Market firm but thin; Sabine Pass active; Blockbuster mixed; Rite Aid up; calendar builds

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., April 5 - The secondary high yield market moved up in Monday trading, according to traders.

Sabine Pass LNG debt - the bonds linked to Cheniere Energy - made the day's most active list following news last week of the company's recent LNG agreement with J.P. Morgan Chase & Co. However, the bonds, while active, were unchanged on the day.

Traders said Blockbuster Inc.'s bonds were mixed during the first trading session of the week. Though there was no news out on Monday regarding the movie rental chain, last week saw a slew of seemingly negative Blockbuster news - including word that investor Carl Icahn had decreased his equity stake.

Elsewhere in the retail arena, Rite Aid Corp.'s debt was seen heading higher.

Sprint Nextel Corp.'s notes finished the day unchanged to better, as the company scheduled its quarterly conference call.

And, Verso Paper Holdings Inc. saw its bonds boosted by a rating upgrade. The upgrade reflects recovering market conditions, according to Standard & Poor's.

Overall cash bonds and synthetics traded higher on Monday, according to a high-yield syndicate source.

No dollar-denominated junk priced during the Monday session, however the market heard terms on RTL Westcan LP's C$130 million issue of seven-year senior secured notes (/B+//DBRS: BB), which priced at par to yield 9 ½%.

Scotia Capital ran the books.

Nexstar to bring $325 million

In the meantime, the new deal calendar built purposefully on Monday.

Nexstar Broadcasting, Inc. and Mission Broadcasting, Inc. will begin a brief roadshow on Tuesday for their $325 million offering of seven-year senior secured second-lien notes.

The roadshow wraps up Thursday, and the deal is expected to price after it finishes.

Bank of America Merrill Lynch, UBS Investment Bank, Deutsche Bank Securities and RBC Capital Markets are joint bookrunners.

Proceeds, together with borrowings under Nexstar's and Mission's amended senior secured credit facilities, and cash on hand, will be used to repurchase Nexstar's outstanding senior subordinated PIK notes, to refinance Nexstar and Mission's credit facility, and for general corporate purposes.

Radiation Therapy $310 million

Radiation Therapy Services, Inc. will host an investor call at 11:30 a.m. ET on Tuesday for its $310 million offering of seven-year senior subordinated notes.

The deal is set to price late this week.

Wells Fargo Securities, Bank of America Merrill Lynch and Barclays Capital are joint bookrunners.

Proceeds will be used to refinance existing debt, as well as to fund ongoing working capital and for other general corporate purposes, including acquisitions.

Pantheon call on Tuesday

Pantheon Inc. will host an investor call at 12:30 p.m. ET on Tuesday for a $280 million offering of seven-year senior secured notes.

Meanwhile, an investor roadshow got underway on Monday and will conclude on Friday.

JP Morgan is the left bookrunner. UBS Investment Bank is the joint bookrunner.

Ratings agencies are expected to rate the notes in the single-B range.

Proceeds will be used to repay debt and for general corporate purposes.

Western Express markets $275 million

Western Express, Inc. began a roadshow on Monday for a $275 million offering of eight-year senior secured notes.

The roadshow is scheduled to wrap up on Friday.

JP Morgan has the books.

Proceeds will be used to repay debt and for general corporate purposes, including funding capital expenditures in connection with the planned tractor fleet upgrade.

Rosetta roadshow starts Tuesday

Rosetta Resources Inc. will begin a roadshow on Tuesday for a $200 million offering of eight-year senior notes (expected ratings Caa1/B+).

The Houston-based exploration and production company will host a 12:30 p.m. ET investor call on Wednesday.

The roadshow wraps up on April 12, and the deal is expected to price the same day.

JP Morgan is the left bookrunner. BNP Paribas and Wells Fargo Securities are joint bookrunners.

Proceeds will be used to fund a partial repayment of the company's second-lien term loan and its revolver.

American Residential to bring $150 million

Elsewhere, American Residential Services LLC and ARS Finance, Inc. plan to price a $150 million offering of five-year senior secured second-lien notes this week.

UBS Investment Bank is the left bookrunner. Jefferies & Co. is the joint bookrunner.

Proceeds will be used to refinance the company's second-lien term loan and to repay a portion of its revolver.

MagnaChip sets talk, covenant changes

MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Corp. talked their $250 million offering of eight-year senior notes (B2/B+) to yield 10¾% to 11%.

In addition, the Korea-based chip-maker introduced covenant changes to the bonds.

The order books close at noon ET on Tuesday. Pricing is expected to follow.

Goldman Sachs & Co., Barclays Capital, Inc., Deutsche Bank Securities, Inc. and Morgan Stanley & Co. Inc. are joint bookrunners.

Elsewhere, Hawkeye Growth LLC (Hawkeye Renewables) is expected to sell up to $150 million of first-lien notes.

PrinceRidge Group has the books.

Proceeds, along with cash on hand, will be used to refinance debt.

The Iowa Falls, Iowa-based ethanol company filed for bankruptcy late last year.

Market firm, but volumes thin

Though the secondary market was seen firming Monday, traders reported less-than-stellar volumes.

The CDX High Yield Index gained 5/8 points to 98 7/8 bid, 99 1/8 offered, a market source said.

Another source placed the KDP high Yield Index at 72.10, yielding 7.82%. That was an improvement over Friday levels of 72.03, with a 7.85% yield.

Still, "it was one of the deader days of the year," a trader said. "Volume was super light."

The trader said that with the European markets being closed Monday, plus the New York Mets' opening day game and a higher-valued market - to say nothing of the preceding three-day weekend - resulted in "a recipe for nobody to do anything - which is kind of what happened."

Another trader noted that less than $1 billion of high-yield issues traded, "I think maybe for the first time this year." Along with the aforementioned reasons for the lackluster day, he added a lack of new issues.

"I assume the new issue machine will start again in earnest on Wednesday and we'll be back to where we were," he opined.

Sabine Pass debt active

The Sabine Pass LNG bonds of Cheniere Energy were among the day's most active issues, according to traders.

However, despite the activity, the 7½% notes due 2016 ended about unchanged around 91, the traders said. One trader noted that about $15 million of the issue had traded.

That trader also saw the 7¼% notes due 2013 ending around 96, though trading was thin in that issue.

But another trader deemed the 7½% notes up nearly a point at 90 bid, 92 offered.

The action in the debt came after the Houston-based energy company announced last week that it had entered into a multi-year agreement with J.P. Morgan Chase & Co. to "utilize their combined expertise in the global liquefied natural gas (LNG) market," according to a press release.

The agreement will give J.P. Morgan capacity rights at the Sabine Pass receiving terminal in Louisiana.

"Cheniere, which owns and operates the Sabine Pass LNG receiving terminal, will benefit from J.P. Morgan's client relationships, financial expertise and strong balance sheet," the company said a press release published Wednesday.

"We are excited to broaden our relationship with J.P. Morgan and provide them with services necessary to successfully expand their capabilities in the global LNG markets," said Davis Thames, president of Cheniere Marketing LLC, in the release. "We believe this arrangement allows us to source LNG with the support of a strong balance sheet and to utilize our capacity at Sabine Pass and our network of relationships in the most effective way. The combination of our LNG assets and know-how and J.P. Morgan's extensive global client franchise will enhance opportunities for both Cheniere and J.P. Morgan, enabling us to provide more services to our LNG suppliers and gas customers."

"Working with Cheniere's team dramatically enhances our ability to serve our energy clients around the world," added Paul Posoli, head of global power, gas, coal and emissions at J.P. Morgan.

Also in the energy sector, Chesapeake Energy Corp.'s 9½% notes due 2015 were seen unchanged at 108 bid, 109 offered.

And, Energy Future Holdings Corp.'s 10¼% notes due 2015 closed around 731/4, "up a couple," a trader said.

Blockbuster mixed

Blockbuster bonds traded up "about a point," a trader said, in somewhat active dealings.

The trader placed the 9% notes due 2012 around 91.

At another desk, a trader echoed that 21 level, deeming it only "fractionally better."

"20 [bid], 22 [offered] has covered them for a week now," he said, adding that about $15 million to $16 million of the paper changed hands.

Meanwhile another trader called the debt a point weaker at 20 bid, 22 offered.

Last Wednesday, news outlets reported that billionaire investor Carl Icahn - Blockbuster's largest shareholder - had sold off 13.2 million class A shares, as well as 1.2 million class B shares.

Icahn now holds about 5.1% of Blockbuster's class A stock, down from the 16.9% stake he reported in January. He also still holds 4.36 million of the class B shares.

Also last week, the Dallas-based movie rental chain said Monday that it had received word from the New York Stock Exchange that it was not in compliance with minimum market value requirements.

Rite Aid trades up

Also in the world of retail, Rite Aid's debt traded up with the market.

A trader saw the 9½% notes due 2017 gaining 1½ points to end around 85. Another trader also placed the bonds at that level, calling it "a little bit higher," on $20 million traded.

The second trader also saw the 7½% notes due 2017 around 93½ and the 9 3/8% notes due 2015 at 873/4. He said those issues, like the 9½% notes, were "marginally better."

A third trader pegged the 7½% notes at 93 bid, 94 offered, unchanged on the day.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Sprint trades

Sprint Nextel saw "almost every one of its issues trade" during Monday's session, according to a trader.

However, the trader noted that most of the trades were "onesies and twosies" and that none of the issues showed "nothing more than a half-point [difference] up or down."

The trader placed the 7 5/8% notes due 2011 at 103 and the 8 3/8% notes due 2012 at 104 3/8, both unchanged.

Another market source saw the 6% notes due 2016 inching up about ½ point to 90½ bid.

The Overland Park, Kan.-based wireless telecommunications provider set April 28 as the date for its conference call to discuss its first quarter results.

Verso upgrade helps bonds

Verso Paper Holdings' 11 3/8% notes due 2016 finished the day "up about a point," a trader said, quoting them at 873/4.

The trader noted that it was hard to tell just how much the bonds were up, as they "haven't traded in so long."

Another trader called the 9 1/8% notes due 2014 firmer by ½ point at 97½ bid, 98½ offered.

On Monday, Verso saw its corporate credit rating raised to B from B- by Standard & Poor's. The second-lien notes were also upped to B, while the unsecured debt was lifted to CCC+ from CCC.

The rating agency explained that an improvement in market conditions helped in their upgrade decision.

The outlook is stable.

Verso Paper is a Memphis-based manufacturer of coated freesheet and groundwood paper, and supercalendered paper for the printing and publishing industry.

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