Tenneco, Range Resources drive by; market awaits Mylan; Nuveen jumps; funds zoom $976.3 million

By Paul Deckelman and Paul A. Harris

New York, July 29 - Tenneco Inc., a Lake Forest, Ill.-based automotive component manufacturer, came to market on Thursday with a $225 million drive-by offering of eight-year bonds, which firmed by at least 1 point when they began trading around.

Also bringing in an opportunistically timed, quickly shopped offering was Range Resources Corp. The Fort Worth-based natural gas exploration and production company priced an upsized $500 million issue of 10-year senior subordinated notes.

Primaryside players meantime readied themselves for several deals announced on Thursday that are expected to price on Friday. Specialty pharmaceuticals maker Mylan, Inc. will be coming in with a $300 million fungible add-on to its 7 7/8% notes due 2020, which priced back in May. And Canadian agribusiness operator Viterra Inc. is expected to price a $300 million split-rated (Ba1/BBB-) tranche of 10-year notes.

Across the pond, price talk was heard on British credit provider International Personal Finance's €200 million of five-year notes, which are expected to price on Friday.

Away from the new-deal arena, Nuveen Investments Inc.'s bonds firmed smartly, and in heavy trading, on the news that the Chicago-based financial services company agreed to buy most of US Bancorp's FAF asset-management division in a cash-and-stock deal.

Great Atlantic & Pacific Tea Co.'s bonds were seen up by several points, in line with a big jump in its shares, although there seemed to be no specific fresh news out about the supermarket chain, whose bonds were battered down last week on bad earnings data.

Junk funds gain $976.3 million

And as things were wrapping up for the day, participants familiar with the Lipper FMI weekly high-yield mutual fund-flow numbers compiled by AMG Data Services of Arcata, Calif. - considered a reliable barometer of overall junk market liquidity trends - said that in the week ended Wednesday, $976.3 million more came into those funds than left them.

It was the third big inflow in as many weeks, following on the heels of the $700.64 million cash injection seen the previous week ended July 21 and the massive $1.275 billion infusion seen the week ended July 14 - the latter being one of the largest inflows ever on record. Those inflows, totaling $2.952 billion according to a Prospect News analysis of the figures provided by market sources, broke a two-week losing streak in late June and early July during which a total of $498.443 million more had left the funds than came into them.

The three big inflows would seem to have put junk liquidity back on a firmly positive track; after strong gains over the first four months of the year, including one 10-week stretch that saw some $4.44 billion of inflows, according to the Prospect News analysis, the weeks that followed have seen a more inconsistent pattern, with several weeks of inflows followed by several weeks of outflows.

With 2010 past the halfway mark, inflows have now been seen in 19 weeks out of the 30 since the beginning of the year, while there have been 11 outflows.

The inflow in the latest week raised the year-to-date cumulative total for the weekly reporting funds to $3.639 billion, according to the analysis of the data, versus the $2.663 billion 2010 net inflow recorded the previous week. The funds hit their biggest year-to-date negative number for the year so far in the week ended June 9, with a cumulative deficit of $475 million, while their peak cumulative inflow total for the year was the $4.086 billion recorded in the week ended April 28.

EPFR sees $1.07 billion inflow

Another fund-tracking service - Cambridge, Mass.-based EPFR Global, whose methodology differs somewhat from AMG - meantime reported a $1.07 billion inflow in the latest week, building on the previous two cash additions of $948 million last week and the $1.2 billion cash addition seen the week before that.

EPFR's analysts said in a research note Thursday night that it was the sixth inflow in seven weeks, and it reflected market perceptions of late that recent economic data supports predictions that U.S. interest rates will not start to climb until the first half of next year, which has led to major inflows to both the high-yield bond funds and emerging-markets bond funds.

Reflecting the difference between the ways AMG and EPFR calculate their respective fund-flow totals - EPFR includes results from some non-U.S. domiciled funds as well as the domestic funds - the service's year-to-date net inflow total now stands at $7.056 billion. That's up from last week's $5.986 billion though still well below the peak inflow level of about $8.59 billion seen at the beginning of May after 10 straight weeks of inflows starting in late February.

Any and all cumulative fund-flow totals, whether for AMG or EPFR, can include unannounced revisions and adjustments to figures from prior weeks.

Range Resources upsizes

A pair of junk issuers did drive-by deals on Thursday. Each priced a single tranche, bringing the session's total issuance to $725 million.

Range Resources priced an upsized $500 million issue of 10-year senior subordinated notes (Ba3/BB) at par to yield 6¾%.

The yield printed at the tight end of the 6¾% to 7% price talk.

J.P. Morgan Securities Inc., Bank of America Merrill Lynch and Wells Fargo Securities were the joint bookrunners for the debt-refinancing deal, which was upsized from $350 million.

The deal went very well, according to a syndicate source.

Tenneco prices at tight end

Elsewhere on Thursday, Tenneco priced a $225 million issue of eight-year senior notes (Ba3/B) at par to yield 7¾%.

The yield came in at the tight end of the 7¾% to 7 7/8% price talk.

Deutsche Bank, Citigroup, Morgan Stanley, RBS Securities and Wells Fargo Securities were the joint bookrunners for the quick-to-market sale.

Proceeds will be used to redeem the company's 10¼% secured notes due 2013 on Sept. 3 at the 101.708 call price.

Mylan to add on

Meanwhile, Mylan will host an investor call at 10:30 a.m. ET on Friday for a $300 million fungible add-on to its 7 7/8% senior unsecured notes due July 15, 2020 (existing ratings B1/BB-).

The Rule 144A-for-life deal, via sole bookrunner Goldman, Sachs & Co., is expected to price later on Friday.

Proceeds will be used to fund the pending acquisition of Bioniche Pharma Group Ltd., an Ireland-based manufacturer of injectable pharmaceutical products.

Should the acquisition not be consummated, the proceeds would be used for general corporate purposes, which may include debt repayment.

The original $700 million issue priced at 99.97 to yield 7 7/8% on May 12.

International Personal Finance talks

International Personal Finance talked its €200 million offering of five-year non-callable senior unsecured notes (//BB+) with a yield in the 11¼% area.

The Regulation S deal, in the market via bookrunners Citigroup and HSBC, is expected to price on Friday.

The deal was pre-marketed in April with guidance of 10% to 10½%, the source added.

The prospective issuer is a Leeds, England-based international home credit business, with operations in Poland, Hungary, Romania, Czech Republic, Slovakia and Mexico.

Tenneco trades up

When the new Tenneco 7¾% notes due 2018 were freed for aftermarket activity, a trader saw the bonds immediately move up by around ½ to ¾ point from the par issue price for the $225 million issue.

A second trader later on saw those bonds trading around 101 bid, 102 offered.

However, a market source saw the company's existing 10¼% notes due 2013 - the issue that is to be taken out using the proceeds of the new bond deal - down slightly to 102¼ bid.

Range Resources holds steady

A trader saw the new Range Resources 6¾% senior subordinated notes due 2020 trading at par bid, 101 offered, unmoved from the upsized $500 million issue's pricing level.

Ford Credit firmer

A trader said the most definite feature of Thursday's market that he saw was the brisk trading in the new Ford Motor Credit Co. 6 5/8% notes due 2017, which priced on Wednesday at 98.485 to yield 6.90%.

"It was very active today," he said of the $1.25 billion offering from Ford Credit, the auto-finance arm of Dearborn, Mich.-based No. 2 domestic carmaker Ford Motor Co.

He saw the new notes "wrapped around 99 to 99¼ in trading. There was very heavy volume, up ¼ to ¾ point."

Apart from the Ford bonds, he said, it was pretty quiet. "Ford was the definite focus."

A market source at another desk meantime saw heavy trading in Ford Credit's established 7½% notes due 2012, estimating those bonds up nearly 2 points on the day at 106½ bid, on mid-afternoon volume topping $20 million. That made it one of the busiest issues Thursday in Junkbondland.

New InVentiv improves

A trader said the new InVentiv Health Inc. 10% notes due 2018 were "still trading up" after having traded at 101½ bid, 102¼ in initial aftermarket dealings on Wednesday. That was well up from the par level at which the Somerset, N.J. pharmaceutical services provider's $275 million issue priced earlier during the Wednesday session.

"Cash is being put to work here."

Market indicators firm up

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index up ¼ point on Thursday at 97¾ bid, 98¼ offered after having lost 3/8 point on Wednesday.

The KDP High Yield Daily index meantime gained 7 bps on Thursday to end at 72.41 after having fallen by 10 bps on Wednesday. Its yield tightened by 2 bps on Thursday to 8.07% after having widened by 2 bps on Wednesday.

The Merrill Lynch High Yield Master II index showed a year-to-date gain of 8.328% - a new peak level for the year, eclipsing the previous mark of 8.277% seen on Wednesday.

Advancing issues led decliners for a 19th consecutive session on Thursday, holding a seven-to-five margin for the second straight day.

Overall activity, represented by dollar-volume levels, declined by about 13% on Thursday on top of Wednesday's 17% fall-off.

Nuveen does nicely

A trader saw Nuveen Investments' 10½% notes due 2015 jump by 6 points to the 98 bid, 98½ offered level from 92 bid previously. "That was the big one" of the session, he said, "big news."

He cited the news that the Chicago-based financial services company had agreed to an asset-swap deal with US Bancorp, which will receive a 9½% stake in Nuveen plus $80 million in cash in exchange for most of the bank's long-term asset-management business, FAF Advisors.

The deal will allow Nuveen - which already provides investment services to high-net-worth investors - to boost the assets under its management by $25 billion, to $175 billion at the close of the transaction.

The trader said that the Nuveen bonds, in gaining a half-dozen points, "traded all the way up" to go out at 98.

A&P improves a little more

A trader said that Great Atlantic & Pacific Tea Co. Inc.'s bonds "improved - they did move a little bit today," building on the gains the iconic Montvale, N.J.-based supermarket operator's bonds notched on Tuesday and Wednesday as they bounced back from the drubbing they took last Friday.

He said that the 11 3/8% senior secured notes due 2015 were finishing around 70 bid, 72 offered, versus 67 bid, 68½ offered on Wednesday and levels in the low 60s earlier in the week.

He also saw the company's 6¾% convertible notes due 2012 having moved up to around 55 bid by the day's end - well up from 51 bid, 52 offered earlier in the day and from 52 bid, 53 offered on Wednesday.

Those bonds had initially fallen all the way down into the 40s last Friday, pushed down by poor numbers, the abrupt exit of the company's chief executive officer after just six months on the job and indications that the company does not yet by any means have the funding in place to pay off a bond series maturing next year.

"There was a lot of volume, too, really active in the name," the trader said.

"The bonds were up a couple [of points], with the 63/4s up a little more" than the 11 3/8s, since they are convertible notes, in line with a jump of 67 cents, or 24.81%, in A&P's New York Stock Exchange-traded shares, which ended the day at $3.37 - actually above the levels they held last Friday - despite the lack of actual fresh news about the company.

Another bonds trader noted "buyers across the board," with the A&P bonds up 3 points on the session.

Gulf energy names calm down

A trader said that "the oils" connected with or impacted by the BP plc oil spill disaster in the Gulf of Mexico "were pretty quiet."

"All the oil things have calmed down," he said. "They're still trading, but it's not like they're whipping around like they were before," now that BP's cap to stop the leaking oil seems to be working and scientists report that much of the millions of gallons of oil spilled into the gulf since the fiery April 20 disaster aboard the leased drilling rig Deepwater Horizon is gone, having been naturally evaporated or else consumed by oil-eating microbes indigenous to the warm waters of the gulf.

He saw ATP Oil & Gas Corp.'s 8 7/8% second-lien senior secured notes due 2015 at 74 bid, 75 offered on "not really a lot of activity, not much news there." He said that would about leave the Houston-based energy exploration and production company's bonds unchanged on the session.

BP's 4¾% notes due 2019 were at 94 bid, 94½ offered, "pretty much the way they were all day." BP's 25% partner in the blown-out well, Anadarko Petroleum Corp., saw its 5.95% notes due 2016 likewise unchanged at 95, and he said it was "the same thing with RIG" - Deepwater Horizon owner Transocean Inc., whose 6% notes due 2018 stayed anchored around the 92 bid level.

The trader, who primarily trades lower-valued distressed paper, said that he had originally been hoping "that they would all go a lot lower and get into my wheelhouse."

Auto names in retreat

Automotive benchmark bonds continued to back up, moving away from the higher levels they'd held earlier in the week.

General Motors Corp.'s 8 3/8% benchmark bonds due 2033 were down ¾ point, a trader said, quoting them at 34½ bid, 35½ offered, well down from around the 37 mark where the Detroit giant's bonds had been trading late last week and earlier this week. He meantime saw GM domestic arch-rival Ford's 7.45% bonds due 2031 likewise off by ¾ point at 97 bid, 98 offered; the Ford long bonds had been quoted in some quarters as approaching the 99 level earlier in the week.

Another trader saw "decent volume" in the GM benchmarks, pegging them at 35 bid, 35½ offered, which he called unchanged on the day but down from recent peaks. He saw the Ford 7.45s staying around 96½ bid, 97½ offered, saying he didn't see much activity in the bonds as Ford's action "was all in the short end" - paper maturing later this year or early next, all trading at levels north of par. "Hardly anything happened in the long end. It was no great shakes and no activity."

He also noted that in the case of Ford, "that new deal that came [Wednesday], that's where all the news was."

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