Trinity, seven more deals price; Tyco firmer as top charge dropped

By Paul Deckelman and Paul A. Harris

New York, March 5 - Trinity Industries Inc. was heard by high yield syndicate sources to have brought a $300 million offering of 10-year notes to market Friday; it led the way in a busy session that saw more than half a dozen deals, collectively worth over $1.2 billion, having priced by the close. Other issuers included Gold Kist Inc., Evergreen Resources Inc., American Rock Salt Co. LLC, Cellu Tissue Holdings, The Newark Group, and iStar Financial Inc. iStar's $150 million sale of three-year notes was the sole quickly shopped drive-by deal to be opportunistically brought to market, with the day's other issues having all come off the forward calendar.

In the secondary market, activity was described as fairly quiet, as sector players first digested the impact of the latest employment figures on the economy and the strong gains in Treasuries that government data produced; later in the day, attention was monopolized by the verdict in the Martha Stewart insider-trading trial, which saw the once high-flying domestic diva found guilty on four counts.

Eight deals priced during the final session of the March 1 week in the junk bond new issue market, with $1.187 billion and €170 million of proceeds raised, in total.

Meantime no new issues were announced during the session.

Funds flows: Half empty or half full?

One sell-side official who spoke to Prospect News late Friday said that Thursday's funds flow news - AMG Data Services had reported a $135 million of inflow of cash to high-yield mutual funds for the week ending March 3 - fails to provide much of an indication as to the present footing of the junk asset class.

"People saw secondary levels stabilizing, reasonably, over the course of the week, with some of the new issues trading up," the official said. "So people were expecting something more positive with regard to the fund flow news.

"The magnitude of the one that we had is not indicative of any real direction."

When Prospect News related to this official the color from other high yield sources throughout the day that three of last five weekly flows were negative, the official concurred, but quickly retorted: "Yes, but two of the past three were positive."

Trinity leads eight-deal parade

Dallas diversified industrial firm Trinity Industries, Inc. priced the biggest deal of Friday's session, selling $300 million of 10-year senior notes (Ba3/BB-) at par to yield 6½%. The issue, led by JP Morgan and Credit Suisse First Boston, came at the inside of the 6¾% area price talk.

Next came Denver-based natural gas exploration and production company Evergreen Resources with $200 million of 5 7/8% eight-year senior subordinated notes (Ba3/BB-) which priced at 99.213 to yield 6%, tight to the 6%-6¼% talk.

Goldman Sachs & Co. ran the books.

Gold Kist Inc. also sold a $200 million issue. Its new 10¼% 10-year senior notes (B2/B-) priced at 98.470 to yield 10½%.

The Atlanta-based chicken processor's deal came spot on the 10½% area price cackle, with Credit Suisse First Boston running the books.

The Newark Group, Inc., a Cranford, N.J. paper and cardboard recycler, downsized its deal to $175 million from $200 million. The 10-year senior subordinated notes (Caa1/B-) priced at par to yield 9¾%, on the wide end of the 9½% area price talk. Wachovia Securities ran the books.

Cellu Tissue Holdings priced $162 million of 9¾% six-year senior secured notes (B2/B) at 98.892 on Friday to yield 10%. The Hartford, Conn. specialty tissue company's deal came at the wide end of the 9¾%-10% price talk. The deal priced via JP Morgan and CIBC World Markets.

And American Rock Salt Co. LLC sold $100 million of 10-year senior secured notes (B3/B-) at par to yield 9½%. The print on the new paper from the highway de-icing salt miner from Mount Morris, N.Y. was on the tight end of the 9½%-9 5/8% talk. Jefferies & Co. ran the books.

iStar makes 4th pass in seven weeks

New York City-based real estate finance company iStar Financial Inc. sold a quick-to-market issue of $150 million of three-year senior floating-rate notes (Ba1/BB+) at par on Friday. That is the fourth deal the company has completed since mid-January, bringing to $875 million the amount iStar has issued thus far in 2004.

The new floaters will bear an interest rate of three-month Libor plus 125 basis points, with Lehman Brothers running the books.

On Jan. 15 iStar Financial priced a massively upsized quick-to-market issue of $350 million 4 7/8% five-year senior notes (also Ba1/BB+) at 99.892 to yield 4.9%, or a spread of 195 basis points. Deutsche Bank Securities and Banc of America Securities ran the books on that deal.

On Feb. 25 the company priced $125 million of series I perpetual preferred shares at par. Those shares will yield 7½%. Bear Stearns & Co. ran the books for that issue.

And earlier in the week of March 1, iStar priced a quick-to-market $250 million of 10-year senior notes (Ba1/BB+) at 99.656 to yield 5.746%, with Lehman Brothers in the lead.

iStar joins Las Vegas gaming and entertainment firm Station Casinos Inc. which is also something of a fixture in the 2004 new issue market, having priced $1.25 billion thus far in 2004.

Clondalkin brings 10-year euro deal inside of talk

Finally on Friday Clondalkin Industries BV sold €170 million of 10-year senior notes (B3/B-) at par to yield 8%. Deutsche Bank Securities, Barclays Capital and Lehman Brothers ran the books for the Dublin, Ireland-based producer of specialty packaging and printing products, which priced its deal inside of the 8 1/8%-8 3/8% price talk.

Trinity up in trading, then falls back

When the new Trinity Industries 6½% notes due 2014 were freed for secondary trading, the bonds moved as high as 103 bid from their par issue price. However, later in the session, they were seen having moved substantially down from those peak levels, trading into a 100.75 bid. At another desk, a trader quoted the bonds as going home at 101 bid, 102 offered.

The trader said the new Gold Kist 10¼% senior notes due 2014 "seemed better bid for," moving as high as the 101-101.5 bid area, before settling in that context, well up from the bonds' 98.470 issue price earlier in the session.

Also being quoted at firmer levels after having priced at a discount to par earlier on, the trader said, was Cellu Tissue's 9¾% senior secured due 2014; he heard that hose bonds had gotten as good as 101.5 bid, 102 offered, from their pricing level at 98.892, but stressed that while there were quotes floating about, he had seen no real trading.

Another trader pegged the new Evergreen Resources 5 7/8% senior subordinated notes due 2012 at 101.5 bid, 102 offered, well up from their 99.213 issue price.

Among recently priced new issues, the trader saw Petro Stopping Centers LP's 9% senior secured notes due 2012 - which had priced at par back on Jan. 30 and which have since firmed solidly - having risen to 105 bid from prior levels around 104.5.

And he saw Ainsworth Lumber Co.'s 6¾% senior notes due 2014 at 102 bid, up from their par issue price on Feb. 27.

Tyco gains

Among the already established names, Tyco International Group SA's 6 3/8% notes due 2011 were up nearly two points to levels around 112.75. Perhaps coincidentally - or perhaps not - the Bermuda-based industrial conglomerate was in the news Friday, as the Manhattan judge hearing the criminal case against former Tyco chief executive officer L. Dennis Kozlowski and former chief financial officer Mark Swartz threw out the top charge against the two men, that of enterprise corruption, which carries a sentence of up to 25 years in prison. But he left intact the rest of the 33-count indictment, which alleges that Kozlowski and Swartz systematically looted the company of as much as $600 million, a charge which both men denied.

Elsewhere, El Paso Corp. bonds were seen having moved higher, helped perhaps by the news that the Houston-based energy operator had closed on the sale of its Aruba refinery and related bunkering and marketing affiliates to Valero Energy Corp.

El Paso will realize $627 million from the transaction - $465 million cash value of the facility plus $162 million for working capital as of the closing date.

In connection with closing, El Paso retired a $366 million lease financing associated with the refinery.

El Paso is in the midst of a campaign to shed underperforming or non-core assets and use the proceeds of such sales to reduce its debt load, hoping to trim its total debt obligations, net of cash, down to about $15 billion by year-end 2005.

So far, El Paso has announced or closed $2.9 billion of the $3.3 billion to $3.9 billion of asset sales targeted under the plan.

Levi Strauss & Co., whose bonds have recently been firming off the lows they hit earlier in the week after the release of disappointing earnings numbers, continued their rise on Friday.

The San Francisco-based blue-jeans maker's three series of outstanding bonds were all quoted in the 75-76 bid area, up from prior levels in a 72-73 context.

But some issues were quiet, even with news - or at least what some people though might be news - out on them.

Sirius Satellite Radio Inc. was the third-most the most active Nasdaq stocks Friday, with almost 79 million shares traded, although its shares actually only gained six cents (2.01%) to $3.05; its bonds were unmoved, with the 14% notes due 2009 holding steady at 108 bid.

During the session, investor bulletin boards crackled with the hot rumor that top-rated shock jock Howard Stern might take his show to the fledgling satellite broadcast operator as a way of getting around the Federal Communications Commission's recently stepped-up scrutiny of the content of over-the-air broadcast programming.

Stern was angered this past week when the nation's largest operator of conventional broadcast stations, Clear Channel Communications Inc., pulled his show from its stations in six of the 40 U.S. markets to which the show is syndicated, including San Diego and Pittsburgh, citing allegedly offensive content.

"Secondaries were quiet," said a trader, adding that following the release of the weak employment number by the Labor Department (non-farm payrolls rose by just 21,000 jobs in February, down from the 97,000 recorded in January and well off the 125,000-job pace the analysts had been expecting), the Treasury market rallied smartly, with the 10-year government bond quoted up 1 14/32, as the yield dipped to 3.838%.

"I would have thought that our market would trade a lot better," he ventured. "It traded up in the morning, but was sort of offered in the afternoon."

The trader said that "there weren't a lot of customers cashing the market higher - there just didn't seem to be all that much interest. It was sort of a yawn - nobody cared."

Commenting on the $135 million high yield mutual fund inflow number reported late Thursday by AMG Data Services of Arcata, Calif., he called it "a sort of paltry number, relatively speaking. It seems kind of flat," especially when compared with the flow numbers - positive or negative - the market has grown accustomed to. The flow numbers are seen by many in the market as a reliable barometer of overall junk market liquidity trends.

While he saw the market "definitely higher" in terms of overall tone and quote levels, "we didn't have customers coming in and looking for paper."

If anything, he said, "there were a couple of decent-sized bid lists going around, in a couple of different spots."

However, he pointed out that "any time there's a big spread move like this, people look to unwind positions - so we saw a little of that [Friday]. "

The Treasury gains helped push the bonds of companies in interest-rate sensitive industries, such as real estate and homebuilding, higher.

"That stuff all tightened - it was all up a point or so." But he added that "it wasn't like a feeding frenzy type of move - it was more of a marking-them-higher kind of thing," with the bonds "better offered at higher levels."

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