AMD drive-by, Vantage price; new AMD gains; Borgata slates; market awaits Aircastle, Air Canada

By Paul Deckelman and Paul A. Harris

New York, July 26 - Advanced Micro Devices Inc. became the latest borrower to take advantage of strong high-yield market technicals and rising investor morale by bringing an opportunistically timed and quickly shopped junk bond deal to market on Monday. When the Sunnyvale, Calif.-based semiconductor maker's new $500 million 10-year issue began trading, it was seen having popped some 2 points early on.

Also pricing, although too late in the session to trade around, was Houston-based offshore energy drilling operator Vantage Drilling Co.'s $1 billion offering of five-year secured notes.

Primaryside players meantime looked forward to expected Tuesday pricings from Air Canada, which is shopping a $900 million offering of five-year secured paper split into U.S.- and Canadian-dollar tranches, and a $300 million eight-year deal from Aircastle Ltd., which leases aircraft to various cargo and passenger airlines, including Air Canada.

Several other deals emerged, which are expected to price next week, including a $725 million two-part entry from Marina District Finance Co. Inc., a funding arm of the joint venture that runs Atlantic City's glitzy Borgata casino resort; a $500 million eight-year deal from Turbo Beta plc, a unit of British-based oil drilling contractor KCA Deutag; and a $370 million six-year secured deal from Trilogy International Partners, LLC, which provides wireless service in selected markets in Latin America, the Caribbean and New Zealand.

Traders meantime saw continued firmness in recently issued bonds from Accuride Corp., Entravision Communications Corp. and Wynn Resorts Ltd.

Away from the new issues, Great Atlantic & Pacific Tea Co.'s bonds continued to actively trade around the sharply lower levels to which the venerable supermarket operator's paper slid on Friday, hurt by news of a poor quarter, an abrupt executive shakeup, and investor worries about debt maturing next year and in 2012.

Vantage prices through yield talk

Two high-yield issuers, each pricing a single tranche of notes, raised slightly over $1.46 billion of proceeds on Monday.

Offshore Group Investment Ltd., a financing unit of Vantage Drilling, priced a $1 billion issue of 11½% five-year senior secured first-lien notes (B3/B-) at 96.361 to yield 12½%.

The yield came 12.5 basis points through the 13% area yield talk. The reoffer price came in line with discount talk of 3.5 points to 4 points.

Several traders said late in the day that they had not seen any sign of the Vantage Drilling 11½% senior notes.

Jefferies & Co. and Deutsche Bank Securities were joint bookrunners.

The Houston-based energy drilling company will use the proceeds, along with the proceeds from a concurrent offering of its ordinary shares, to, among other things, fund the remaining construction payments for the Platinum Explorer, a 781-foot long DSME Ultra Deepwater drillship.

Vantage also plans to use proceeds to refinance outstanding debt, including the $135 million of 13½% senior secured notes issued last December by wholly owned Vantage subsidiary P2021 Rig Co. and its existing credit facility, as well as for general corporate purposes.

A blowout

Vantage Drilling saw a "ridiculous" amount of demand, according to a high-yield mutual fund manager who played the deal.

The order book contained 235 accounts, representing roughly $5.5 billion of orders, according to the source.

Of the $1 billion that priced, $500 million was "protected," meaning that half the issue was set aside for accounts that came into the deal via reverse inquiry, or otherwise put in advance orders.

Most, if not all, of those accounts saw their allocations fall short of their orders, anyway, the buysider said.

It doesn't pay to squawk too loudly about allocations, even when you are supposedly protected, the investor warned.

You don't want to make heavy weather when you know that another deal will come along, and you will once again desire a generous allocation, the source explained.

The new Vantage Drilling 11½% secured notes due 2015, which priced at 96.361, were par½ bid late Monday, the investor said.

Vantage rejects buyout

With the fight for Vantage Drilling bond allocations underway, this investor noted the company's Monday press release, disclosing that the company received an unsolicited proposal to acquire all of its outstanding shares at a premium to the current market price.

The proposal was subject to due diligence and requested an exclusivity period.

In addition, the proposal was conditioned on the company abandoning the notes and equity offerings.

"After careful consideration, including consultation with its outside financial and legal advisors, the company determined that it is in the best interests of the company and its shareholders to proceed with the financings in light of its business plan and financing needs," the release stated.

"Accordingly, the company has rejected the unsolicited proposal."

AMD drive-by

Elsewhere on Monday, AMD priced a $500 million issue of 10-year senior notes (Ba3/B+) at par to yield 7¾%.

The yield printed at the tight end of the 7¾% to 8% price talk.

JP Morgan and Citigroup were the joint bookrunners for the quick-to-market deal.

The Sunnyvale, Calif.-based semiconductor company will use the proceeds to help fund the tender for $800 million of its 6% convertible notes due 2015 at par.

The market buzz had the AMD deal spoken for before it launched, a buyside source said, adding that the par-pricing notes were 101¾ bid at the Monday close.

Aircastle for Tuesday

Meanwhile, Aircastle held an investor conference call on Monday for its $300 million offering of eight-year senior notes.

Pricing is set for Tuesday.

Citigroup has the books for the debt refinancing and general corporate purposes deal.

Early guidance is 10% to 10½%, according to a buy-side source.

Air Canada two-parter

Air Canada set price talk on its $900 million equivalent two-part offering of five-year senior secured first-lien notes (B2/B+) on Monday.

The Montreal-based airline talked the dollar-denominated tranche to yield 9½% to 9¾%. The Canadian dollar-denominated notes, meanwhile, are talked to yield 7/8% behind the notes in the dollar-denominated tranche.

The books close at 2 p.m. ET on Tuesday. Pricing is set for Tuesday afternoon.

JPMorgan has the books for the bank debt refinancing and general corporate purposes deal.

Borgata $725 million

Marina District Finance Co., a wholly owned subsidiary of Borgata, will begin a roadshow on Tuesday for its $725 million two-part offering of senior secured notes.

The offering will be split between tranches of five-year notes, which come with three years of call protection, and eight-year notes, which come with four years of call protection.

Tranche sizes remain to be determined.

The deal is set to price on Aug. 5.

Bank of America Merrill Lynch, Wells Fargo Securities, JP Morgan, Barclays Capital, RBS Securities and UBS Investment Bank are joint bookrunners.

Proceeds will be used to repay bank debt and to fund a dividend.

KCA Deutag starts Tuesday

Turbo Beta plc, the owner of England-based oil and gas services company KCA Deutag, will start a European roadshow on Tuesday for its $500 million offering of eight-year senior unsecured notes (Caa2/CCC).

The European roadshow wraps up on Wednesday.

A roadshow in the United States is scheduled to start on Thursday and to wrap up on Aug. 4.

Goldman Sachs & Co. is the global coordinator for the debt refinancing deal. HSBC, Lloyds TSB and Royal Bank of Scotland are the joint bookrunners.

Trilogy International $370 million

Trilogy International Partners LLC and Trilogy International Finance Inc. plan to price a $370 million offering of six-year senior secured notes during the Aug. 2 week.

Goldman Sachs & Co. is the left lead bookrunner. Deutsche Bank Securities and JP Morgan are the joint bookrunners.

Proceeds will be used to repay the Bellevue, Wash.-based company's $250 million term loan and to invest in its New Zealand operations.

Trilogy has operations in the Caribbean, Latin America and New Zealand.

New AMD bonds advance

When Advanced Micro Devices' new issue of 7¾% notes due 2020 was freed for secondary dealings, a trader said that the bonds had promptly firmed to around 102 bid, 102½ offered, although he saw the semiconductor maker's new issue come in slightly later to around a 1013/4-102¼ context.

Even though the bonds came off their highs, he said, "when you get a 2-point pop, that's nothing to whine about."

A second trader saw the AMD issue quoted around 102 bid, 102 3/8 offered.

At another desk, a trader, who saw the bonds up 2 points from their par issue price called the deal "a nice trade."

Recent new deals stay strong

A trader said that recent new deals from Acccuride Corp., Entravision Communications and Wynn Resorts continued to show strength by each trading at a premium to their respective issue prices.

For instance, he saw Accuride Corp.'s 9½% first-priority senior secured notes due 2018 trading at 101½ bid, 102 offered - well up from the 97.288 level at which the Evansville, Ind.-based commercial producer of steel and aluminum vehicle wheels had priced its upsized $310 million issue on Thursday to yield 10%. Those bonds had quickly moved up to around 101 bid, 102 offered levels shortly after they were feed for trading.

He meantime saw Santa Monica, Calif.-based Spanish-language TV and radio broadcaster Entravision's new 8¾% senior secured first-lien notes due 2017 at 1003/4bid, 101¼ offered. That too was up solidly from Thursday's issue price of 98.722 to yield 9%.

Although he did not see any new dealings in meat and poultry producer JBS SA's $700 million of 8¼% notes due 2018, which priced on Thursday at 98.634 to yield 8½% and were being quoted Friday at 99-991/2, he did see trading at continued firm levels for Las Vegas-based casino operator Wynn's new bonds, which priced last Wednesday.

He said that the $1.32 billion of 7¾% first-mortgage bonds due 2020 issued by subsidiaries Wynn Las Vegas LLC and Wynn Las Vegas Capital Corp. had priced at par, and then had moved up in the aftermarket by Friday to around to around 101¼ bid, 101½ offered.

"I haven't seen it," he said, "but I would have to imagine they would be up today," with the stronger market.

Out of that same gaming sector, a trader saw paper of Boyd Gaming and MGM Mirage - the co-owners of the Borgata casino resort - up a point or two on the news that the joint venture entity is doing a big new bond deal, with at least some of the proceeds earmarked for a dividend payment.

He saw Boyd's 7 1/8% notes wrapped around 86 and its 6¾% notes trading up in an 88½ bid, 89½ offered context. He saw MGM'S 13% secured notes due 2013 at 117½ bid, 118 offered, "getting to be inside of 7%," while its 7½% notes due 2016, which he characterized as "a go-go issue," wrapped around 84.

Market indicators add to gains

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index gain ½ a point on Monday, same as it had on Friday, to end at 97¾ bid, 98¼ offered.

The KDP High Yield Daily index meantime rose by 20 basis points on Monday, on top of the 9 bps gain recorded on Friday. Its yield narrowed by 8 bps on Monday to 8.13%, after having declined by 3 bps on each of the two preceding days.

Advancing issues led decliners for a 16th consecutive session on Monday, while their margin widened back out to about seven to five versus the six-to-five ratio seen Friday.

Overall activity, represented by dollar-volume levels, rose about 23% on Monday versus a 58% plunge on Friday.

Even so, a trader said, "there was not a ton of activity, but everything seemed a little firmer. We're hearing that folks are just sitting on tons of cash," waiting to put it to work.

A second trader said that "the whole market was better by ¼ to 1/2. High yield had a really good tone to it."

A&P steady at lower levels

A trader said that A&P had been "obviously really wild on Friday," when the Montavale, N.J.-based company, which operates the iconic and eponymous supermarket chain was well as PathMark and Waldbaum's, reported poor quarterly numbers.

"Ugly numbers make for ugly markets," he observed.

He saw A&P's 11 3/8% senior secured notes due 2015 trading a 60 bid, 62 offered range, while its 6¾% convertible notes due 2012 started at 41 bid, 43 offered, but was ending at 41 bid, 42 offered, calling both issues about a point lower on the day in "decent volume."

"They are still having an ugly time of it," he said.

"There was a lot of volume and a lot of quotes." He added that the 11 3/8% was "probably the much more active issue - definitely the more active issue."

Another trader said that A&P's paper on Monday was "not as active as on Friday, when you needed a cleanup on Aisle 9."

He saw the 63/4s down to around 42½ bid, with a lot of activity between 42 and 43.

The 5 1/8% convertible notes due 2011 hung in with "a lot of activity" between 63½ bid and 64½ offered. The 11 3/8% straight bonds traded between 62 and 631/2, before the bonds finally went out later on offered at 621/2.

A&Ps' bonds swooned on Friday after the company reported a net loss of $122.6 million, or $4.83 per share, for the fiscal first-quarter ended June 19 on revenue of $2.54 billion. That compared to a net loss of $65.2 million, or $3.64 per share, on sales of $2.79 billion in the first quarter of 2009.

Analysts had been only expecting a loss of about 70 cents per share on revenue of $2.6 billion.

In addition to the poor results, the company also announced an abrupt leadership change, with Sam Martin - up until now the chief operating officer at Office Max - taking over as president and chief executive officer. He replaces Ron Marshall, who had only been hired as president and CEO at the end of January.

Marshall was cryptically described in the A&P press release announcing Martin's hiring as having "left the company."

But the press release also quoted Christian Haub, executive chairman, whose comments could be taken to mean that A&P was unpleased with Marshall's performance:

"Although we are clearly disappointed with our performance in the first quarter, we are confident that we now have the right leadership in place to drive this operational and revenue-driven turnaround effort and make A&P a great company again."

As previously reported, a market source remarked that company executives said on the conference call that they were "planning an asset sale and they would work with the banks" to augment their liquidity.

He said that A&P has ample funds available to take care of the maturing 5 1/8% notes next year, but also warned that "they're bleeding cash."

Gulf energy names seen steady

A trader said that "oil's a little better," specifically referring to the bonds of companies, which one way or another have been impacted by the April 20 BP oil rig disaster in the Gulf of Mexico and the subsequent efforts to clean up the massive environmental damage done there.

He saw ATP Oil & Gas Corp.'s 11 7/8% second-lien senior secured notes due 2015 up by "maybe a half a point" at 73½ bid. The Houston-based energy exploration and production company played no role in the Deepwater Horizon disaster, but its bonds have been knocked down to the lower 70s - and as bad as the 60s - from their near-par pricing levels on investor fears the tough government crackdown on deepwater drilling in the Gulf announced in the wake of the accident will hurt companies like ATP, which has a majority of its proven reserves in the deepwater sectors there.

The trader said that "the other ones" - the companies directly involved in the accident - "were probably about the same."

BP Capital Markets plc's bonds were "pretty much unchanged," with the British oil giant's 4¾% notes due 2019 staying in a 93½ bid, 94 offered context. He said that he saw little impact on the company's bonds from the news reports indicating that embattled, gaffe-prone chief executive officer Tony Hayward will soon step down from that post and take a position with a BP joint venture in Russia, likely to be replaced by Robert Dudley, an American who has been overseeing the Gulf oil spill recovery efforts.

He also saw Deepwater Horizon operator Transocean Inc.'s bonds "somewhat unchanged," with its 5¼% notes due 2013 a little above the 97 mark and its 6.80% bonds due 2038 just under 91.

He saw BP's 25% partner in the blown-out well Anadarko Petroleum Corp.'s 5.95% notes due 2016 up a ½ point at 95½ bid.

Stephanie N. Rotondo contributed to this report.

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