Accuride, Entravision price, firm in secondary; Calumet pulls deal; funds up $700.64 million

By Paul Deckelman

New York, July 22 - Accuride Corp. and Entravision Communications Corp. were heard by high-yield syndicate sources to have successfully priced upsized offerings of senior secured notes on Thursday, Accuride's $310 million an eight-year piece and Entravision's $400 million a seven-year deal.

Against a backdrop of strong gains pretty much across Junkbondland, traders saw both of those new deals, which had come at a discount to par, trading up smartly around the 101 bid area.

But the new-deal market was not without its setbacks, as Calumet Specialty Products Partners, LP announced that it was not going to proceed with its planned $450 million offering of 10-year notes, citing market conditions. The company's planned revolving credit loan deal was also seen in jeopardy.

In the overseas markets, Spanish gaming operator Codere SA priced a quickly shopped €100 million tranche of 8¼% notes due 2015 whose terms mirror those of the €660 million of already outstanding bonds. British furniture manufacturer and retailer DFS Furniture Holdings came to market with £240 million of seven-year senior secured notes.

Among recently priced new deals, Wednesday's offering from Wynn Resorts, Ltd. was seen to have moved up solidly, while Tuesday's Interactive Data Corp. deal remained strong.

In the secondary arena away from the news deals, General Motors Corp.'s benchmark bonds were seen up 1½ to 2 points on the day, helped by the news that the carmaker is buying subprime auto lender AmeriCredit Corp., which gives GM its own "captive" auto finance arm for the first time since it sold its controlling stake in GMAC LLC back in 2006.

Junk funds gain $700.64 million

And as the session was winding down, participants familiar with the Lipper FMI weekly high-yield mutual fund-flow numbers compiled by AMG Data Services of Arcata, Calif. - considered a reliable barometer of overall junk market liquidity trends - said that in the week ended Wednesday, $700.64 million more came into those funds than left them.

It was the second big inflow in as many weeks, following on the heels of the massive $1.275 billion cash infusion seen the week ended July 14 - one of the largest inflows ever on record - which had broken a two-week losing streak prior to that during which a total of $498.443 million more had left the funds than came into them, according to a Prospect News analysis of the figures provided by market sources.

The two big inflows would seem to put junk liquidity back on a firmly positive track; after strong gains over the first four months of the year, including one 10-week stretch that saw some $4.44 billion of inflows, according to the Prospect News analysis, the months that followed have seen a more inconsistent pattern, with several weeks of inflows followed by several weeks of outflows.

A high-yield primary market source, viewing the latest week's numbers, speculated that "cash will continue to build into the summer and then the buyers will return doubly in the fall."

With 2010 a little past the halfway mark, inflows have now been seen in 18 weeks out of the 29 since the beginning of the year, while there have been 11 outflows.

The inflow in the latest week raised the year-to-date cumulative total for the weekly reporting funds up to $2.663 billion, according to the analysis of the data, versus the $1.963 billion 2010 net inflow recorded the previous week. The funds hit their biggest year-to-date negative number for the year so far in the week ended June 9, with a cumulative deficit of $475 million, while their peak cumulative inflow total for the year was the $4.086 billion recorded in the week ended April 28.

EPFR sees $948 million inflow

Another fund-tracking service - Cambridge, Mass.-based EPFR Global, whose methodology differs somewhat from AMG - meantime reported a $948 million inflow in the latest week, building on the previous week's $1.2 billion cash addition.

EPFR's analysts said in a research note Thursday night that recent equity market gyrations, caused by investor uncertainty over a lot of factors, have been good for the bond markets and the funds that invest in them since many investors were "gravitating towards fixed-income funds," including junk funds, to avoid some of the uncertainty-caused equity volatility.

They said that high-yield funds benefited from investor response to the "less than ringing endorsement of the U.S. economy" offered up by Federal Reserve chairman Ben Bernanke; they said the Fed chief's comments "reinforced the perception that U.S. interest rates are unlikely to rise - thereby increasing the attractiveness of U.S. debt relative to riskier alternatives - any time soon."

Reflecting the difference between the ways AMG and EPFR calculate their respective fund-flow totals - EPFR includes results from certain non-U.S. domiciled funds as well as the domestic funds - the service's year-to-date net inflow total now stands at $5.986 billion. That's up from last week's $5.03 billion, though still well below the peak inflow level of about $8.59 billion seen at the beginning of May, after 10 straight weeks of inflows starting in late February.

Any and all cumulative fund-flow totals, whether for AMG or EPFR, can include unannounced revisions and adjustments to figures from prior weeks.

Accuride moves up timing

In the primary sector on Thursday, syndicate sources said that Accuride, an Evansville, Ind.-based maker of steel and aluminum wheels and other truck and commercial vehicle components, priced a $310 million offering of eight-year first-priority senior secured notes (B2/B) to yield 10%. The notes, carrying a coupon of 9½%, priced at 97.288, in line with revised pre-deal price talk envisioning a yield of 10%. However, that price talk had come in from the 10¼% to 10½% level that had circulated in the market late Wednesday. The issue price was consistent with expectations of a discount from par of between 2 and 3 points.

The issue was slightly upsized from the $300 million figure that the company had first announced on Monday.

High-yield traders noted that the timing of the deal was moved up by several days, presumably to take advantage of generally strong primary market conditions. After the company announced its plans for the offering, sources heard that it had begun a roadshow to market the deal to investors and said at that time that the deal would likely price sometime during the upcoming July 26 week.

A trader said that given the strength seen in the primary market of late, company managers and the bonds' underwriters probably thought it was better to "take the money while you can" rather than waiting to finish out the full roadshow and floating the deal off until next week, as originally expected.

Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were the joint bookrunners for the Rule 144A and Regulation S deal, which is being sold with registration rights.

Accuride plans to use the proceeds from the new deal, plus approximately $10 million under a new asset-based revolving credit facility and cash on hand, to refinance its existing senior credit facility.

Upside ride for Accuride

When Accuride's new notes hit the secondary market, they began to firm handsomely from their discounted issue price. A trader saw the bonds get as good as 101½ bid, 102 offered, well up from their 97.288 issue price, before they finally settled back in around 101¼ bid.

Another trader called its aftermarket "a nice 4-point pop" from the pricing level and noted rumors to the effect that the company and its underwriters had built up more than a $10 billion book for what turned out to be a $310 million issue.

"The market is clearly very strong," he said, "with definitely better buyers of most things out there, and with their story, coming out of bankruptcy, the leverage numbers make it a pretty attractive story, so it's pretty easy to sell the guys right now. So I'm not surprised they were able to get it done a little quicker than have to do a full one-week roadshow."

Entravision prices

Another domestic deal that executed well, market participants said, was the new issue from Entravision Communications, a Santa Monica, Calif.-based Spanish-language media company that owns radio and television stations in many large markets.

It priced an upsized $400 million offering of 8¾% seven-year first-lien senior secured notes (B1/B) to yield 9%, high-yield syndicate sources said. The notes priced at 98.722, putting the issue at the tight end of pre-deal market price talk envisioning a yield between 9% and 9¼%.

The issue was upsized from the $385 million that the company initially announced on Monday.

Citigroup, Wells Fargo Securities and UBS Investment Bank were the joint bookrunners on the Rule 144A/Regulation S deal, which was being sold with registration rights. Moelis Capital Partners was the co-manager.

The deal priced after a relatively short marketing campaign, as it had only been announced on Monday, when the company said that it would do the bond deal and enter into a new revolving credit facility for up to $50 million.

Net proceeds from the offering will be used to fully repay outstanding debt under its existing syndicated bank credit facility as well as for general corporate purposes.

Entravision notes do nicely

When the Entravision bonds moved into the secondary, a trader saw them reach the level of 100¾ bid, 101¼ offered, versus their 98.722 issue price. He saw the bonds going home at that higher level, "pretty much where they've been all day."

A trader said that while not quite matching the pop Accuride got, "it's still traded well," up 2½ points, "not as well as Accuride, but still a very good break for that deal also."

Codere brings mirror tranche

The day's other pricings originated with overseas issuers.

One was Spanish gaming company Codere, SA, which priced a €100 million mirror tranche of 8¼% senior notes due June 15, 2015 ((p)B2/B(expected)) under the indenture governing three previous issues of those bonds, which the company has sold since mid-2005, totaling €660 million.

While the new bonds carry the same terms as the outstanding 81/4s, they are not fungible due to U.S. pricing range limitations versus par.

The new bonds, issued by the company's Codere Finance (Luxembourg) SA unit and guaranteed by the parent company and some of its subsidiaries, priced at 94 for a yield-to-worst of 9.822% and a spread of 823 basis points over the Bund securities maturing in April 2015. The deal priced a little wide of whispered price talk envisioning about a 9¾% yield.

Reflecting the changes in the junk market over the past few years, the new bonds priced at a considerably lower level, with a higher yield and a wider spread, than the earlier tranches did. Codere sold its original €335 million of the 8¼% 2015 senior notes in June 2005, pricing them at par to yield 8¼%, or 496 bps over the reference security. It sold a €165 million add-on, upsized from the originally shopped €150 million, in April 2006, at 106.25, for a yield-to-worst of 7.12% and a spread of 338 bps and sold another €160 million of the bonds, upsized from the originally shopped €150 million, in November 2006 at 107.25, for a yield-to-worst of 6.866% and a spread of 311 bps.

The new deal, which was not shopped to investors in the United States, Canada or Japan, was brought to market by joint bookrunners Credit Suisse Securities (Europe) Ltd. and Barclays Bank plc.

Codere, a gaming company with operations in Spain, Latin America and Italy, said that the proceeds of the new deal will be used to repay amounts outstanding under its senior credit facilities and other long-term debt obligations and to fund certain liabilities owed by three units of Mexican gaming operator Group Caliente, which Codere this week took a controlling interest in.

DFS comes to market

The other overseas deal of the day came from DFS Furniture Holdings, a United Kingdom-based furniture manufacturer and retailer, which priced a £240 million issue of seven-year senior secured notes (B1/B) to yield 9¾%, junk market syndicate sources said. The bonds, carrying a 9¾% coupon, priced at par. The pricing was in line with market price talk.

The Rule 144A and Regulation S offering was brought to market via joint bookrunners Goldman, Sachs & Co. and J.P. Morgan Securities Inc., with Lloyds TSB as joint lead manager. It priced after a short roadshow, which syndicate sources said began Monday and lasted through Wednesday.

DFS is being acquired via a leveraged buyout by Advent International; the new-deal proceeds will be used to help fund that LBO transaction.

Calumet cancels out

The other major news of the day on the primary side was the announcement by Calumet Specialty Products Partners and its wholly owned subsidiary, Calumet Finance Corp., that they have decided not to proceed with Calumet's planned $450 million offering of senior unsecured notes due 2020 (B3), citing market conditions as the reason for the decision.

Calumet, an Indianapolis-based specialty hydrocarbon products producer, first announced the bond deal on July 12 and marketed it to would-be investors via a roadshow that wrapped up last Friday. Before the company's announcement Thursday that it was scrubbing the deal, several junk traders had expressed puzzlement this week that the deal had not yet come to market, even though the roadshow had concluded.

The Rule 144A/Regulation S bond deal, which was to have been sold with registration rights, was to have come to market via joint bookrunners JPMorgan and Bank of America Merrill Lynch, with Barclays, Deutsche Bank, Goldman and Wells Fargo as co-managers.

Calumet was also heard by a source in the bank-loan market on Thursday to have decided not to pursue its pending $375 million asset-backed revolving credit facility led by Bank of America and JPMorgan, although there was no official word from the company about the loan. The company had intended to use the proceeds from the revolver and the bond deal to repay its senior secured term loan in full and refinance its existing revolver.

New Wynn bonds a winner

Among the issues priced before Thursday, a trader saw Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.'s 7¾% first mortgage notes due 2020 "pretty much trading at the 101 level all day, give or take 1/8," - well up from levels around 100 3/8 bid, 100 7/8 offered at which the Las Vegas-based gaming company's $1.32 billion drive-by mega-deal had traded on Wednesday following their pricing at par.

A trader said that at his shop, they had traded the bonds Wednesday night around a 100¼ to 100½ level, although he heard people say they had been at 1012 bid, but "they clearly moved up to that 101 level everywhere today," going out at 101 to 101 1/8. "Not a whole lot of room for interpretation there."

He said the company "kind of got done what it needed to get done," describing the new Wynns as "a win-win situation."

Interactive Data stays strong

A trader saw Interactive Data's 10¼% senior notes due 2018 continuing to hover around the 103 level, quoting the bonds in a range of 102¾ to 1031/4.

The Bedford, Mass.-based financial market data provider's $700 million deal priced at par on Tuesday and then proceeded to firm handsomely in the aftermarket to levels around 102½ to 103, driven by accounts scrambling in the aftermarket to make up for the paltry allocations they had received from the underwriters.

A trader said the bonds "continue to hold their gains."

Market indicators head north

Away from the new deals, a trader saw the CDX North American HY Series 14 index gain 5/8 point on Thursday to 96 ¾ bid, 97 1/8 offered after having eased by 1/8 point on Wednesday.

The KDP High Yield Daily index meantime was up by 18 bps on Thursday to an even 72 after having advanced by 15 bps on Wednesday, while its yield came in by 3 bps to 8.24% Thursday on top of having tightened by 6 bps Wednesday.

Advancing issues led decliners for a 14th consecutive session on Thursday by the same seven-to-five margin that had been seen the previous two days.

Overall activity, represented by dollar-volume levels, soared by 46% on Thursday after having declined by 8% on Wednesday.

A trader said that the junk market "has felt stronger" over the past few sessions. "It's not on-fire strong, but it slowly creeps up each day."

Another trader said "the entire market is clearly well bid-for at this point. The bids are there across the board."

He saw "a lot of stuff up by ¼ to 1/2. If you want to talk about bonds that were up by 1/2, there are about 500 bonds to talk about."

GM jumps

Among specific names, the news that General Motors is getting back into the auto-finance business with a $3.5 billion purchase of AmeriCredit pushed the carmaker's bonds up solidly during the session, since its dealers say such a move is a necessity if they are to continue to compete with their counterparts at Ford Motor Co., which already has a loan financing arm.

A trader saw GM's benchmark 8 3/8% bonds due 2033 up around 2 points on the day at 34½ bid, 34¾ offered. The long bonds, he said, had been "trading all day."

Indeed, a market source said that the GM issue was one of a handful of the most heavily traded junk credits on the day, with nearly $50 million having changed hands by mid-afternoon and final figures probably higher than that. He too saw the bonds at 34, up from prior levels in a 32ish context.

Another source estimated that trading may have surged late in the day to reach beyond the $100 million level in the benchmarks.

GM said it will pay $3.5 billion - or $24.50 per share - for AmeriCredit in an all-cash transaction. In a press release announcing the purchase, GM remarked that the buy was an effort to "meet customer demand for leasing and non-prime financing for GM vehicles."

The Detroit-based company had previously been considering buying back its former financing arm, GMAC, or starting another unit in order to have in-house financing options.

"With AmeriCredit providing us niche capabilities in leasing and non-prime financing, along with the continued strong support of Ally Financial and others for prime retail and dealer financing, we've set up a very competitive solution for our financing needs, which will be resilient through credit and business cycles," said Chris Liddell, vice chairman and chief financial officer, in the release.

The acquisition is expected to close by the end of the fourth quarter.

Stephanie N. Rotondo contributed to this report

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