GM Financial drives by with $1.5 billion two-parter in otherwise quiet post-holiday session

By Paul Deckelman and Paul A. Harris

New York, July 7 – The junk bond market got back to work on Monday following the July 4th holiday break with one very big deal heard by syndicate source to have priced: a quickly shopped $1.5 billion two-part issue from General Motors Financial Co., Inc., the Fort Worth, Texas-based captive auto-finance arm of General Motors Co.

While secondary market traders did see some quotes after the megadeal priced, they noted that with the transaction having come off the investment-grade desks of the various underwriters despite its nominally high-yield ratings, and with the deal having priced to produce very tight and un-junk-like yields – below 3% on the three-year tranche and below 4% on the five-yield piece – they didn’t expect the deal to see much activity from traditional junk bond investors.

GM Financial was the only dollar-denominated, junk-rated deal to have priced Monday.

The syndicate sources said that one other such deal had been announced – a $1.185 billion two-part offering from Paragon Offshore Ltd., a provider of oil-drilling services. The eight-year-and 10-year notes were being shopped around to potential investors via a roadshow, with pricing seen at the end of the week.

There was also activity in the non-dollar market, including a pricing of a euro-denominated deal from Greek telecommunications provider OTE plc and a number of announcements of upcoming transactions.

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