Getty Images, TDF expected to bring deals; primary otherwise quiet; ATP active but steady

By Paul Deckelman and Paul A. Harris

New York, Aug. 28 - The high-yield market edged one day closer to the Labor Day holiday break on Tuesday, a session characterized by little primaryside activity and mostly light, featureless trading in the secondary market.

The new-deal wing of Junkbondland was again quiet, with no deals having priced.

However, two prospective deals did emerge.

In the domestic dollar space, Getty Images Inc., which distributes newspaper photos and other still imagery as well as videos, was heard by syndicate sources to be getting ready to shop a deal around to support the company's leveraged buyout. However, that deal is not expected to happen for nearly a month, until late September.

Out of Europe came word that French telecommunications company TDF Group SA is likely to bring a euro-denominated deal to market, possibly as soon as early September.

The new-deal realm was otherwise quiet, and that stillness was largely replicated in the secondary market, although the recent deal from Advanced Micro Devices Inc. generated some volume.

But once again, ATP Oil & Gas Corp. was seen having topped the most-actives lists, its seventh straight session at the top of the pile.

Statistical measures of market performance were mixed for a second straight session.

TDF possible for next week

The primary market remained becalmed on Tuesday.

Although sellside sources assure that a substantial early September calendar is taking shape, information on specific early September business has been difficult to come by, market watchers agree.

One name did surface during Tuesday conversations with sources in Europe.

France's TDF Group, formerly known as Telediffusion de France, is expected to bring a euro-denominated offering of high-yield bonds to market as early as the week ahead.

No further information - size, structure, syndicate or use of proceeds - has been disclosed. One source, however, expects the deal to be refinancing or acquisition related.

European pipeline

In the wake of a Monday sellside forecast that the dollar-denominated high-yield new issue market could see $80 billion of issuance before year-end, a London-based debt capital markets banker said that the euro-denominated market is apt to turn out €10 billion to €15 billion during the run-up to 2013.

That amount of issuance hinges on macroeconomic factors related to the delicate condition of euro zone credit, the source said, adding that too much negative news about Greece, Spain or Italy could slow down the European high yield considerably.

September will be active, but it won't be the biggest September in the history of the market, the sellsider added.

Another London-based senior syndicate source professed the expectation that the euro-denominated new issue market will be open, with acquisition-related deals predominating.

In addition to euros, Europe-based issuers will almost certainly be looking to raise dollars in the U.S. market as well, the source added.

AMD a bit active

In the secondary market, a source saw some trading in Advanced Micro Devices' new 7½% notes due 2022, which had priced back near the beginning of the month.

Those bonds were seen to have firmed by about 7/8 point to end at 100½ bid, although almost all of the trading took place in odd-lots.

The Sunnyvale, Calif.-based semiconductor manufacturer priced $500 million of those bonds at par in a quick-to-market deal on Aug. 6, after upsizing from an originally announced $300 million.

There was considerably more active dealings on Tuesday in the company's established 7¾% notes due 2020, which saw some $15 million of trading in round lots and even more than that in smaller trades, generating "pages and pages" of transactions on the Trace system.

Those bonds, however, fell on the session, dropping by 7/8 point to end at 101 bid, after having traded for a while as high as 103.

AMD announced on Tuesday that it had lured a well-known semiconductor industry veteran away from rival Intel Corp. John Gustafson will become chief product architect for AMD's graphics chip business unit.

It was only in the latest in a recent string of high-profile hires that has seen AMD successfully poach executive and engineering talent away from such high-tech competitors as Intel, Apple Corp. IBM and Freescale Semiconductor.

Other recent deals quiet

Apart from AMD, traders said there seemed to be little doing in other recently priced bond deals.

The most recent of the bunch - the 7¼% notes due 2017 that VWR Funding Inc. priced last Monday - were seen by a trader to be unchanged at 101 5/8 bid, 101 7/8 offered.

The Radnor, Pa.-based laboratory supply company's quickly shopped $750 million deal priced at par on Aug. 20, gradually moving above the 101 bid level in the days that followed and staying there.

Sprint Nextel Corp.'s 7% notes due 2020 saw about $7 million traded, said a market source, pegging the Overland Park, Kan.-based wireless company's $1.5 billion offering at 102 11/16 bid, 102 15/16 offered, about a 5/16 point gain.

However, another trader located those bonds down a quarter-point at 102¼ bid, 102¾ offered.

Sprint priced that drive-by megadeal at par on Aug. 9. The bonds initially struggled in the aftermarket but have firmed since then.

Secondary stutters along

Outside of the new-deal realm, traders saw mostly light, featureless trading in the secondary arena.

"It's dead out there," one remarked.

"There's not a lot of numbers out there, and if you latch onto something [in setting up a trade], it kind of takes you all day to put it together and realize a trade out of it.

"You're filling in holes with people who are there," he added. Many market participants, in fact, are not "there" this week, opting to take what's unofficially considered the last full week of the summer before the Labor Day holiday break as a vacation week.

ATP activity continues

As a result, he said, "there certainly isn't a lot of activity going on in the street, a few names are a little active here and there," with ATP Oil & Gas' 11 7/8% second-lien senior secured notes due 2015 "still at the top of the leader-board, as far as volume goes," for a seventh consecutive session.

A second trader meantime said that the Houston-based offshore energy company "has been there [at the top of the volume list] all week. It seems like they've stabilized down here at the lower numbers," in a 26-to-27 context.

He said those bonds went home around 26½ bid to 27¼ offered on volume of between $25 million and $30 million.

"That's about where they were [Monday]," he said.

Those notes, which had slid for months amid the company's mounting and well-publicized problems, were seen to have been jumping around all last week on market-leading heavy volume, even amid relatively less-busy activity elsewhere.

The catalyst for the activity was the company's Chapter 11 filing with the U.S. Bankruptcy Court in Houston late in the day on Aug. 17. After that filing, the bonds shot up by several points, to around 31½ bid last Monday, the first full trading session after that filing. Over $75 million traded at that time.

On Tuesday, the bonds mostly held to those levels before edging up later in the session to end above 32 bid.

On Wednesday, having had their big burst of upside movement in immediate response to the bankruptcy filing, the bonds slid by around 4 points to about the 28½ level and continued retreating on Thursday, falling to a 271/4-to-27¾ context.

And by Friday, the bonds were seen dipping below 261/2, staying there on Monday and again on Tuesday.

Ship Finance muted

A trader said: "[I] didn't see too much trading today" in Ship Finance International Inc.'s 8½% notes due 2013, seeing them anchored in a narrow range between 100 1/8 and 100¼ bid.

The Bermuda-based owner of oil and chemical tankers, energy-drilling rigs, dry bulk cargo carriers and cargo-container vessels reported a solid gain in second-quarter earnings on Tuesday, though that was largely attributable to accounting factors rather than gains in operating income.

Company executives also expressed confidence that they would be able to refinance the 8½% notes as well as other debt slated to come due next year (see related story).

Nokia quiets down

A trader said that Nokia Corp.'s 6 5/8% notes due 2039 were down around 1 point on Tuesday from the levels they held on Monday, finishing around 80½ bid, 81½ offered.

"But there was not a lot of volume in them," he said, seeing turnover in the Finland-based cell phone maker at around $6 million or $7 million - about half of what it had been on Monday.

He also saw the company's 5 3/8% notes due 2019 at 85 bid, 86 offered on Tuesday, calling that down 1 or 2 points from Monday's levels, while volume likewise fell off to around $8 million, again about half of Monday's turnover.

On Monday, those bonds had firmed smartly - more than 2 points apiece - on brisk trading, helped by a rise in the company's stock fueled by analysts' comments that saw the late-Friday verdict in favor of Apple Corp.'s patent-infringement suit against Samsung Electronics as a potentially bullish factor for Nokia.

Nokia is battling rival Samsung for market-share in that sector of the cell phone business not dominated by Apple's trendy iPhones.

Indicators stay mixed

Statistical indicators of junk market performance were mixed on Tuesday for a second straight time and for the fifth time in the last six sessions.

The Markit Group CDX North American Series 18 High Yield Index fell back by 3/16 of a point to end at 98 bid, 98 4 offered, after having risen by 1/8 of a point on for a second straight session on Monday.

And the KDP High Yield Daily Index dipped by 2 basis points for a second consecutive session to close at 73.84. Its yield was unchanged for a second straight session, at 6.22%.

But the widely followed Merrill Lynch U.S. High Yield Master II Index notched its eighth consecutive gain on Tuesday - albeit a very small one - as it edged upward by 0.03%, on top of Monday's more substantial 0.102% advance.

That lifted its year-to-date return to 10.289% -- a sixth consecutive new high for the year. This eclipsed the old peak level of 10.256%, which had just been set on Monday. The index is now at its highest level since the last session of 2010, when it closed that year with a 15.19% return.

Its yield to worst, meanwhile, stood at 6.712%, slightly higher than Monday's 6.71%, which is the low for the year so far.

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