Allegiant deal dead; First Data firms again; Smurfit strengthens on agreement with holders

By Paul Deckelman and Paul A. Harris

New York and St. Louis, May 24 - Allegiant Travel Co. became the latest prospective high-yield issuer to back away from the junk bond market on Monday, discontinuing its planned $250 million offering of seven-year notes due to adverse market conditions.

The Las Vegas-based leisure travel company thus joins such other would-be junk borrowers, which have recently have been heard to have spiked deals, or - at the very least - to have delayed them. They include Regal Cinemas Corp., Capella Healthcare, Inc., JonesApparel Group, Inc., Americold Warehouse Investments Portfolio LLC and Essar Steel Holdings Ltd./Gallop Holdings LLC.

The demise of Allegiant's offering was the only news coming out of an otherwise quiet primary sector, as Junkbondland moved into the final trading week in May ahead of the upcoming Memorial Day holiday. Relatively light trading is expected all week, punctuated by an abbreviated session on Friday and a full market shutdown next Monday.

The secondary market meantime was seen continuing in the same mostly featureless vein as this past Friday's session, which was trying to regain its footing following last Wednesday's weakness and Thursday's utter debacle.

Among the few names that were seen really going anywhere included First Data Corp., which continued the rebound in the credit begun on Friday. This followed a string of sessions in which the company's bonds had been smacked around subsequent to the May 14 release of quarterly earnings.

Smurfit Stone Container Corp.'s bonds pushed upward on the news that the Chicago-based packaging company had reached an agreement with its shareholders on a reorganization plan that will allow those holders to recoup some of their investment.

Allegiant pulls deal

The Monday primary market produced very little news, and what little news it did produce was negative.

Morgan Stanley & Co. Inc. had the books on Allegiant's discontinued $250 million offering of senior unsecured notes.

Proceeds were to be used to pay the balance of the purchase price and induction costs for the MD 80 and Boeing 757 aircraft under contract and to make principal payments on existing debt payable in 2010 and 2011. Remaining proceeds will be used for other asset acquisitions, for mergers or acquisitions and for general corporate purposes.

Roadshows continue

Meanwhile, at least two of the deals on the calendar as business for the present week remain on their respective roadshows, a syndicate banker said.

Citgo Petroleum Corp. will continue its $1.5 billion two-part offering of first-lien senior secured notes (Ba2/BB+/BB+) into Thursday, the source said.

The Houston-based refiner plans to sell seven-year notes, which come with four years of call protection, and 10-year notes, which come with five years of call protection.

RBS Securities Inc., UBS Investment Bank, BNP Paribas Securities Corp. and Credit Agricole CIB are the joint bookrunners for the debt refinancing and general corporate purposes deal.

Also, Willbros Group, Inc. is roadshowing its $250 million offering of six-year senior secured second-lien notes (B3/B+) - a deal that is slated to price late in the present week.

UBS Investment Bank is the left bookrunner. Credit Agricole CIB and Credit Suisse are joint bookrunners.

Proceeds will be used to partially fund the acquisition of InfrastruX Group, Inc.

Although marketing continues on both Citgo and Willbros, it remains to be seen whether there will be attempts to price those deals at the conclusion of the roadshows, given the present volatility in the capital markets, the banker said.

Of the two deals, the high double-B rated Citgo offering would obviously enjoy the smoother road to completion, the source added.

SkillSoft goes nowhere

A trader said that the new SkillSoft plc 11 1/8% notes due 2018 had not traded, thus staying anchored to the levels at which the Irish business development and educational software provider's issue held late Friday after it had priced.

He quoted the bonds around 99 ½ bid, up marginally from 99.347, where the $310 million issue had priced to yield 11¼%.

Another trader said he had seen no sign of the new bonds on Monday.

Market indicators turn mixed

Among bonds not connected with the new deal market, a trader saw the CDX Series 14 index down 1/8 point for a second straight session on Monday to end at 92 7/8 bid, 93 1/8 offered.

However, the KDP High Yield Daily Index rose by 23 basis points on Monday to 69.85, after having lost 10 bps on Friday. This came on top of Thursday's 78 bps plunge. The index's yield tightened by 6 bps to 8.93%, after having gapped out by 24 bps on Thursday and then widening another 4 bps on Friday.

Advancing issues were again behind decliners for a seventh straight session on Monday, although they trailed by only a couple of dozen issues out of the nearly 1,400 bonds tracked.

Overall market activity, represented by dollar-volume levels, fell by nearly 12% on Monday to carry on Friday's 40% downturn from the previous day.

A trader said that Monday's session was "pretty quiet, kind of sideways." He ventured that "maybe certain issues were up, very slightly."

He added that "no one particular name was coming to our attention."

Another trader agreed that the session was "very quiet," adding that it was "weak, weak, weak."

He said that the CDX index "was up most of the day" before pulling back late in the session to end down slightly.

The first trader meantime said, "This morning, it took a couple of hours to really get any type of volume showing up on Trace." He said that normally, there might have been $400 million or $500 million of bonds traded overall by around 10 a.m. ET, but on Monday, "at 10 a.m., not even $100 million had traded yet, which is really [getting] off to a slow start."

He added: "You're getting close to the month's end and you throw in a three-day weekend [for Memorial Day], which very easily could turn into a four-day weekend," with the expected slow pace of activity during Friday's abbreviated session.

"It looks like the week was starting off a little quiet. There was stuff trading - but it just seemed that everything was kind of unchanged, moving sideways, with nothing dramatic in one direction or another."

He noted that "you had some things up by maybe a point or two points, but not on huge volume."

Last week, he continued, "you had a lot of dealers selling paper, just to lighten up their positions, but now, a few of them seem to be out there, trying to cover their shorts, or just trying to get more inventory back on the books, but there was nothing in any huge direction."

First Data continues comeback

A trader said that First Data's 11¼% notes due 2016 finished the day at around 671/2-68, which he called up perhaps by half a point, while the Greenwood Village, Colo.-based electronic transaction processor's 9 7/8% notes due 2015 held steady in an 83-84 context on "pretty decent volume - there was a lot of volume in that issue."

He saw the First Data 10.55% notes due 2015 as "also an active trader," stating that the bonds ended several points higher around the 78 level after starting the day around 76 ½ bid, 77 offered, "also on decent volume."

Another trader saw the 9 7/8% notes as probably the most active high-yield bond, seeing them up a point on the day. A market source at another desk meantime saw more than $22 million of the bonds having changed hands heading into the final hour of trading, putting it among the day's busiest issues.

The company's bonds were continuing a rebound which started on Friday, following several days during which that paper had been hammered down directly after the May 14 announcement of its first-quarter results. First Data reported a net loss of $240 million versus a net loss of $231 million in the prior year, while its adjusted EBITDA fell to $424 million from $472 million a year earlier.

The 11¼% notes have tumbled to their current levels in the mid-to-upper 60s from pre-news levels around 81 bid, 82 offered.

Its 9 7/8% notes, now in the low 80s, had been as good as 89-90 before the earnings were released.

And the 10.55% notes, now in the mid-to-upper 70s, had traded around 86 before the numbers.

GM bonds trade busily

A trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 were ending around 32½ bid, which he called up 1 point to 1¼ point on the session.

He meantime said that GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 "seemed to hold their own," moving around in an 87-88 context before going home last traded around 87½ bid, which he called up a point. He added that there was "not a lot of trading [in the Ford paper] - a lot of trading in GM but not much in Ford."

At another desk, a trader said that the GM benchmarks were unchanged at 32 bid, 33 offered, while the Ford long bonds gained a point to end at 86½ bid, 88½ offered.

Yet another trader said the GM issue traded between 32¼ bid and 32¾ offered.

Elsewhere in the autosphere, a trader called Visteon Corp.'s bonds - 7% notes due 2014 and 8¼% notes slated to mature this August - still in a 105-107 range.

"I don't think there was much trading in the name at all," he said, despite several items of major news: Friday's unsolicited $1.25 billion offer by Visteon competitor Johnson Controls Inc. to purchase much of its rival's operations, as well as Monday's decision by the Wilmington, Del. bankruptcy judge overseeing Visteon's restructuring to direct the company to hold further talks with shareholders who claim to have a less expensive plan for restructuring.

"I saw the quotes, I didn't see much trading," he added.

Another trader saw the Van Buren Township, Mich.-based company's 7s at 104½ bid, calling that down 1½ points on the day.

A trader said that American Axle & Manufacturing Holdings Inc.'s bonds were up by two points on the day on "decent volume," in line with a 7% jump in the Detroit-based automotive components company's New York Stock Exchange-traded shares on four times their normal volume, although there was no fresh news seen out on the company.

Its 7 7/8% notes due 2017 rose to 87 bid.

Landry's news has little impact

The news that Landry's Restaurants Inc. had reached an agreement with its chief executive officer, Tilman J. Fertitta, that will allow him to take the company private by buying up all of the shares he doesn't already own at a price of $24 per share in cash - up from $21 per share previously - was seen to have little or no impact on the Houston-based restaurant and casino operator's bonds.

A trader that Landry's 7½% notes due 2014 last traded some two weeks ago at around the 98 level.

He also had seen no recent activity in its 9½% notes due 2014.

Smurfit-Stone gains of shareholder deal

A trader saw Smurfit-Stone Container Corp.'s paper trading around the mid-80s, "right around 85," which he called up 1 point to 1½ points on "not much trading" in the 8 3/8% notes due 2012, with the company's other bonds "just quotes."

That followed the news that the Chicago-based paper-based packaging company had reached agreement with its shareholders, which will allow those holders to recoup some of their investment, ending a long-running dispute that had been holding up its process of exiting Chapter 11.

At another shop, a trader said that Smurfit's 8¼% notes due 2012 "bounced up a little," gaining about 2½ points on the day to close around 87 bid versus its levels in the low-to-mid-80s towards the end of last week.

Yet another market participant saw those 8¼% notes up 1½ points on the day, at just above the 87 mark.

Elsewhere in that sector, a trader said that that NewPage Corp.'s bonds "are always active," seeing the Miamisburg, Ohio-based coated-paper manufacturer's 11 3/8% notes due 2014 as the busiest of the company's bonds. They ended up in a 921/2-93½ context.

"The whole market is unchanged," he said, with 92½ being down ¼ point from Friday's levels and 93½ up a quarter, pronouncing the bonds unchanged to down 1/2. He saw no activity in the company's 10% notes due 2012, recently in the 60s.

At another desk, sector peer Verso Paper Holdings Corp.'s 9 1/8% notes due 2014 jumped nearly four points on the day, to just under the 95 mark, although there was no fresh news seen out on the Memphis-based coated-paper maker that might explain that rise.

WaMu Bank weakens on new plan

A trader said that Washington Mutual Bank's bonds, such as its 2009 and 2011 floating-rate notes, "weakened up at the end of the day" to close at 41 bid, 42 offered, down a point from previous levels.

This followed the company's Seattle-based parent, Washington Mutual Inc., filing on Friday a new plan of reorganization with the Delaware bankruptcy court that implements and incorporates the terms of the recently revised global settlement agreement reached among WaMu, the Federal Deposit Insurance Corp., which seized WaMu's extensive branch network in September 2008 over the company's objections, and JPMorgan Chase Bank, NA, which bought those branches at what WaMu contended was a fire-sale price.

The corporate parent's holding company paper meantime continued to trade at several points above par.

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