Iron Mountain prices; secondary becalmed; GM moves up; Remy recovers

By Paul Deckelman and Paul A. Harris

New York, March 9 - Iron Mountain Nova Scotia Funding Co. priced a C$175 million issue of 10-year senior subordinated notes on the wide end of price talk Friday, the only one transaction completed in the new issue market during the final day of the March 5 to March 9 week.

Traders did not see the bonds moving around in aftermarket dealings on a relatively quiet day.

Elsewhere in the primary sphere, ethanol producer Aventine Renewable Energies Inc. was heard getting ready to hit the road Tuesday to market its proposed $300 million offering of 10-year notes.

And business services provider MSX International Inc. was in the market with a $200 million offering of five-year bonds.

In the secondary market, General Motors Corp.'s benchmark bonds were seen solidly higher, in line with the Detroit giant's announcement that it anticipates reporting its first quarterly profit in two years when it posts its fourth-quarter and full-year results. Bonds of GM's still 49%-owned financing affiliate GMAC LLC were also generally higher in very active trading.

Remy International Inc.'s bonds, which had fallen all week as bankruptcy buzz swirled around the automotive systems maker, were seen having bounced off those lows on Friday.

Overall, sources said that the broad high-yield market continued to strengthen during the Friday session.

At the close, a high yield syndicate official said that junk was unchanged to slightly higher on the day.

Iron Mountain places C$175 million

Friday's sole junk issuer was Iron Mountain Nova Scotia Funding Co., a wholly owned subsidiary of Boston-based data storage company Iron Mountain Inc.

The company priced a restructured C$175 million issue of 10-year senior subordinated notes (B3/B) at par to yield 7½%, at the wide end of the 7 3/8% area price talk.

The tenor of the notes was decreased by two years to March 15, 2017 from a planned 2019 maturity.

Bear Stearns, Banc of America Securities LLC, JP Morgan, Lehman Brothers and Scotia Capital were joint bookrunners for the debt refinancing.

Week's issuance $1.9 billion

With no dollar-denominated issues pricing during the Friday session, the week's total issuance came to slightly more than $1.9 billion in five tranches.

Of the nine weeks of 2007 that are now in the books, and which saw any issuance whatsoever, it was the second lowest total weekly amount thus far in the year.

Only the Jan. 8 through Jan. 12 week saw a lower total: slightly more than $1.8 billion in four tranches.

The most recent week ended with $31.5 billion of year-to-date new dollar-denominated high yield issuance in 91 tranches.

Hence 2007 issuance remains well ahead of the pace of the record-breaking year of 2006, which had seen $23.7 billion in 61 tranches by the March 9 close.

Aventine launches $300 million

Illinois-based ethanol company Aventine Renewable Energy Holdings, Inc. will begin a roadshow on Tuesday for its $300 million offering of 10-year senior notes.

JP Morgan, Goldman Sachs & Co. and UBS Investment Bank are joint bookrunners for the deal, proceeds from which will be used to fund a portion of the company's capacity expansion plans.

Freeport - the biggest deal

Late Friday one primary market source told Prospect News that the market appeared to have regained its footing in the wake of a sell-off that accompanied a downturn in world equity markets which began on Feb. 27.

Should that indeed be the case, it will no doubt come as welcome news to Freeport McMoRan Copper & Gold Inc. which is now on the road with what market sources are describing as the biggest junk deal ever: a $6 billion two-part offering of senior notes (B2/B+) via JP Morgan and Merrill Lynch.

The acquistion deal is comprised of tranches of eight-year notes and 10-year notes, sizes to be determined.

Pricing is set for the week ahead.

One source noted that if Freeport MacMoRan is completed at its announced size it will top Firestone Acquisition Corp. (Freescale Semiconductor Inc.)'s $5.95 billion four-part high yield bond transaction, priced last November, by $50 million.

The week ahead

In addition to Freeport MacMoRan, terms are expected on the following transactions before the Friday close:

• Hawker Beechcraft Corp.'s $1.2 billion in four tranches via Goldman Sachs, Credit Suisse, Citigroup and Lehman Brothers;

• Belden CDT, Inc.'s $350 million 10-year notes (Ba2/BB-) via Wachovia Securities;

• General Cable Corp.'s $325 million senior notes in two tranches (B1/B+) via Goldman Sachs; and

• Centene Corp.'s $175 million offering of seven-year senior notes (Ba3/BB) via Banc of America Securities.

GM jumps on anticipated profit

Back among the established bonds, the standout performer Friday among the most actively traded issues was GM, whose benchmark 8 3/8% notes gyrated wildly within a 6 point range before finishing near the top end of that range at 95.75, up 2½ points on the session.

The giant carmaker announced that it expects to post a fourth-quarter profit - its first quarterly gain in two years. That will stand in marked contrast to the $3 billion of red ink which it racked up in the first three quarters of 2006.

Analysts attribute the company's recently improving financial performance to the effects of cost-cutting, including its elimination of over 34,000 hourly jobs through early retirement and buyout offers, as well as its efforts to globalize its product engineering and design. They estimate that all of those measures will save the company $9 billion on an annual basis.

GM-linked bonds which moved up slightly, also in busy trading included GMAC's widely followed 8% notes due 2031, which ended just below 111, and its 6 7/8% notes due 2011, which ended around 101.5. The financing company's 6¾% notes due 2014 were down slightly at 100.125.

GM arch-rival Ford Motor Co.'s signature issue, its 7.45% notes due 2031, were down ¼ point to around 80 bid, after having touched heights at 84 during the session.

Rumor-ridden Remy rebounds

Remy International's bonds, after having fallen for several straight sessions on market fears that the Anderson, Ill.-based automotive electrical systems maker might be headed for bankruptcy, were seen on the upside on Friday.

A trader quoted its Delco Remy 8 5/8% senior notes due 2007 unchanged at 73 bid, 75 offered, and saw upside movement in its two other issues - the subordinated 11% notes due 2009 were up 2 points at 17 bid, 19 offered, and its 9 3/8% subs due 2012 jumped 3 points to 17 bid, 18 offered.

He said the gains were "probably due to short covering - but who knows?"

Another trader saw the company's bonds up 2 points across the board, pegging the 11s at 17 bid, 18 offered and the 8 5/8s at 73.5 bid, 74.5 offered.

Not much going on

Outside of the autosphere, a trader said that Friday's junk market was "extremely quiet - I mean, really dead." he said that "things ended really early, as people made an early beginning to a long weekend."

"Not a lot," was happening, said yet another trader, who indicated that what activity taking place was largely in the volatile distressed precincts.

Fedders seen steady after crazy week

Traders saw Fedders Corp.'s 9 7/8% notes due 2014 unchanged around 55 bid, after a volatile week which saw them gyrate from lows in the lower 50s, trading flat, or without their accrued interest, after it became apparent that the Liberty Corner, N.J.-based air quality products producer had not made its March 1 coupon interest payment but had instead invoked the grace period provision, to highs in the lower 60s on the news that it had lined up new financing from a Goldman Sachs affiliate.

Tembec seen tumbling

A trader said the only other real movement was in Tembec Inc., whose bonds were down about a point across the board, after having firmed the previous couple of sessions. The Canadian forest product company's 8 5/8% notes due 2009 were a point lower at 81 bid, 82 offered, while its 8½% notes due 2011 were off more than 2 points on the day to 71 bid.

Another trader saw the 8 5/8s off 2 points at 80 bid, 81 offered.

Among other issues, Northwest Airlines' 10% notes due 2009 lost a point to 86 bid, 87 offered.

Movie Gallery Inc.'s 11% notes due 2012 were unchanged at around the 91 level, hanging on to the gains they notched earlier in the week on the news that the Dothan, Ala.-based video rental store chain operator had bought the MovieBeam Inc. home-video delivery system, marking its belated entrance into the burgeoning online and home-delivery segment of the video rental market, well after such rivals as Blockbuster Inc. had moved in.

MagnaChip comes back, a little

MagnaChip Semiconductor Ltd. - whose bonds had been beaten down over the several previous sessions - "regained its composure," a trader said.

The South Korean computer chip maker's 8% notes due 2014 were seen up 1½ points at 68.5 bid, 69.5 offered.

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