Synovus prices, gains, other expected deals wait, Polkomtel slates; Sprint up after numbers

By Paul Deckelman and Paul A. Harris

New York, Feb. 8 - Synovus Financial Corp. came to market on Wednesday with an upsized $300 million issue of seven-year bonds. Traders said that the bank holding company's new deal firmed solidly when it was freed to trade.

But Synovus was the only significantly-sized dollar-denominated deal to finally appear - the sole other sale of dollar paper was a smallish add-on from lawn- and animal-care products maker Central Garden & Pet Co., which was not seen in the aftermarket.

Ford Motor Co.'s European automotive financing arm, FCE Bank plc, showed up with a quickly shopped, split-rated £250 million offering of five-year notes.

Back on the domestic scene, what were expected to be big pricings - some $2.5 billion total - instead warmed the bench for at least another session. Syndicate sources heard price talk emerge on gaming giant Caesars Entertainment Corp.'s $1.25 billion secured paper deal and medical technology provider Kinetic Concepts Inc.'s $750 million offering, but neither transaction got done, and both were reclassified as Thursday's business. Energy operator Endeavour International Corp.'s $500 million of eight-year notes, also seen as possible, if not likely for pricing on Wednesday, was also a no-show.

Elsewhere on the primaryside, Polish telecommunications operator Polkomtel SA was seen marketing a $200 million deal, for possible pricing Thursday.

Secondary market traders saw robust activity in HCA Inc.'s mega-deal, which priced Tuesday; the hospital operator's new bonds traded up from their par issue price and initial aftermarket levels, as did Tuesday's other deal, from Caribbean wireless provider Digicel Ltd.

Away from the new deals, Sprint Nextel Corp.'s bonds were seen up by a point or more across the board, despite the wireless provider's wider fourth-quarter loss, as the company noted positive gains in other measures and expressed optimism about continuing its network build-out and lining up financing.

Statistical market performance measures remained mixed on the session.

Synovus upsizes

Two issuers raised a combined $347 million during the Wednesday primary market session.

Synovus Financial priced an upsized $300 million issue of non-callable 7 7/8% senior notes (B2/B/BB-) at 99.339 to yield 8%.

Initial guidance had the yield coming in the low to mid 8% range. The amount was increased from $250 million.

J.P. Morgan ran the books.

The Columbus, Ga.-based financial services holding company plans to use the proceeds to fund a tender offer for its 4 7/8% notes due 2013 and for general corporate purposes.

Central Garden taps 81/4s

Central Garden & Pet priced a $50 million add-on to its 8¼% senior subordinated notes due March 1, 2018 (B2/B) at 98.501 to yield 8.571%.

The deal came in the form of a drive-by, and there was no official price talk issued, a source said.

The Walnut Creek, Calif.-based lawn and garden and pet supplies company plans to use the proceeds to pay down its revolver.

The original $400 million priced at par in February 2010, so the company paid a premium of 32 basis points on Wednesday versus the yield on the original issue.

FCE sells split-rated deal

In the crossover market FCE Bank, the European lending arm of Ford Motor Co., priced a £250 million split-rated issue of five-year senior notes (Ba1/BBB-/BB+) at par to yield 4.825%.

The yield printed slightly inside the 5% area price talk.

BNP, Deutsche Bank, HSBC and Royal Bank of Scotland were the managers.

Talking the deals

The back end of the Feb. 6 week figures to be busy, with the forward calendar containing $3.8 billion and €950 million of deals expected to price by Friday's close.

A sizable portion of those amounts is expected to come on Thursday.

During Wednesday's session Caesars Entertainment talked its $1.25 billion of eight-year senior notes (B2/B/B) with a yield in the 8½%.

That talk came at the tight end of the initial guidance of 8½% to 8¾%.

The deal is set to price on Thursday via J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley.

French cable operator Numericable talked its €350 million offering of seven-year senior secured notes (confirmed B2/expected B) with a yield in the 13% area.

That deal is also set to price on Thursday.

J.P. Morgan is the physical bookrunner. Goldman Sachs, BNP, Credit Agricole and HSBC are the joint bookrunners.

In addition to Caesars and Numericable, look for previously announced deals from Endeavour International Corp. and M&G Finance Corp. to price on Thursday. Some market sources were looking for them to price Wednesday, but no final terms were available at press time.

A previously announced deal from Lone Pine Resources Canada, Ltd. could also price on Thursday, according to a syndicate source. However no price talk was heard on Wednesday.

Add to those a sizable drive-by deal which is teed up for a Thursday morning announcement, sellsiders say.

It will come from a name that is quite familiar to the high-yield market, one banker volunteered, but declined to provide the name.

Polkomtel to price PIK notes

Poland's Polkomtel plans to price a $200 million tranche of 8.5-year PIK notes (expected ratings Caa1/B-) on Thursday.

Deutsche Bank, Credit Agricole, Royal Bank of Scotland and SG are the leads.

Proceeds will be used to repay a PIK bridge loan backing the $5.5 billion equivalent acquisition of Polkomtel by investor Zygmunt Solorz-Zak

On Jan. 19 Polkomtel priced €920 million equivalent of eight-year senior notes (B1/B+).

That deal included €542.5 million of 11¾% notes, which were priced at 96.268 to yield 12½% and $500 million tranche of 11 5/8% notes at 98.1 to yield 12%.

Talk on Kinetic Concepts

Finally, dealers set yield talk in the 12¾% area for a $750 million tranche of 12½% senior notes due Nov. 1, 2019 (Caa1/CCC+) from Kinetic Concepts, Inc. and KCI USA, Inc. The yield implies a reoffer price of 98.75.

That deal is also set to price on Thursday.

Morgan Stanley, Bank of America Merrill Lynch, Credit Suisse and RBC are the joint bookrunners..

The 12½% notes were sold to the underwriters in October 2011 at which time a $1.75 billion issue of 10½% second-lien senior secured notes due Nov. 1, 2018 was successfully syndicated.

Synovus shows strength

In the aftermarket, a trader said that the new Synovus seven-year bonds "had a nice little pop." He saw the issue trading at 100½ bid, 101 offered.

The $300 million deal priced at 99.339 and then proceeded to move up from there.

A second trader said that the new paper "traded very well," moving up to 101 bid on the break.

Yet another trader opined that "the new bonds did pretty well," seeing them having risen to 101 bid, 101 ½ offered.

HCA heads higher

A trader said that "obviously, HCA was very active on their new deal. A ton of those bonds traded."

He saw the new 5 7/8% notes due 2022 trade as high as 101 bid in the morning, "then they kind of faded," but he still saw them improved on the day, in a 1001/2-100 5/8 bid context, on "a lot of bonds trading."

A second trader also saw them at that level, while a third said the bonds were trading between 100¼ and 100½ on the bid side.

The Nashville-based hospital operator came to market on Tuesday with a quickly-shopped $1.35 billion issue of those bonds, nearly doubled in size from the $750 million originally planned. The bonds priced at par, and then edged up to between 100 1/8 and 100¼ bid in initial aftermarket action.

Digicel does better

Tuesday's other deal - the quick-to-market $250 million of 7% notes due 2020 from Kingston, Jamaica-based Caribbean wireless provider Digicel - were seen by a trader to have moved around on Wednesday at 100 5/8 bid, 100 7/8 offered.

That was up from the bonds' par issue price, and up as well from the par to 100¼ bid level seen in initial aftermarket trading late Tuesday.

However, a second trader, who had seen the bonds go home Tuesday night quoted at par bid 100½ offered - said he had seen no sign of them in Wednesday's dealings.

Absent Caesars noted

A trader said that from what he could see, much of Wednesday "was spent sitting around, waiting for the Caesars deal - and then wondering why they got pushed back."

The company's existing 10% notes due 2018 were meantime seen off ½ point, with a trader quoting the bonds of the Las Vegas-based casino giant formerly (and still popularly) known as Harrah's trading between 79¼ and 791/2, versus the 80 bid level at which they had begun the day.

Sprint runs up

Away from the new-deal arena, traders noted that Sprint Nextel Corp.'s bonds, and those of its Sprint Capital Corp. funding unit, firmed smartly in the wake of the Overland Park, Kan.-based number-3 U.S. wireless telecommunications company's fourth-quarter and full-year 2011 results.

One said that the bonds were "higher across the board," with issues were "up 1 to 1½ points."

He saw the Sprint Capital 6 7/8% notes due 2028 up 1¾ points, last trading at 76¼ bid, while the parent company's 8 3/8% notes due 2017 were up 1 3/8 points to 96 bid, and the old Nextel Communications Inc. 7 3/8% notes due 2015 - issued by the former Nextel Communications and then assumed by Sprint after it acquired Nextel several years ago - were 1 point better at 97½ bid.

"Sprint seemed to be a little better on the [earnings] news," a second trader said, also quoting the 7 3/8s at 971/2, which he called a ¾ point gain. He pegged the 6 7/8s in a 76 to 76½ context, up 1½ points, "with good volume in both."

Sprint Capital's 6¾% bonds due 2032 shot up by 2¼ points on the day to 86¼ bid, a market source said.

Told that the Sprint bonds rose even though the company posted a wider net loss for the quarter - $1.3 billion versus $926 million a year ago - the first trader quipped "maybe people think they'll make it up by selling more iPhones." The reality is that Sprint, just like its larger rivals Verizon Wireless and AT&T Mobility, actually loses money on the sale of each of the hot new Apple devices, since it subsidizes subscriber upgrades or purchases in order to get customers to sign fixed contracts for its monthly-billed post-paid services, considered the steadiest and most reliable type of revenue stream in the industry.

While the red ink widened, company executives, on their conference call with analysts following the release of the results, heralded such positive financial milestones as rising net new additions to its customer subscriber base and record high overall customer count, improved subscriber churn, or loss of accounts, revenue gains in key areas and the continued rollout of what the company calls its "Sprint platform" of services, particularly as it winds down the old "Nextel platform" that served customers of the former Nextel before, and even after Nextel's 2005 acquisition by and integration into Sprint.

They also touted comfortable liquidity, including more than $5 billion of cash, and said the company expected to soon reach an agreement with its major equipment suppliers on vendor financing for the continuing Sprint network build-out (see related story elsewhere in this issue).

Jones jumps on earnings

Also on the earnings front, Jones Group Inc. had quarterly results out - and a trader said that the New York-based apparel company's numbers "must have been pretty decent," because the bonds moved up 3 points in response.

He said that "more and more accounts" were asking about Jones Group's 6 7/8% notes due 2019. During the midweek session, he saw the bonds rising as much as 3 points on the back of earnings.

"They must have been pretty decent," he said.

He pegged the notes at 931/2.

For the fourth quarter, the company managed to narrow its loss. Total loss was $21.2 million, or 27 cents per share, versus $40.1 million, or 47 cents per share, the year before.

Revenues gained 2.3% to $893.6 million and gross margins rose to $35.8%. Material costs declined by 5%.

Financials are firmer

A trader saw activity in Evansville, Ind.-based lender Springleaf Finance Corp.'s bonds, quoting the 6.90% notes due 2017 at 74-75, calling the 74½ mid-point up 1 point, on "good volume in the name," which used to be the former American General Finance Inc. consumer lending division of insurance giant American International Group, Inc., before AIG sold it about two years ago.

He saw its 5.85% notes due 2013 finishing at 89 bid, 89¾ offered. While those bonds had traded earlier in the session as high as 91 bid, they were still closing up 3 points on the day, versus Tuesday's 85-86 finish on "really, not much volume.

"So they were up but they were up even higher before.

"Up 3 points from [Tuesday], but still 2 points off the high, on good volume."

He said he "only see the quotes, I don't see any news" that might explain the troubled issuer's roller-coaster-like gyrations.

A second trader saw "better buyers" for Springleaf - "we had buyers across the board in that name."

He quoted its 6.90% notes "probably up 1 or 2" at 74-75.

He saw the rise in Springleaf in the context of general strength and "a lot of activity" in the financial sector, including such non-distressed peers as Ally Financial 's 8% notes due 2031, which firmed by around a point or so to 108¼ bid, 108¾ offered."That was the easiest one to see the rally in."

At the same time, though, he said that Residential Capital Corp. LLC's paper, like its 9 5/8% notes due 2015, was weaker also by around a point or so, dipping to a 78-80 context. He cited news reports "that Ally is looking to possibly pre-pack [bankruptcy] ResCap," the automotive lender and bank holding company's money-losing Minneapolis-based residential mortgage unit.

The reports said that Detroit-based Ally, or even ResCap itself under Ally's direction, was shopping the company around to potential buyers among private equity firms like Cerberus Capital Management LP, Fortress Investment Group LLC, Leucadia National Corp. and Centerbridge Capital Partners LLC, to sound them out on the possibility of one or more acquiring ResCap via a pre-packaged bankruptcy filing. The reports quoted unidentified sources, and there was no official comment on anything from any of the companies supposedly involved.

One of the traders speculated that apart from the company-specific news moving ResCap lower, "I think it was just the sector, just better buying interest across the board. "

For instance, he said that "PHH Corp. paper actually got a boost today -it may have just been that people speculated that if Synovus got a deal done, it may bode well for PHH," a Mount Laurel, N.J.-based residential mortgage originator which also provides out sourced mortgage servicing and vehicle fleet management services.

But its 9¼% notes due 2016 traded up to around 98½ and its 7 1/8s were back to being a par bond, the trader said.

And from out of deep in the distressed-debt world, a trader saw MF Global Holdings Ltd.'s 6¼% notes due 2016 "drifting lower," seeing the bonds between 33 and 34 bid, "mainly quoted, not trading."

He said the failed New York-based future brokerage company's paper "just seemed to be not doing a whole lot."

Market indicators mixed again

Statistical measures of junk market performance were mixed for a third consecutive day on Wednesday.

A trader saw the CDX North American Series 17 High Yield index off by 3/8 point Wednesday to end at 97¾ bid, 98¼ offered, after having been down by 1/8 point on Tuesday.

But the KDP High Yield Daily Index gained 7 basis points on the day to close Wednesday at 74.38, after having risen by 13 bps on Tuesday. Its yield declined by 2 bps to 6.63%, after having come in by 5 bps on Tuesday.

And the widely-followed Merrill Lynch High Yield Master II Index made it a lucky seven straight upside sessions on Wednesday, gaining 0.179%. That followed Tuesday's 0.113% advance.

That lifted the index's year-to-date return to 3.847% on Wednesday, a new peak level for the year so far, from Tuesday's 3.662%, the previous high-water mark for the year.

Stephanie N. Rotondo contributed to this report

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