AMC 10-year prices, zooms; Ducommun deal ahead, Gulf Offshore spikes offering; NewPage falls

By Paul Deckelman and Paul A. Harris

New York, June 22 - The high-yield primary arena saw its first really sizable, purely junk-rated domestic dollar deal in many days on Wednesday, as AMC Networks Inc. came to market with a $700 million offering of 10-year notes.

Starved for such paper, the secondary market eagerly ate up the Cablevision Systems Corp. spinoff unit's new deal, which was seen to have firmed by several points when it hit the aftermarket.

Next up would seem to be Ducommun Inc., as price talk emerged on the aerospace and defense industry company's $200 million issue of seven-year notes, which is expected to price after the order books close on Thursday.

And INC Research LLC, a provider of contract research services to the pharmaceutical and biomedical industry, is expected to begin shopping its $250 million note offering around to investors Thursday via a conference call.

But the forward calendar lost a deal on Wednesday, high yield syndicate sources said, as energy industry transportation provider Gulf Offshore Logistics LLC was heard to have postponed its planned $110 million senior secured deal, citing market conditions. It was the second such pullout in as many days, following Canadian waste management operator CCS Corp.'s similar decision on Tuesday.

Away from the new deals, the overall secondary market, which had improved on Tuesday pretty much across the board, was seen mixed on Wednesday, traders said, with some selling towards the end of the day.

And selling definitely continued in the secondary sphere's clear volume leader, NewPage Corp., on investor worries about the paper company's ability to meet an upcoming interest payment.

VimpelCom prices $2.2 billion

The primary market posted its biggest dollar-amount of issuance in a month on Wednesday, as two issuers priced a combined $2.9 billion in four tranches.

Netherlands-based VimpelCom - which focuses its business on Russia - priced a $2.2 billion three-part deal.

It included $200 million of five-year floating-rate notes priced at par to yield Libor plus 400 bps. That tranche was added after the original, all-fixed rate deal was introduced to the market.

VimpelCom also priced $500 million of notes due March 1, 2017 at par to yield 6¼%, in the middle of price talk, and $1.5 billion of notes due March 1, 2022 at par to yield 7½%, at the tight end of price talk that had been set in the 7 5/8% area.

Barclays Capital, BNP Paribas, Citigroup, ING, HSBC and RBS were the bookrunners.

AMC prints on top of talk

AMC Networks priced a $700 million issue of 10-year senior notes (B2/B+) at par to yield 7¾%, on top of price talk.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole CIB, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. Inc., RBS Securities Inc., SunTrust Robinson Humphrey Inc., UBS Investment Bank and US Bancorp were the joint bookrunners for the acquisition financing.

Wednesday's $2.9 billion total was the biggest dollar amount to price since the May 26 session during which saw $6.9 billion in 10 tranches.

Ducommun sets price talk

Ducommun talked a $200 million offering of seven-year senior notes (B3/B-) with a 9½% to 9¾% yield on Wednesday.

The order books close at noon ET Thursday, and the deal is set to price after that.

Credit Suisse Securities (USA) LLC and UBS Securities LLC are the joint bookrunners.

As to the remainder of the calendar, no price talk was heard on Wednesday.

However, CKX Entertainment, Inc.'s $360 million offering of eight-year senior secured second-lien notes (/B-) via Goldman Sachs, has been whispered with a yield in the 11% range, according to a buy-side source.

Rural/Metro Corp.'s $200 million offering of eight-year senior notes (Caa1/CCC+) is whispered in the 10% to 10¼% context, source added. That deal is in the market via left bookrunner Citigroup and joint bookrunners Credit Suisse and Jefferies.

Lawson Software, Inc.'s $560 million offering of eight-year senior notes (Caa1/B-), via Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank, Morgan Stanley and RBC, is expected to come with a 10%-handle, the buy-sider said.

And Crown Media Holdings, Inc.'s $300 million offering of eight-year senior notes (B3/B-), a JP Morgan deal, is expected to come with a yield in the low 10% range.

INC sets Thursday call

INC Research plans to host an investor call at 9 a.m. ET on Thursday for a $250 million offering of eight-year senior notes (Caa1/B-).

The deal is expected to price on June 30.

Morgan Stanley & Co. Inc., ING and RBC Capital Markets are the joint bookrunners.

Proceeds will be used to help fund the purchase of Kendle International Inc. and to refinance INC and Kendle debt.

US Airways, Inc. announced an $83 million offering of class C enhanced equipment trust certificates.

The deal comes on the heels of Tuesday's $94.283 million tranche of class B certificates due April 22, 2020 (B2/B+) sold at par to yield 9¾%, and a split-rated $293.944 million tranche of Class A certificates due April 22, 2025 (Ba2/BBB), which priced at par to yield 7 1/8%.

As with the class A and B notes, Goldman Sachs & Co. is structuring agent and a bookrunner for the class C tranche, along with joint bookrunners Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC.

The deal was expected to price on Tuesday. However final terms were not available at press time.

Gulf Offshore postpones

Finally, Gulf Offshore Logistics postponed its $110 million offering of five-year senior secured notes due to market conditions.

The Raceland, La.-based provider of marine transportation services to the energy industry plans to return to the high-yield market as conditions improve, according to an informed source.

Global Hunter Securities and Knight Capital were the managers for the debt refinancing and general corporate purposes deal.

AMC = A Mighty Climb

When the new AMC Networks 10-year deal was freed for secondary dealings, traders said that the bonds firmed smartly right from the get-go, as investors, starved for a big, fairly liquid, purely junk deal, scooped up the new paper and took it several points above its par issue price.

A trader who saw the deal at 101 3/8 bid, 102 1/8 offered, observed: "That one seems to be holding its own."

A little later on a second trader quoted the bonds at 100¾ bid, 102¼ offered. "The offer has been sitting there, and the bids have been creeping up - 101, 101 3/8, 1011/2. So they're probably going to meet right around the 102 level."

Noting the enthusiastic market response to the $700 million issue, he said that over the past few sessions "we've been seeing all these little deals, these small little airline pieces and that's it," as opposed to a big fully junk issue people could sink their teeth into.

Another trader was even more impressed, exclaiming "Wowee! That really went up," as he pegged the new deal at 101 7/8 bid, 102 1/8 offered.

US Airways edges up

One of those other types of deals that junk players had followed while waiting for a big, purely high-yield offering like AMC was Tuesday's split-rated $388 million two-part offering of pass-through trust certificates that US Airways Group priced on Tuesday. While such a deal would normally not be of that much interest in Junkbondland, lack of much else to trade did garner some interest for the issue.

A trader on Wednesday saw both tranches at par bid, 100½ offered, while a second trader had them a little better at 100¼ bid, 100½ offered, although he observed that while "there was some trading - it was not that big."

On Tuesday, the Tempe, Ariz.-based airline holding company priced $293.94 million of 7 1/8% class A certificates (Ba2/BBB) due 2025 and $94.28 million of 9¾% class B certificates (B2/B+) due 2020, both at par. They had been quoted late Tuesday in a par to 100½ bid range.

Coventry deal easier

One recent new issue which was busily traded on Wednesday was Coventry Health Care Inc.'s 5.45% notes due 2021, although traders noted that the Bethesda, Md.-based managed-care company's Ba1/BBB-/BBB- bonds mostly appeal to high-grade investors reaching down into crossover territory to pick up a little yield with bonds normally shunned by junk marketers because of coupons which are relatively low by the usual standards.

Still, there were over $40 million of the bonds traded on Wednesday, with a junk trader estimating them off by 1/8 point on the day at 103 bid, 103¼ offered.

A second trader quoted them on a spread versus Treasuries basis of 207 bps bid, 202 bps offered.

The $600 million deal priced at 99.8 on June 2 to yield 5.476%, or a spread of 245 basis points over the comparable Treasury issue.

Coventry on Wednesday announced a new $750 million revolving credit facility, and outlined its plans for extinguishing its remaining bonds due in 2012 during a healthcare conference presentation (see related story elsewhere in this issue).

Market signs turn mixed

Away from the new-deal arena, a better tone in the secondary market which had been evident on Tuesday seemed to moderate a little on Wednesday, with statistical measures of market performance turning mixed.

A trader saw the CDX North American Series 16 HY Index ease by 1/8 point on Wednesday to close at 100¼ bid, 100½ offered, in contrast to the jump of ¾ point recorded on Tuesday.

However, the KDP High Yield Daily Index rose by 10 basis points on Wednesday to 74.80, adding to the 9 bps rise seen on Tuesday, both of which had followed a 26 bps plunge on Monday. Its yield came down by 3 bps for a second consecutive session on Wednesday to end at 6.97%; it had ballooned out by 10 bps on Monday.

And the Merrill Lynch High Yield Master II Index posted its second straight gain on Wednesday, rising 0.148%, on top of the 0.035% advance seen on Tuesday, which had been the index's first positive daily reading after a 13-session losing streak that dated back to June 2.

That lifted the index's cumulative return to 4.473% on Wednesday from 4.319% on Tuesday. However, the index remains well below its year-to-date peak level of 6.071%, which was reached about a month ago, on May 20.

A trader said that "the secondary market was a little bit firmer this morning. A lot of the new issues that were down [Tuesday] were a little bit firmer. The overall market was probably up 1/8 to ¼ point."

Late softening seen

At another desk, a trader opined that Wednesday's overall session "was kind of the same as the last couple of days," in having no discernible focus.

"It seemed like in maybe the last half hour or 20 minutes, some bids were getting hit, or people were just selling some things."

He said that there was "nothing going down points or anything, but just enough stuff to be notable."

For instance, he said that Emergency Medical Services Corp.'s 8 1/8% notes due 2019 - $950 million of which had priced at pat back on May 13 - had been trading during the morning at 99 3/8 bid, but by late in the afternoon, he saw them at 99¼ bid, "so they were down from where they were trading earlier today."

And that, he added "was down from where they were a couple of weeks ago." After the Greenwood Village, Colo.-based provider of ambulance services and outsourced physician services priced its deal, those bonds had firmed to around the 101½ bid level in aftermarket dealings before starting to gradually come down to around present levels.

NewPage knocked lower

A trader said that "the biggest loser - or at least the most active - was NewPage."

He saw the Miamisburg, Ohio-based coated-paper manufacturer's 11 3/8% first-lien senior secured notes due 2014 down ¾ point at 91¼ bid, but saw its 10% second-lien secured bonds due 2012 down almost 4 points on the day at 27.

He said that he had not seen any official news or regulatory filings that would explain the losses which the company's bonds have been seeing last week and this week, and attributed the prolonged downturn to unconfirmed market scuttlebutt indicating that the company might have trouble making the nearly $100 million coupon interest payment due at the end of the month on its $1.6 billion of the first-lien notes.

"I haven't heard anything [official] or heard anyone saying this, that or the other thing," he said - "just that they've been really active, and not on a positive trend."

A second trader pegged the 10% notes down several points at 96½ bid, 97½ offered, while the 11 3/8s were off marginally at 91½ bid, 92½ offered.

Yet another trader said that NewPage's 11 3/8s had volume of more than $56 million, shooting them to the top of the junk bond most-actives list. He said that they were "inside a half-point market all day," staying in a 91¼ to 91 5/8 range for most of the day, with the final trade of the day at 911/4, down ¾ point on the day.

He saw the 10s drop by 3½ points to trade down at 26¾ bid, on volume of more than $24 million.

"Between those two issues, more than $80 million" was trading.

Caesar's seen higher

Elsewhere, a trader saw Caesar's Entertainment Corp.'s bonds - the old Harrah's Operating Co. - up for a second straight session, quoting the Las Vegas-based casino giant's 10¾% notes due 2016 up ¾ point, with "a couple of million" trading at the 96 bid level.

He also saw its 10% notes due 2018 right around 89, up 1/8 point, on top of the roughly 2 point rise seen on Tuesday.

And he saw the 12¾% notes due 2018 up by 1 point at 99 7/8 bid.

Other issues from the company were "up slightly, on small volume."

He opined that "I guess gaming is back."

Graham gets better

A trader saw a fair amount of activity in the bonds of Graham Packaging Co. LP, the York, Pa.-based maker of plastic packaging products which last week agreed to be acquired by Reynolds Group Holdings Ltd. in a $4.5 billion transaction, including debt assumption. However, he did not see any fresh news out about the company.

Still, he said, some $25 million of Graham's 8¼% notes due 2018 traded at 107¾ bid, up ¾ point on the day.

And he saw Graham's 8¼% notes due 2017 trading at 106¾ bid, 106 7/8 offered, up ¼ point, on turnover of $15 million.

Apart from those several busily traded junk names, and the Coventry Health Care bonds, "after that, there was just a smattering of crossover credits, and just names in general."

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