Jarden prices upsized issue; GM jumps on debt swap, Ford firming goes on; new Nielsens steady

By Paul Deckelman and Paul A. Harris

New York, April 27 - Jarden Corp. made its second visit in a week to the capital markets on Monday, pricing a quickly shopped issue of seven-year notes, increased from its original size. Last week, the company tapped the stock market in a roughly $200 million equity offering, which closed on Monday. Jarden's existing bonds, meantime, firmed slightly ahead of the new deal.

Among recent new deals, meanwhile, Nielsen Finance LLC/Nielsen Finance Co.'s seven-year notes that priced Friday moved into the secondary market but were not much changed on the day from their starting level.

Also not much changed - though at considerably higher levels - were Lennar Corp.'s eight-year notes, which came to market at a discount on Thursday and then firmed smartly Friday to nosebleed territory, above par. Encore Acquisition Co.'s new seven-year notes, which priced on Wednesday, were seen continuing to firm in the secondary.

But JBS USA, LLC/JBS USA Finance, Inc.'s deal, which had also priced on Wednesday but which subsequently struggled just to stay around their issue price, were down on Monday, hurt by investor fears about the impact the developing swine flu epidemic might have on the big meat processor.

Among established bonds, swine flu jitters were also seen knocking JBS competitor Smithfield Foods Inc.'s bonds down several pegs.

On the upside, General Motors Corp. beleaguered bonds moved up by several points across the board, after the embattled carmaker announced the opening of an exchange offer that would give bondholders equity in a restructured GM, in exchange for their notes.

GM domestic arch-rival Ford Motor Co.'s bonds - which had moved solidly higher Friday on investor response to less-troublesome than-feared quarterly numbers, continued to push higher for yet another session.

Cash bonds traded marginally higher despite expectations that a "swine flu freakout" would cause junk to tumble on Monday, a trader said.

In spite of a Centers for Disease Control report that there are 40 known cases of the disease in the United States, including 28 in the New York City area, the "swine flu" news did not appear to impact the high-yield market as the week got underway, sources said.

Upsized Jarden tight to talk

In Monday's primary market Jarden Corp. priced an upsized $300 million issue of 8% seven-year senior notes at 97.401 to yield 8½% in a quick-to-market transaction.

The notes were printed at the tight end of the price talk which specified an 8% coupon at a discount to yield 8½% to 8¾%.

The offering was driven by a significant amount of reverse inquiry and was well subscribed, an informed source said, adding that the new Jarden 8% notes due May 1, 2016 were at 99 5/8 bid in late Monday trading.

Deutsche Bank Securities, JP Morgan and Barclays Capital were joint bookrunners for the issue which was upsized from $250 million.

Moody's Investors Service assigns its B2 rating to the notes. A Standard & Poor's rating is expected on Tuesday, according to the informed source.

The upsized issue generated $292.203 million of proceeds, which will be used to repay bank debt.

Also on Monday Jarden announced the closing of its public offering of 12 million shares of common stock at $17.50 per share. Proceeds from the stock sale, which was led by Barclays, will be used for general corporate purposes, including debt reduction.

A 'bullish' market

Trailing the Jarden execution, a syndicate source said that the high-yield primary market seems "bullish" right now.

A "get it out there now" mentality seems to be taking hold among issuers and their underwriters, the source added.

The remaining four sessions of the April-May crossover week could see significant drive-by activity, investment bankers said on Monday, although as is customary none of these sell-siders was volunteering any names.

One name that has been bandied about is El Segundo, Calif.-based dialysis services provider DaVita Inc. which is scheduled to report its first quarter numbers during a Tuesday conference call.

"Their bonds have certainly been trading rich, so a new deal would not surprise me," a trader for a high-yield mutual fund commented on Monday afternoon.

What the...?

Finally on Monday, primary market sources continued to marvel at the story of Nielsen's upsized $500 million issue of 11½% senior notes due May 1, 2016, which priced late last week at 92.173 to yield 13¼%, in line with price talk.

A draft of a press release announcing the deal was inadvertently circulated to the press on Thursday and officially retracted by the company early Friday morning.

However the inadvertent release created such a reverse inquiry frenzy that JP Morgan went back to the company - which before the mistake had intended to bide its time - with news that the order book for the then-non-existent deal was building, and that Nielsen could sell a significant amount of bonds at a rate it had been eying, according to a market source.

Right now there is a lot of reverse inquiry, the market source said, adding that during the past four weeks inflows to high-yield mutual funds, as reported by AMG Data Services, are averaging higher than $500 million a week.

Existing Jarden bonds edge upward

The new Jarden 8% notes due 2016 came too late in the session for any kind of aftermarket activity.

A trader meantime saw the company's outstanding 7½% notes due 2017 up about ½ point before the new deal priced, at 90 bid, 92 offered, while another saw them ¼ point better at 89½ bid, on volume of $7 million.

New Nielsen bonds hold steady

A trader saw Nielsen Finance's 11½% notes due 2016 at bid levels around 92-921/2, trading at 92 bid, 94 offered during the session, "pretty much unchanged."

Nielsen Finance, an arm of the New York-based market research, media and information company best known for its television ratings service, priced $500 million of those bonds, upsized from the $300 million originally shopped around, on Friday at 92.173, to yield 13¼%.

Recent Lennar bonds hold steady

A trader said that Lennar Corp.'s 12¼% senior notes due 2017 were at 100¾ bid, 101½ offered, "about where they were" on Friday after moving up to the par level - in fact, getting as high as 100 3/8 at one point Friday afternoon before coming down from that peak to end around par. "There were 101 bids all day Friday," he noted, "they just kept grinding higher."

The Miami-based homebuilder had priced its $400 million issue of the bonds on Thursday, upsized from the originally planned $250 million, at 98.098, to yield 12 5/8%.

Encore continues firming

A trader saw the Encore Acquisition 9½% senior subordinated notes due 2016 going out at 95¼ bid, 96¼ offered, which he said was up from 94½ bid, 95¼ offered, their level on Friday.

Another trader, though, while putting the bonds at 95 bid, said that was actually off a little from 95¼ at the close Friday. He said $1 million of the bonds traded.

On Wednesday, Encore, a Fort Worth, Texas-based independent energy exploration and production company, had priced $225 million of the bonds, upsized from the $200 million originally talked around the market. The bonds priced at 92.228, to yield 11 1/8%, and began moving up when they were freed for secondary dealings on Thursday.

JBS bonds jolted

The lone downsider among the recently priced issues was Greeley, Colo.-based pork and beef producer JBS USA's 11 5/8% senior notes due 2014. The company - the domestic arm of Brazilian global beef and pork giant JBS SA - sold $700 million of the bonds on Wednesday, upsized from the originally planned $400 million. But after pricing at 95.046 to yield 13%, and then quickly moving up to around 96½ bid on the break later in the session, the bonds just as quickly came back down to go home around 95 bid, and stayed there on Thursday and Friday.

But on Monday, a trader saw the bonds backtrack to 93½ bid, 94½ offered, and attributed the retreat to investor worries about the spread of the swine flu, which could hurt both overseas and domestic sales of meat from U.S.-raised hogs, even though medically speaking, the virus cannot be transmitted through food. JPMorgan analyst Ken Goldman summed up the problem for companies like JBS and Smithfield Foods succinctly.

"Though there is no evidence that swine flu can be obtained by eating pork, the fear generated by a disease named after hogs cannot be good for pork consumption," he said in a research note.

Smithfield in swine flu swoon

Smithfield, named for the eponymous Virginia town where it has its headquarters, is the biggest U.S. pork producer, and like JBS, Smithfield was getting smacked around on flu fears on Monday.

A trader said the company's bonds "were active," seeing its 7% notes due 2011 at 80 bid, down from 84¾ on Friday, on volume of $5 million. A market source at another desk saw the bonds ease to 791/2.

The first trader also saw Smithfield's 7¾% notes due 2013 fall to a round-lot level of 69 bid from 74 on Thursday, on volume of over $7 million, the most recent previous round-lot trade, while its 7¾% notes due 2017 fell to 641/4, a 3 point loss from prior levels.

Another trader saw the 7s down a deuce at 78 bid, 80 offered, while the 73/4s ended off 1½ points at 62 bid, 64 offered.

Yet another junk trader pointed out that "their stock was down over 10% today" - and that loss deepened as the day dragged on, with Smithfield's New York Stock Exchange-traded shares closing down 12.40%, or $1.28, to end at $9.04, on volume of 8.9 million, more than 3 times the usual activity level.

Market indicators seen mixed

A market source saw the CDX Series 12 High Yield index - which had gained ¾ point on Friday - down ½ point Monday to end at 75¼ bid, 75¾ offered.

Meanwhile, the KDP High Yield Daily Index, which zoomed by 40 basis points on Friday, rose another 8 bps Monday, to 56.82, while its yield tightened by 4 bps to 12.34%.

Advancing issues, which on Friday had led decliners by about a two-to-one margin, continued to hold the advantage Monday, though by a reduced ratio of five to four.

Overall market activity, measured by dollar-volume totals, eased by 2.5 % from Friday's levels.

A trader said that "it wasn't as dead as a lot of Mondays - but I wouldn't say it was busy, either."

He said the greatest activity was seen in really beaten-down credits like GM, whose bonds have lately been trading on both sides of the 10 mark, and troubled former indirect GM unit Capmark Financial Group Inc., whose bonds trade in the lower 20s.

Another trader pronounced Monday to be "a pretty quiet day."

At another shop, a trader said that "there was not much to report, other than the activity of GM." He said "it felt like people didn't want to fight that equities were down, so I certainly didn't see any buying per se away from GM, but I really didn't see any anxious sellers as well."

GM higher on debt-swap, restructure plans

The trader saw GM's bonds topping the list of the most-active issues, with the Detroit giant's benchmark 8 3/8% bonds due 2033 at 10½ bid, up from 8¾ on Friday, on volume of $40 million., while its 8¼% bonds due 2023 firmed to 9½ bid from 7 on Friday, on volume of $26 million.

Another fairly active issue, he said, was GM's 7.20% notes due 2011, which he saw ending at 10 bid, up from 9½ on Friday on some $12 million traded.

He also saw the Capmark 6.30% notes due 2017 also among the very active names, firming to 24 bid from 23 3/8 on $26 million traded.

A second trader called GM up 2 points on the day at 9 bid, 11 offered on the benchmarks.

At another shop, a trader also saw the GM long bonds trading at 9 bid, 11 offered, which he said was a point better, while its 7.20% notes due 2011 ended at 9½ bid, 11½ offered. He noted that earlier in the day, the GM bonds had been down as much as a point intraday, before bouncing back to their current levels.

GM on Monday announced that it was starting offerings to exchange shares of its common stock for $27 billion of its unsecured public notes, setting a ratio of 225 shares of stock per $1,000 principal amount of the bonds.

GM's NYSE-traded shares in Monday's dealings rose 35 cents, or 20.71%, to finish at $2.04, on volume of 154 million shares, over six times the norm.

The exchange offers will expire on May 26.

Consummation of the exchange offers are contingent on various factors including voluntary employee benefit association (VEBA) modifications and U.S. Treasury debt conversion conditions that would result in an at least $20 billion reduction in liabilities.

According to General Motors, the exchange offers are a vital component of its overall restructuring plan to achieve and sustain long-term viability.

The company went on to say that if it does not receive prior to June 1 enough tenders of notes to consummate the exchange offers, it expects to file for bankruptcy.

"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, president and chief executive officer, in a news release.

"Our responsibility is clear - to secure GM's future - and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team," Henderson added.

But despite the desire to complete a restructuring out of court, bondholders are not warmly embracing the debt swap.

"The exchange offer that General Motors announced this morning must look to bondholders like something Tony Soprano dreamed up," wrote Gimme Credit analyst Shelly Lombard in an afternoon comment. "It's pretty heavy-handed and doesn't offer much in the way of options... Although there could be some negotiating room, this offer doesn't seem designed to bring bondholders back to the table."

Analyst Kip Penniman of KDP Investment Advisors Inc., in Montpelier, Vt.m agreed in a research note that "terms of the offer are even less attractive than we envisioned on several fronts," leading him to conclude that "there is no chance that GM will get anywhere near [the 90% bondholder] participation rate" that it outlined in its announcement.

The bottom line, Penniman declared is that "we believe GM will enter bankruptcy protection on June 1, 2009."

Ford firms again

While much of the financial community sees a bankruptcy likely in GM's future, rival Ford Motor Co.'s perceived success in so far avoiding a similar situation has contributed to the recent robustness in the Number-Two carmaker's bonds, and this was the case again on Monday.

A trader saw Ford's 7.45% bonds due 2031 up 1½ points on the day at 46 bid, 48 offered.

Another saw them at 47 bid, although he said that was unchanged on the day, but said it was on only $1 million traded.

Yet another trader called the bonds up a point, but only saw them finishing at 43 bid, 45 offered, while its 7 3/8% notes due 2011 were quoted up 1 point at 79 bid, 81 offered.

Stephanie N. Rotondo contributed to this report

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