Sprint bonds trade actively; Trump holds gains; Standard Pacific again firmer; domestic primary quiet

By Paul Deckelman and Paul A. Harris

New York, May 30 - Sprint Nextel Corp.'s bonds and those of its Sprint Capital affiliate, were seen actively trading around on Friday, despite a lack of fresh news about the Overland Park, Kan.-based wireless service provider that might explain investors' interest in the credit.

Trump Entertainment Resorts Holdings LP's bonds - fresh from the big gains they notched on Thursday on the news of a major asset sale - were seen continuing to trade roughly around the levels to which they had jumped on Thursday. Here too, activity was particularly heavy. Sector peer Greektown Holdings LLC's bonds were seen "all over the place" at sharply lower levels after the gaming company's descent into Chapter 11.

And traders saw continued strength in Standard Pacific Corp., whose bonds have been on a tear all during the week, helped by last Tuesday's news that the Irvine, Calif.-based homebuilder had lined up sizable new financing.

In the primary sphere, not much was going on among domestic issuers. European energy operator Petrolia Drilling ASA was heard to have done a Norwegian krone-denominated deal.

New Symbion deal unseen in the market

Several traders meantime said that they had not seen any trace whatsoever of the new Symbion Inc. issue of seven-year PIK toggle notes, which priced on Thursday at a considerably steep discount to par in order to get the deal done.

One opined that "obviously, to price it at such a huge discount" - the 11% bonds priced at 75, in order to offer potential buyers a whopping 17.16% yield - is a sign that the issuer "had a hard time placing it." At that kind of level, he said, "my speculation is that there were very few players or accounts willing to take on the paper." Accordingly, with fewer buyers for the deal, "maybe that's why we're not seeing any aftermarket."

Other traders also mentioned the offering's smallish size - $179 million - and its status as a Rule 144A placement as factors preventing the emergence of any aftermarket interest.

Among recently priced issues, a market source saw Kansas City Southern Railway Co.'s notes due 2015 as being fairly busily traded at around the 100.75 bid area - up a little from 100.375 on Thursday, and up further still from the par price at which the transportation operator's $275 million of bonds priced this past Tuesday.

Market indicators trend better

A trader said the widely followed CDX junk bond performance index was up ¼ point, quoting it at 97 bid, 97½ offered. The KDP High Yield Daily Index meantime was unchanged at 75.66, while its yield held steady at 9.30%.

In the broader market, advancing issues broke out of their recent funk and overtook decliners, leading them by about a nine-to-seven margin. Activity, represented by dollar volume levels, fell nearly 33% from Thursday's levels.

"There was not much to say" about the session, the trader said. "It was pretty dead all day." Outside of selected issues, "it was very quiet."

Another trader called the session "more quiet than your typical Friday. It felt more like a Friday before a three-day weekend" such as the market had seen the week before, heading into the May 23-26 Memorial Day break.

"There were a few names with a lot of trading in them," yet a third trader said, "but the rest [of the market] was mostly hit and miss."

Sprint trades actively on no news

The busiest name that he saw was Sprint.

"We heard there was a lot of trading" in the credit, "though there was nothing cooking in the news" that might explain the market's apparent fascination with the telecom company. He noted, for instance that the company's 6% notes due 2016 "were up a little bit - but there's like two pages of trading on Trace [the bond-tracking system], sizable trades," in the 82-83 area, which he called up ½ point. It seemed to him that "many more bonds are trading than a ½ point [gain] would account for." Some of the trades, he said, were "$5 million bond lots, or larger."

He likewise saw the fairly actively traded 8 3/8 notes due 2012 rack up "2½ pages of trades on Trace," while also rising about ½ point to 97.5 bid, 98 offered. "So they're trading just a little bit better than they were [Thursday] - but a lot of bonds are changing hands."

Indeed, a market source estimated late in the afternoon that there had been at least $115 million of the Sprint 6s traded - nearly double the volume of the next busiest issue, which was the Trump Entertainment 8½% notes due 2015.

"Wow!" said yet another trader who saw the volume figures on that issue, "they were really active" - and the activity was all the more notable, he said, for having come "on a day like today," meaning an otherwise fairly sleepy Friday afternoon with many market participants in New York and other Northeastern business centers deciding to take advantage of the splendid weather and make an early exit.

He also saw the 6% bonds up "½ point or so" at 82.5 bid, 83 offered, while pegging the Sprit 6 3/8% notes due 2009 better by ½ point at 99.875 bid. Like the first trader, he saw no news items that might shed some light on the market interest in the credit.

There was "high volume on the day," agreed yet another trader, who saw the 6s going out ½ point better at 82.5 bid, 83.5 offered, while Sprint's 5.95% notes due 2014 were a point better at 77 bid, 78.5 offered.

A market source who saw Sprint or the old bonds of Nextel Communications Inc. - now a part of Sprint Nextel - dominating the list of the Top Ten most actives, with six out of the 10 positions, at the same time saw those bonds either unchanged or up or down 1/8 point, with the exception of the Sprint Capital 6 7/8% bonds due 2028, which were quoted up 1 point at just above 80 bid.

There meantime seemed to be no unusual activity in Sprint Nextel's New York Stock Exchange-traded shares, which rose 10 cents, or 1.08%, to $9.36. In fact, Friday's volume of 18.6 million shares was less than half of the average daily turnover of about 40 million shares in the name.

Trump holds its gains

Elsewhere, a trader saw Trump Entertainment's 8½% notes due 2015 "stay firm" within ¼ point of 68, which he saw as the high tick on the day, up a bit from Thursday's levels around 67-67.5. As with Sprint, he said there were "a lot of trades," with most of them taking place around the 68 level.

Another trader saw those bonds at 67 bid, 68 offered, around the level to which they had jumped on Thursday on news that the Atlantic City, N.J.-based gaming operator had agreed to sell its Trump Marina hotel and casino for $316 million, culminating a long search for a buyer of one or more of its three hotel-casino resorts in the seaside Jersey gambling capital.

He said that "a lot of size traded," although he added that while there was in fact "a lot of activity," the bonds "didn't go anywhere" much than where they had finished on Thursday. He said that 67-68 was the range in which most of the big trades took place.

Yet another trader saw the Trump bonds go to 68-68.5 intraday, but saw them end unchanged at 67 bid, 68 offered.

Trump and the prospective buyer, Coastal Development LLC, jointly announced the sale of the 27-story, 728-room hotel and casino property on Thursday morning, causing the bonds to soar into the upper 60s from prior levels around 58-59, on very heavy trading, with well over $150 million of the $1.25 billion issue having traded that session.

In announcing the transaction, Trump's chief executive officer Mark Juliano said that the deal "will provide us with additional financial flexibility to effectively master plan the future path of our company, and said that it would "closely" evaluate its options, which could include reducing the company's heavy debt load, which by some estimates tops $3 billion, or could include "additional development in Atlantic City . . . [or] potential projects to diversify our interests outside of Atlantic City."

The first trader said that from where he sat, the top priority for Trump should be "fixing up their [remaining] Boardwalk casinos" in order to remain competitive. Besides the Marina, the company has the Trump Plaza and Trump Taj Mahal casinos on the Boardwalk - seen by many industry observers as aging, 1980s-era facilities needing a facelift. He said this is especially true if Coastal makes good on its plans to invest substantially in the Marina and make it over in a "Margaritaville" theme of the idyllic tropical paradise depicted in the classic Jimmy Buffett song of the same name. In fact, Buffett has parlayed that well-known hit into a growing business empire that includes developing restaurants and casinos, and his company will be working with Coastal on overhauling the Marina.

With that kind of development going on, "if [Coastal and Buffett] do a class job on it" - and with the influence exerted by the Marina's nearby neighbor, the glitzy Borgata, opened just a couple of years ago by Boyd Gaming Inc. and MGM Mirage and believed to be the largest and most profitable of the New Jersey city's dozen casinos - "the old Boardwalk casinos that need to be refurbished" like the Plaza and the Taj Mahal will face increased competitive pressure. All of this comes at a time when Atlantic City itself is under competitive assault from the opening of "racinos" - slot-machine equipped racetracks - in nearby Pennsylvania, Delaware and New York.

Greektown takes a tumble, FireKeepers down

In that same gaming sector, a trader said that Greektown Holdings' 10¾% notes due 2013 were "all over the place" on news of the Detroit casino company's Chapter 11 filing.

He said that he heard them down 20 points on the day to a wide 62 bid, 75 offered, but saw the company's bank debt up 4 to 5 points on the day at 92 bid, 95 offered. Later, he saw the bonds at 64 bid, 70 offered, but opined that no one knew "where they are now. They were in the 90s and now the 60-70s, so that's ugly."

Another trader saw Greektown's bonds at 67 bid, 69 offered, and said he heard they were down 20 points after the filing.

One of the traders further said that he saw the FireKeepers Development Authority 13 7/8% notes due 2015, which priced at 96 on April 22 but which then moved smartly up from that point to levels ultimately above par, come down about a point on Friday to par bid, 101 offered. He speculated whether it was "down in sympathy with Greektown," since the tribal gaming authority is also building a casino in southern Michigan.

Standard Pacific keeps gaining

A trader said that Standard Pacific's bonds - which have been rising all week on the news of a major equity infusion - again were "feeling better" on Friday.

He saw its longer-dated paper, like the 6¼% notes due 2014 and the 7% notes due 2015, at 80.5 bid, 81.5 offered.

The shorter-dated issues, meantime "feel really good," he said, quoting the 6½% notes due 2010 at 91 bid, 92 offered and the 5 1/8% notes due 2009 at 96 bid, 97 offered, "so they're all up huge points on the week."

Another trader saw its 9¼% notes due 2012 up a point on the session to 78 bid, 80 offered.

Standard Pacific announced on Tuesday that MatlinPatterson had agreed to invest $530 million in the homebuilder. MatlinPatterson's affiliates will receive $381 million in preferred stock convertible into 125 million shares of common stock at a price of $3.05 per share. MatlinPatterson will also exchange about $128.5 million of senior and subordinated debt it holds for warrants to purchase additional preferred stock that is convertible to 89.4 million shares at a price of $4.10 per share. Further, Standard Pacific is issuing an additional 50 million shares of common stock at a price of $3.05 per share to raise $152.5 million more. MatlinPatterson will backstop the deal, purchasing any unsold shares. The New York-based private equity firm will also name three members to an expanded 11-member Standard Pacific board of directors.

In other housing names, a trader saw "modest trading" in Hovnanian Enterprises Inc.'s 7½% notes due 2016, but "not many trades."

Countrywide climb continues

A trader saw Countrywide Financial Corp.'s 6¼% notes due 2016 at 87 bid, 88 offered, which he called up "6 or 7 points on the day" from prior levels around the low 80s, although other traders had actually seen the bonds in the middle 80s on Thursday.

Another saw the bonds up a point or so to that level.

He said that there was "good-size trading" in Countrywide, apparently encouraged by investor optimism that the Calabasas, Calif.-based mortgage provider will indeed be acquired by Bank of America in a $4 billion deal as scheduled; some in the market had worried that the banking giant might try to renegotiate the deal terms downward or even back out of it entirely in response to recent revelations of losses at Countrywide and amid the continued troubles of the mortgage industry.

Primary quiet

The high yield primary market failed to generate any news on Friday.

Hence the four-session post-Memorial Day week came to a close having seen $1.6 billion of new issuance in five tranches of junk.

The week's biggest deal from a U.S. issuer came from CSC Holdings, Inc., a subsidiary of Cablevision Systems Corp.

The company priced a $500 million issue of seven-year senior notes (B1/BB) at par to yield 8½% on Wednesday, at the wide end of the 8 3/8% area price talk.

Banc of America Securities, Merrill Lynch, Citigroup and JP Morgan were joint bookrunners.

Also issuing half a billion of dollar-denominated Rule 144A high-yield notes was Brazil's Braskem SA, which priced its 7¼% senior unsecured bonds due 2018 (Ba1/BB+) at 99.127 to yield 7 3/8% via ABN Amro, Calyon Securities and Citigroup.

The week's smallest deal emanated from the backlog of hung LBO-related bridge loans.

Symbion Inc. priced a $179.93 million face amount of 11% senior PIK toggle notes due Aug. 1, 2015 (Caa1/CCC+) at 75.00 to yield 17.16% on Thursday, coming to market via Merrill Lynch and Banc of America Securities.

Of the 17 weeks that are now in the book for the year of 2008, the four-day post-Memorial Day week was the 10th to see issuance topping $1 billion.

And although the $33.11 billion of year-to-date issuance, at Friday's close, represents a paltry amount when reckoned against totals generated during 2007, and during the record-setting year of 2006 (which had seen just over $54 billion of new issues by the May 30 close) there was some positive news late in the post-Memorial Day week.

For the first time since a period ending in late January 2004, high yield mutual funds have seen nine consecutive weeks of positive flows, the latest being a meager $25.6 million flow reported Thursday by AMG data services.

Meanwhile, as the week came to an end there were no deals on the forward calendar.

However during the sessions trailing the Memorial Day recess high-yield syndicate sources reported having visibility on potential corporate issuance in the week ahead.

As is customary, however, those sources declined to volunteer any names.

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