with pricing expected to take place on Wednesday or Thursday.

Lehman Brothers and Deutsche Bank Securities are joint bookrunners for the debt refinancing deal.

Meanwhile the roadshow is set to get underway Wednesday for Carrols Corp.'s $200 million offering of eight-year senior subordinated notes (B3/B-), which is expected to price on Wednesday, Dec. 8.

JP Morgan and Banc of America Securities will be joint bookrunners for the debt refinancing/dividend funding deal from the Syracuse, N.Y., restaurant company, which is the largest franchisee of Burger King restaurants.

Elsewhere, the roadshow starts Wednesday for The Pep Boys-Manny, Moe & Jack's $150 million offering of 10-year non-call-five senior subordinated notes (B3/B), expected to price on Thursday, Dec. 9 via Goldman Sachs & Co.

The Philadelphia, Pa.-based automotive maintenance, repair and parts business will use the proceeds to refinance debt.

And finally, the roadshow starts Tuesday for Ryerson Tull Inc.'s $150 million offering of seven-year non-call-four senior notes (B2/B), expected during the week of Dec. 6 via JP Morgan and UBS Investment Bank.

The Chicago-based processor and distributor of metals will use the proceeds to repay its revolver, which was drawn to fund the acquisition of Integris Metals Inc.

Reliant Energy $4 billion of debt includes bonds

Reliant Energy, Inc. announced last Friday that it intends to make new debt offerings totaling $4 billion.

The offerings will include the sale of new senior secured notes and fixed-rate tax-exempt bonds, although no amounts were specified.

The roadshow is expected to begin during the week of Dec. 6, with Goldman Sachs & Co., Banc of American Securities Merrill Lynch & Co. and Barclays Capital running the deal.

The Houston-based energy company will use the proceeds to refinance debt.

An eye on the 10-year

One investment banker who spoke to Prospect News well after the Monday session came to a close said that the high-yield market is presently following the fortunes of the U.S. Treasury market, where the news is somewhat unsettling.

"The high-yield market was down a little bit in light trading today," the banker said. "It was very quiet.

"Today the real focus was on the 10-year Treasury, which was very volatile. The Treasury price has been dropping for the past couple of weeks on the speculation that foreign demand for U.S. paper, especially from China and Japan, is going to wane.

"We're seeing a steady depreciation of the U.S. dollar against the euro and the yen.

"Today the 10-year Treasury yield rose to 4.33%, in the afternoon, after opening around 4.25%. That's a big move.

"The 10-year yield has gone up about 30 basis points this month. By comparison there has been a five-point decline in the equivalent German debt security during the same period.

"Over the next day or two the movement in the 10-year Treasury is going to have some impact in the market."

American Tower down in trading

In the secondary market, American Tower's existing 7 1/8% notes due 2012 were seen down half a point, at 101.75 bid, while its 7½% notes due 2008 and 9 3/8% notes due 2009 were both at 105.5 bid, unchanged.

There was likewise little price-action movement in response to the announcement by The Pep Boys - Manny, Moe & Jack - that the Philadelphia-based chain of auto parts stores/service centers had begun a cash tender offer for its $100 million principal amount of outstanding 7% notes due 2005, planning on funding the tender with a new $150 million offering. The 7s were unchanged at 101.5 bid, while the company's 6.407% notes due 2007 were likewise unchanged, at 101.75.

Junk down with Treasuries

A trader said that the market "basically was pretty quiet," noting that some commentary from PIMCO bond guru Bill Gross "sent the Treasury market into a tailspin and our market just kind of followed suit." He saw "the more Treasury-sensitive names," such as Crown Cork & Seal and Houghton Mifflin Co., trading off any where from one-quarter to three-quarters of a point.

Gross, the managing director of PIMCO, expressed wariness and caution about investing in Treasuries, echoing recent comments by Federal Reserve Chairman Alan Greenspan warning of the trade deficit's impact on the value of the greenback.

Also lower, the trader said, was EchoStar Communications Corp. paper, as were Nextel Communications Inc. bonds, and recently issued bonds from Owens-Illinois, Rogers Wireless and Rockwood Co. bonds; all were down about half a point.

He saw retailing issues, such as Dillards, The Gap and J.C. Penney, to name just a few, pretty much unchanged on the session, equally unfazed by the strong start to the holiday shopping season seen on the oddly-named "Black Friday" as well as by industry giant Wal-Mart Stores' release of lackluster November numbers.

The sector, he said, "headed down with the market - I don't think there was any significance to the Wal-Mart numbers," he declared.

"It's interesting," he said, "you've seen more supply, and no real inflow to speak of during the last couple of weeks. So a lot of the supply is getting soaked up, and you've got a lower Treasuries market. So it's going to be interesting to see where a lot of these deals price and what that does to the secondary market."

The other trader saw the secondary market down about 5/8 point on the session. "So it's definitely given some ground." However, he characterized trading as "extremely slow."

"Where it [the retreat] stops, who knows? But spreads are awful tight against governments."

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