Lender Processing prices deal; autos off as analysts issue warnings; Thornburg unchanged despite troubles

By Paul Deckelman and Paul A. Harris

New York, June 18 - Lender Processing Services Inc. successfully priced a somewhat downsized and restructured issue of eight-year notes during Wednesday's session.

High yield syndicate sources said that Susser Holdings LLC also did a deal, a small add-on to its existing issue of 2013 bonds.

Meanwhile, price talk emerged on Expedia Inc.'s upcoming issue of eight-year senior notes.

In the secondary market, General Motors Corp.'s paper, and that of domestic arch-rival Ford Motor Co., and their respective financing arms, were seen lower, as several analysts put out bearish opinions on the struggling car business.

After several days of upside, Boyd Gaming Corp.'s bonds seemed to top out and gave back some of their recent advance.

And traders saw little real movement in the bonds of Thornburg Mortgage Inc. - even though the Santa Fe., N.M.-based mortgage lender said in a regulatory filing that its ability to stay in business was in doubt.

A buy-side source said that the broad high-yield market was probably off a little on Wednesday, given the move in equities.

All three U.S. stock indexes sustained losses in the one-percent range.

"It didn't really seem that bad," the buy-sider said of the mid-week junk market - although that was not an unanimous view among high-yield players.

"It's pretty quiet, maybe because it's summer."

This buy-sider commented that the news coming out of the financial sector, in particular a report from Goldman Sachs predicting that banks are going to have to raise an additional $65 billion in order to cover writedowns, is pretty ugly.

"It's going to get a lot worse before it gets better because all of these guys have to raise capital," the buy-sider said.

"Every bank that has raised capital in the past month or two is under water.

"You have to question whether people are going to continue to throw good money after bad.

"And if they don't, what are these banks going to do?"

The buy-sider also noted late-breaking news of Hexion Specialty Chemicals, Inc. suing to cancel its acquisition of Huntsman Corp., anticipating that the debt financing from the underwriters will fall apart, had Huntsman bonds trading off 10 points.

Meanwhile a high-yield syndicate source proffered both good news and bad news: high yield mutual funds have seen 11 consecutive weeks of inflows, the banker said, but added that the people making decisions about capital allocations seem recently to be pulling back a little.

Lender Processing at tight end

Two deals priced in the Wednesday primary market, as a pair of issuers raised a combined total of slightly less than $406 million of proceeds.

Lender Processing Services priced a downsized, restructured $375 million issue of eight-year senior notes (Ba2/BB+) at par to yield 8 1/8%.

The yield was printed at the tight end of the 8¼% area price talk.

The bond issue was downsized from $400 million with $25 million being shifted to the company's term loan B which was upsized to $510 million from $485 million.

Meanwhile the call protection on the notes was decreased to three years from four years. The notes will become callable on July 1, 2011 at 106.094.

JP Morgan, Banc of America Securities LLC and Wachovia Securities were joint bookrunners for the spin-off deal.

A source from a high-yield mutual fund said that the deal played to $3 billion of orders.

This source liked the 20% yearly amortization on the company's upsized $510 million term loan B.

"That's pretty significant deleveraging," the buy-sider commented.

While the Lender Processing bond deal came at the tight end of talk, the term loan is blowing right through the original talk. Prospect News learned on Wednesday that the loan reverse flexed to Libor plus 250 basis points from initial guidance of Libor plus 275 bps to 300 bps, and the original issue discount on the term loan B was tightened to 99 from 981/2.

The $510 million term loan is four-times oversubscribed.

The new Lender Processing Services 8 1/8% notes due 2013 appeared too late in the session for any kind of meaningful aftermarket action.

Susser prices $30 million tap

Elsewhere on Wednesday Susser Holdings, LLC priced a $30 million add-on to its 10 5/8% senior notes due Dec. 15, 2013 (B2/B) at 102.00 to yield 10.139%.

Banc of America Securities LLC ran the books for the quick-to-market notes sale, proceeds from which will be used to pay down the company's revolver.

The original $170 million priced at par on Dec. 15, 2005, hence the company accomplished savings of nearly half a percent point on its interest expenses with Wednesday's tap.

An informed source said that the new notes went to a handful of accounts.

Expedia sets talk

Expedia Inc. set price talk for its $500 million offering of eight-year senior unsecured notes (Ba2/BB) at the 8½% area on Wednesday.

JP Morgan and Banc of America Securities are joint bookrunners for the debt refinancing and general corporate purposes deal, which is expected to price on Thursday afternoon.

Market indicators head south

A trader said that the widely followed CDX junk bond performance index was down about ½ point on the session Wednesday, quoting it at 95 7/8 bid, 96¼ offered. The KDP High Yield Daily Index meantime fell 14 bps to 74.90, while its yield widened 4 bps to 9.56%.

In the broader market, advancing issues trailed decliners by a more than five-to-four margin. Activity, represented by dollar volume levels, was off 24% from Tuesday's levels.

A trader said that there was "not much new" in Wednesday's dealings. "The market was down, on very little activity.

Another trader concurred that "certainly there was a negative tone - no doubt about that."

GM, Ford drive lower

The autosphere was a particular sore spot, after analysts for J.P. Morgan Chase & Co. and Deutsche Bank separately each issued bearish pronouncements on the prospects for the troubled industry.

A trader saw GM's benchmark 8 3/8% bonds due 2033 down a point at 68 bid, 69 offered, while seeing GM's 49% owned financing arm, GMAC LLC's 8% bonds due 2031 off 1½ points at 73 bid.

A market source saw the GM benchmarks fall almost 3½ points to hit the 67 mark, in very active trading. The source also saw Ford's consumer financing arm, Ford Motor Credit Co.'s 12% notes due 2015 down some 2 ½ points, likewise in active trading, around the 97 bid level.

At another desk, the GM 8 3/8s were seen down almost 1¾ points to just below the 69 region.

Yet another source saw the GM 7 1/8% notes due 2013 down a point at 75 bid, while GMAC's 6 7/8% notes due 2012 lost ½ point to end below the 80 mark. Ford Credit's 7% notes due 2013 were down almost a point at 81.

The GM and Ford paper fell, along with the two carmakers' shares and those of other automotive-related names, on bearish analyst commentary by, among others, Deutsche Bank's Rod Lache, who cut his 2008 U.S. light vehicle sales prediction to 14.5 million vehicles from 14.9 million previously, while also lowering his estimates for 2009 and 2010.

Besides cutting his industry output estimates, the analyst also lowered his earnings estimates for the next three fiscal years for both GM and Ford.

Lache further said that if it is to even try to turn things around, GM will have to put in place an "aggressive" restructuring plan that would see the Detroit giant reduce the eight nameplates under which it currently sells vehicles. He also said that GM's domestic market share - already languishing at around 20% - might fall further still.

Boyd moves lower

Elsewhere, a trader saw Boyd Gaming's bonds lower after their recent M&A speculation-fueled run-up. He saw its 7¾% notes due 2012 down ½ point at 91.75 bid, while its 6¾% notes due 2014 lost ¾ point at 83.75 and its 7 1/8% notes due 2016 were down a point on the day at 79 bid.

"Clearly, the [whole] capital structure is lower," he said.

Another market source saw Boyd's 73/4s down nearly a full point at 91.5, while its 7 1/8s were 1½ points lower at 79.

The Las Vegas-based casino operator, which runs gaming palaces in that city and elsewhere in Nevada, in Atlantic City, N.J. and in Mississippi and other "riverboat gaming" jurisdictions, had been given a boost over the previous several sessions by speculation that having been beaten down along with the rest of the gaming sector, Boyd could be an attractive takeover target. But there was no firm news that the company was actually in talks with any potential acquirers.

Food names falter

A trader saw several food processor names lower, among them Tyson Foods Inc., whose bonds and shares fell after Fitch Ratings cut the Springdale, Ark.-based chicken, beef and pork processor's credit to BB+ from BBB- previously, saying the downgrade reflects its expectations that Tyson's credit statistics "will continue to deteriorate in the near term due to lower-than-anticipated operating earnings and cash flow."

He pegged Tyson's 8¼% notes due 2011 at 101 bid, "down a couple of points" from recent levels, while its 6.60% notes due 2016 were a point lower than recent levels at 96.

He also saw Tyson competitor Smithfield Foods Corp.'s 7¾% notes due 2013 at 93.25 bid, down from recent levels around 96. Its 7¾% notes due 2017 were ¾ point lower at 91 bid.

Thornburg steady despite problems

Thornburg Mortgage disclosed in its quarterly filing with the Securities and Exchange Commission that it was been the recipient of subpoenas from the regulatory agency regarding information it wants in an investigation, a probe with which the company is cooperating. As if that were not a bad news, its filing also contained a warning from management that the company's very survival could be at stake because of still-tough conditions in the residential mortgage industry.

Even so, a trader saw its 8% notes due 2013 actually firmer on the day despite the warning. He said there was "some activity" in the credit, with the bonds firming 2 points on the bid side to 71 bid, 73 offered, versus 69 bid, 73 offered on Tuesday.

Another trader saw the bonds go home at 73 on Tuesday and said they traded between 72 and 73.25 on Wednesday, finishing at 73.25 bid, "which is impressive," he said, given the company's well-publicized troubles and the fact that "it doesn't look like the homebuilders' situation [which impacts upon the mortgage industry] is going to get better anytime soon."

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