Sprint sells $2.28 billion; coupon question for Edison; James River off; funds up $82 million

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Nov. 8 - The high-yield primary market sloughed off another substantial day of selling in the stock market and continued to churn out big numbers on Thursday.

Prices were heavy in the secondary, though, traders reported, adding that the focus continued to be on new issues.

Five issuers brought single-tranche dollar-denominated deals, raising a combined total of $3.88 billion.

Sprint Nextel Corp. led the day with a $2.28 billion issue of non-callable 10-year senior notes (B3/B+) that priced at par to yield 6%.

The company's existing debt was a bit weaker on the day, but traders attributed the minor losses more to the general tone of the market versus the pending new issue.

Meanwhile, Edison Mission Energy paper was "continuing to drop off," a trader said. The rumor mill has been buzzing that the company might forgo an upcoming coupon payment and that it could end up filing for bankruptcy instead.

After reporting dismal earnings on Wednesday, James River Coal Co.'s debt was losing more ground. The sector as a whole also continued to be soft, as concerns about stricter environmental regulations abound.

$82 million inflows

Trailing a week of outflows, high yield funds flows were positive during the most recent week, market sources said.

The funds saw $82 million of inflows for the week to Wednesday, sources said, citing a weekly report from Lipper-AMG.

That small inflow follows the previous week's more substantial $619 million of outflows.

Year to date inflows have been seen in 36 out of the 45 weeks.

Sprint prints $2.28 billion

Sprint Nextel priced $2.28 billion of non-callable 10-year senior notes (B3/B+) at par to yield 6% after announcing the quick-to-market deal at benchmark size on Thursday morning.

The yield printed at the wide end of price talk that was set in the 5 7/8% area.

In the secondary market the bonds traded lower, according to a trader who had them at 99 3/8 bid, 99 5/8 offered.

Borrowing the slang designation applied to unlimited calling plans, the trader remarked that Sprint printed: "All you can eat."

Merrill Lynch, Barclays, Citigroup, Deutsche Bank, Goldman Sachs and J.P. Morgan were the joint bookrunners for the debt refinancing deal.

Terex re-jiggers deal

Terex Corp. priced a restructured $850 million senior notes transaction.

Terex priced its senior notes due May 15, 2021 (B3/B+) at par to yield 6%, at the wide end of the 5¾% to 6% yield talk.

The dollar notes tranche was upsized from $530 million. However a €250 million tranche, which was to be issued by Terex International Financial Services Co., was eliminated.

Credit Suisse, Goldman Sachs, RBS and UBS were the joint bookrunners for the quick-to-market debt refinancing deal.

New Gold at the tight end

Elsewhere in Thursday's drive-by action, New Gold Inc. priced a $500 million issue of 10-year senior notes (B2/BB-) at par to yield 6¼%, at the tight end of the 6¼% to 6½% yield talk.

The bonds were at 101 bid after the close, a trader said.

J.P. Morgan and Scotia were the joint bookrunners for the general corporate purposes deal.

Crestwood taps 7¾% notes

Crestwood Midstream Partners LP and Crestwood Midstream Finance Corp. priced a $150 million add-on to their 7¾% senior notes due April 1, 2019 (B3/B-) at 101 to yield 7.475.

The reoffer price came on top of price talk.

Merrill Lynch, Barclays, Citigroup, RBC and RBS were the joint bookrunners for the quick-to-market debt refinancing deal.

Prospect Medical taps 8 3/8% notes

Prospect Medical Holdings, Inc. priced a $100 million add-on to its 8 3/8% senior notes due May 1, 2019 (B2/B-) at 102 to yield 7.972%, also on top of the price talk.

Morgan Stanley, Credit Suisse and RBC were the joint bookrunners for the quick-to-market dividend deal.

Rottapharm at the tight end

The European high-yield market also had a big day that featured three Italian deals.

Rottapharm Ltd. priced a €400 million issue of seven-year senior notes (Ba3/BB-) at par to yield 6 1/8%, at the tight end of yield talk that was set in the 6¼% area.

Joint bookrunner JPMorgan was the global coordinator. Banca IMI and Mediobanca were also joint bookrunners.

The Monza, Italy-based pharmaceutical company plans to use the proceeds to refinance debt and for general corporate purposes.

Guala Closures's floater

Also from Italy, Guala Closures SpA priced a €275 million issue of seven-year senior secured floating-rate notes (B1/B) at par to yield three-month Euribor plus 537.5 basis points.

The spread came at the tight end of the Euribor plus 550 bps spread talk.

Joint bookrunner Credit Suisse will bill and deliver. Banca IMI, Natixis and UniCredit were also joint bookrunners.

The Alessandria, Italy-based manufacturer of closures for beverage containers plans to use the proceeds to repay bank debt.

Fiat brings Swiss franc deal

Finally, Italian car-maker Fiat Finance & Trade Ltd. SA priced a CHF 400 million issue of non-callable four year senior notes (B1/BB-/BB) at par to yield 5¼%, on top of price talk.

RBS and UBS were the joint bookrunners for the general corporate purposes deal.

The European market also figures to be in action on Friday.

Sweden's Perstorp Holding AB is poised to price a $1.09 billion equivalent multi-currency three-part offering of secured notes.

On Wednesday Perstorp set price talk.

The deal includes $660 million equivalent of dollar-denominated and euro-denominated first-lien notes due in May 2017 (B2/B).

The dollar-denominated notes are talked to yield 8½% to 8¾%. The euro-denominated notes are talked to come 25 basis points behind the dollar-denominated notes.

Tranche sizes remain to be determined.

In addition Perstorp is offering $430 million of second-lien notes due in August 2017 (Caa2/CC) which are talked to yield 10¾% to 11%.

Joint physical bookrunner J.P. Morgan will bill and deliver for the dollar-denominated notes. Goldman Sachs, which is also a joint physical bookrunner, will bill and deliver for the euro-denominated notes.

Eagle Midco for Friday

Eagle Midco, Inc., a holding company of Epicor Software, plans to host an investor conference call at 10 a.m. ET on Friday to discuss its $340 million offering of five-year senior discount notes.

The deal is set to price on Friday afternoon.

Merrill Lynch and RBC are the joint bookrunners for the dividend deal.

Pacific Drilling sets roadshow

Pacfic Drilling V Ltd. plans to start a roadshow on Friday for its $500 million offering of five-year senior secured notes.

The deal is expected to price late in the week ahead.

Goldman Sachs, Deutsche Bank, Citigroup and DNB are the underwriters.

The Luxembourg-based ultra-deepwater drilling contractor plans to use the proceeds to fund the remaining construction payments on the Pacific Khamsin drill ship, and for general corporate purposes.

American Piping starts roadshow

American Piping Products, Inc. began a roadshow on Thursday in Los Angeles for its $100 million offering of five-year senior secured notes.

Investor meetings are planned for New York City in the week ahead.

Imperial Capital is sole manager.

Proceeds will be used to repay debt, redeem preferred stock and founder's stock, and pay a dividend to common stock holders.

Market softens more

In the secondary, market indexes were again pressured in Thursday trading, according to market sources.

The KDP High Yield Index fell to 74.18 from 74.24, as yields widened out to 6.11% from 6.09%.

The CDX North American Series 19 High Yield Index meantime down a point at 98 bid, 98¼ offered.

Sprint weak ahead of deal

Sprint Nextel was out shopping a new 10-year deal on Thursday. Traders saw the Overland Park, Kan.-based telecommunications provider's debt falling during the day, though it was not clear if the loss was due to the new issue or the overall tone of the market.

One trader saw the company's 8 3/8% notes due 2017 falling ½ point to 1161/4. The 6.9% notes due 2017 were also ½ point lower, at 109.

However, the 6% notes due 2016 were pegged at 108 5/8, up slightly.

"I don't se them doing a 10-year deal as having a big impact on pricing," another trader said. He saw the 9 1/8% notes due 2017 slipping fractionally to 117¾ bid, 118 offered, versus 118 bid, 118¼ offered previously.

A third source called the 6% notes up a touch at 108¾ bid.

Coupon concerns pressure Edison

A trader said that there was "chatter" that Edison Mission Energy might not be able to make an upcoming coupon payment on Nov. 15 and that "it might possibly file" instead.

That prompted a decline in the company's bonds.

The trader said issues like the 7% notes due 2017 and the 7¾% notes due 2016 were slipping to levels around 45.

Another trader also pegged the bonds around 45 but stated that all the bonds were trading in that context.

Prospect News reported on Nov. 2 that the company had stated in a filing with the Securities and Exchange Commission that there is no assurance that the $97 million of interest payments due Nov. 15 on its unsecured bonds maturing in 2017, 2019 and 2027 will be made on that date.

More losses for James River

James River Coal's 7 7/8% notes due 2019 were "under a little more pressure again," a trader said, just one day after the coal producer reported a wider quarterly loss.

The trader deemed the debt down nearly 3 points to 601/2.

Another trader said the issue was "down a little bit more" at 60½ bid, 61 offered.

The rest of the coal sector was also weaker, for the most part. Alpha Natural Resources Inc.'s 6¼% notes due 2021 dropped almost 2 points to 883/4, but Patriot Coal Corp.'s 8¼% notes due 2018 were a point higher at 52½ bid,

In its third quarter earnings release posted on Wednesday, James River reported a net loss of $20.6 million, or 59 cents per share. That compared to a loss of $3.7 million, or 11 cents per share, the year before.

Revenues declined 5% to $288.1 million.

The coal producer also said that it had repurchased $61.4 million in debt at a discounted price of $23.9 million, or 39 cents on the dollar. Some in the market saw that as a positive for the company's bottom line, while others lamented the resulting decline in liquidity.

Liquidity was $172 million at the end of the quarter, versus $191.9 million the previous quarter.

James River's management also remarked that a potential for increased environmental regulations under Obama could negatively impact its balance sheet.

Still, the bigger issue at hand could be the price of natural gas.

ArcelorMittal rebound continues

ArcelorMittal bonds "were still one of the more active names," a trader said Thursday.

Another trader placed the 5½% notes due 2021 at 97 5/8, which was up just over a point from Wednesday. The 9.85% notes due 2019 closed a point higher at 1151/2, while the 4½% notes due 2017 were "unchanged to down a ¼ [point]" at 98.

On Tuesday, the steelmaker received a rating downgrade from Moody's Investors Service that then resulted in a 3- to 10-point loss for the debt. But the drop might have been overdone, as many in the marketplace were already expecting the downgrade, especially given that Standard & Poor's had done so a few months before.

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