McClatchy, Glatfelter, Songa slate deals, market awaits Libbey; Blockbuster rebound rolls on

By Paul Deckelman and Paul A. Harris

New York, Jan. 27 - The high-yield primary market spent Wednesday's session building the forward calendar, according to junk market syndicate sources.

They noted new-deal announcements from McClatchy Co., PH Glatfelter Co. and Songa Offshore SE, with details about the timing of the issues making the rounds of the market grapevine.

Sacramento, Calf.-based newspaper publisher McClatchy's was the biggest prospective offering, weighing in at $875 million of seven-year senior secured notes. The company will begin a roadshow on Thursday to sell the deal to prospective buyers, with pricing seen around the middle of next week.

Also hitting the road, with a pricing set for next week, is Cyprus-based off-shore energy drilling company Songa's $200 million of seven-year notes.

And although paper manufacturer Glatfelter's announcement only said that it would sell its $100 million notes during the current first quarter, sources heard that they will mirror an existing tranche of notes and will be shopped to investors via a Thursday morning conference call.

Thursday is meanwhile when Libbey Glass Inc. is now expected to price its $400 million offering of five-year secured notes, which the sources heard had been moved up from its originally scheduled Friday timeslot, while price talk emerged on the deal.

In the secondary market, traders saw a slight firming in the new notes priced late Tuesday by Chicago-based metals company Ryerson Holding Corp., as well as in another Tuesday deal, for Coleman Cable Inc.

Away from the new-deal arena, traders saw Tuesday's small upturn in Blockbuster Inc.'s badly battered bonds continue in Wednesday's session, as that paper again firmed modestly from the low levels to which it had been mercilessly beaten down on Thursday, Friday and Monday in response to bearish earnings guidance.

Traders saw considerable activity in "hybrid" issues from nominally investment-grade financial companies like Capital One Financial Corp. and Wells Fargo Corp., as well as the split-rated bonds of regional lender Zions Bancorporation.

Libbey moves up, sets talk

No issues were priced during the Wednesday primary session, a market source said.

Libbey Glass Inc. moved up timing on its $400 million offering of five-year senior secured notes (B2/B), and set price talk at the 10½% area on Wednesday.

Pricing is set for Thursday afternoon. Previously the deal had been expected to price on Friday morning.

Barclays Capital Inc. and Bank of America Merrill Lynch are joint bookrunners for the debt refinancing.

Glatfelter plans mirror notes

Meanwhile, PH Glatfelter Co. will host a 10:30 a.m. ET conference call on Thursday to present to investors a $100 million offering of notes mirroring its existing 7 1/8% senior notes due May 1, 2016 (Ba2/BB+).

Credit Suisse has the books for the acquisition deal.

The original $200 million issue priced at par in April 2006.

McClatchy to sell $875 million

McClatchy Co. will begin a roadshow on Thursday for its $875 million offering of seven-year senior secured first-lien notes.

The roadshow wraps up on Feb. 4, with the bonds expected to price the same day.

JP Morgan, Bank of America Merrill Lynch and Credit Suisse are joint bookrunners.

Ratings in the low-to-mid single B range are expected.

Proceeds will be used to refinance bank debt and fund a tender for the Sacramento-based newspaper company's 7 1/8% senior notes due 2011 and 15¾% senior notes due 2014.

Songa starts roadshow

Cypress-based offshore drilling services provider Songa Offshore SE started a roadshow on Wednesday for a $200 million offering of seven-year senior notes, according to an informed source.

The deal is expected to price late next week.

Citigroup is leading the Rule 144A/Regulation S offering.

Proceeds will be used to refinance debt and for general corporate purposes.

Following the closing of the offering, Songa expects to conduct an exchange offer in which it will issue more of the new notes for its existing secured fixed-rate notes due 2011 and its floating-rate notes due 2012.

Songa is a provider of offshore drilling services. With its fleet of six rigs, it currently operates in the North Sea, offshore North and West Australia and offshore North and West Africa. Songa is headquartered in Limassol, Cyprus.

New Ryerson, Coleman bonds edge upward

A trader said that Ryerson Holding's new 14½% senior discount notes due 2015 were trading at 46 bid, 47¼ offered. That was up slightly from the 45.598 level at which the company priced its $483 million of the notes late Tuesday to produce proceeds of $220.238 million, at a yield of 16.32%

He also saw Waukegan, Ill.-based electrical wire producer Coleman Cable's new 9% notes due 2018 at 98¾ bid, 99¼ offered. That $235 million deal had priced earlier Tuesday at 98.597 to yield 9¼%.

Market indicators turn mixed

Back among the established bonds, a trader saw the CDX Series 13 index off marginally - about 1/16 point - on Wednesday to 97 1/8 bid, 97 3/8 offered, following Tuesday's ¼ point gain.

The KDP High Yield Daily Index broke back into positive territory, however, jumping 17 basis points on Wednesday to end at 71.12, after having lost 14 bps on Tuesday. Its yield, meantime, narrowed by 3 bps to 8.20%, after having widened out by 5 bps the previous session.

Advancing issues stayed behind decliners for a seventh consecutive session on Wednesday, although just like on Tuesday, the difference was just a relative handful of issues out of the nearly 1,600 tracked.

Overall market activity, as measured by dollar volume levels, fell by 11% from Tuesday's pace.

A trader said that things were "pretty busy" at his shop Wednesday, seeing "good two-way flows" in a number of names, including such credits as Lehman Brothers Holdings, American International Group Inc., Teck Cominco Ltd., HCA Inc., Hertz Corp. and Ford Motor Co. But while activity was brisk, "none really jumped around."

Continuing, he said that "names like Clearwire [Corp.] came back, Clear Channel [Communications Inc.] was fairly stable, and we had some buyers in Qwest [Communications International Inc.] paper."

It was, he said, "a surprisingly good volume day."

High yield still has it

The trader further said that he was "surprised at the activity levels today, not only in AIG, but also across the board, what with the [AIG bailout investigation ] hearings in Washington, the FOMC meeting, [Federal Reserve chairman Ben] Bernanke's confirmation and all of that. It seems like the high-yield market was oblivious to it."

He went on to theorize that "we're not trading on fundamentals - if anything, fundamentals have been thrown on the scrap heap again, and we're being driven by investable cash. We still represent - really - what investors perceive to be the safest, highest-yielding option, for them to invest in. They still haven't gravitated back to structured product.

"If it's yield they want - they're coming here."

Blockbuster bounceback continues

A trader saw Blockbuster Inc.'s bonds having moved back up from their lower levels of earlier in the week. He quoted the 9% senior subordinated notes due 2012 as trading in a 27-28 range, while its 11¾% secured notes due 2014 were at 74-75, both of them "up a bit from yesterday [Tuesday], with decent trading in both."

He called the Dallas-based movie-rental company's 9s maybe up a point, while the 113/4s "are up further," estimating their gain at around 3 points, "and trading - they were active."

As for the reason, he suggested that the rise could just be "a dead-cat bounce - but who knows?"

Blockbuster, agreed another trader, "was bouncing around again," and was among the most actively traded junk issues, with over $20 million of the 9% notes changing hands. "They started moving up, and then late in the day, a couple of bids got hit," with the bonds finishing off their highs for the session.

He said that the bonds had gone as low as 22½ bid, and as high as 32 - although he said that the latter level was "only in some small pieces - the small pieces don't matter." He saw considerable round-lot trading in a 27-28 context, but late in the day saw the bonds having come in a little from those peaks to go home at 26 bid, without an offering.

He also saw the 11¾% notes as having moved up to 74½ bid, 75½ offered , after having been as low as 71 bid earlier.

Yet another trader suggested that Blockbuster might have moved higher on some short-covering following its overdone downside slide, which saw the 9% bonds lose nearly 40 points over several sessions, down to the low 20s, from the lower 60s before last week's disastrous announcement of anticipated losses due to continued weak sales, while the 113/4s had tumbled from levels near par down to the upper 60s, before coming off their lows, to end at 74 3/8 bid, 74 5/8 offered, "up pretty smartly" from prior levels around 71-73.

The trader alternatively suggested that "there's a change-of-control [put provision] on the 9s, so I don't know whether people are looking at that saying 'if they have to sell the company, maybe we'll get lucky,' or if it was just short-covering."

The bottom line, he said, was that "I didn't see as many guys trying to get out today as I saw over the past week."

Hybrids trade around

A trader said that "the hybrids were active again," seeing heavy volume in such names as Capital One Financial and Wells Fargo - nominally investment-grade companies which have issues of split-rated or junk-rated trust preferred paper or other unusual structures which appeal to high-yield players.

For instance, some $47 million of McLean, Va.-based Capital One's 8 7/8% cumulative trust preferred securities due 2040 had traded by mid-afternoon, topping the junk market's most actives list. The bonds traded at just a shade under 104, down ½ point on the day.

San Francisco-based Wells Fargo's Wachovia Capital Trust III's floating-rate preferred paper due 2042 was up 5/8 point on the day at just under 80 bid, with over $20 million of turnover.

He also saw considerable activity in Reston, Va.-based educational lender SLM Corp.; the Sallie Mae 6% notes due 2029 were seen down more than 2 points on the day at just over 68 bid.

AIG in the spotlight

One of the day's major news stories was the televised congressional testimony of Treasury secretary Timothy Geithner, his predecessor, Henry Paulson, and other government officials before a committee probing the $180 billion bailout in late 2008 of crippled insurer AIG, asking, among other things, whether information about AIG's payments to various banks was concealed in documents which the New York-based company filed with regulators, allegedly at the command of the Federal Reserve Bank of New York, then headed by Geithener.

Meantime, there was fairly active dealings in bonds of AIG's International Lease Finance Corp. which itself has been in the news this week amid media reports that AIG has decided a sale of the aircraft leasing unit would not generate enough of a profit to make any kind of a dent in the company's huge debt. ILFC's 5¾% notes due 2011 were being quoted up 2 points at 94 bid, while its 6 3/8% notes due 2013 lost 1½ points to finish at 841/2. Another market source, however, pegged the latter bonds actually up by ½ point at the 85 level, while seeing its 5 5/8% notes due 2013 up 1 point at 83 bid.

A trader noted that International Lease Finance's bonds "traded off, then traded back up" over the course of several sessions this week. "I don't think that anybody has any real ideas" about what's going to happen to ILFC, and, more generally, to AIG, "but what's happened is that some of the sellers have been high-grade accounts that have written it down and have just decided to get out.

"I think there are guys on the Street that are trying to buy it, and so it makes for some interesting trading dynamics."

Zions busy again

Also among the financial names, a trader said that Zions Bancorporation paper remained busily traded on Wednesday, although the volume in the name was down from the unusually heavy trading seen on Tuesday in the market's initial response to the Salt Lake City, Utah-based regional banking company's quarterly numbers.

He saw more than $20 million of its 7¾% senior notes due 2014 traded - down from the more than $60 million which changed hands on Tuesday, but still enough to put it near the top of the junk market's Most Actives list.

He saw those bonds in "kind of a tight range," with most of the round-lot transactions taking place inside a 951/2- 96¾ context. "That's where most of your volume took place today," he said. "That seems to be the active one on the high yield desk," despite its mostly high-grade rating of nr/BBB-/BBB.

He saw the bonds going home around 95½ bid - actually down slightly from the late levels about 96 quoted on Tuesday, although there was some paper traded Wednesday around 96 3/8, "but most of it was between [ninety] 5½ and 6."

At another desk, a trader saw the Zions 73/4s trading just under 97 bid during the afternoon, pegging that up some 1¾ points from their closing levels on Tuesday.

During Tuesday's session, the Zions bonds had pushed into a 95-96 context, up from previous levels around 94, after the company's announcement after the close on Monday that its fourth-quarter loss attributable to common shareholders shrank to $176.5 million, or $1.26 per share, well down from a loss of $498.1 million, or $4.37 per share, in the year-earlier period, as the bank took considerably less in the way of charges and write downs.

The $1.26 per share loss was well below the roughly $1.65 per share analysts had been expecting. Company executives expressed optimism that that peak levels of loan losses are behind the company, and that economic conditions in the majority of its markets in 10 Western states have begun to stabilize.

Papermakers' paper mostly steady

A trader said that New Page Corp.'s 10% notes due 2012 saw "good volume," and were trading in a 61-62 bid neighborhood, finally ending the day at 62½ bid, down about a point. "It was an active issue," he said.

The Miamisburg, Ohio-based coated-paper maker's bonds had recently slid down to the lower 60s from levels above 80, hurt by the abrupt resignation of the company's chief executive officer and weak quarterly numbers.

NewPage rival Catalyst Paper Corp.'s 8 5/8% notes due 2011 were steady around 86 bid, 87 offered, on "some activity," a trader said, but he added that the levels were pretty stable from where it was [Tuesday]."

The Richmond, B.C.-based company's issue had shot solidly higher from levels around 80 previously on the news on Monday that it had sweetened the terms of an exchange offer it is making for those 2011 bonds.

ResCap quietly rallies on ratings boost

A trader said that he "did not see much activity" in Residential Capital LLC's paper, even as Standard & Poor's raised its ratings on both the Minneapolis-based mortgage lender and its parent, automotive finance operator GMAC LLC. The agency cited the recently announced $3.8 billion government investment in GMAC, most of which was used to prop up ResCap, and other restructurings. S&P raised its long-term counterparty credit ratings on GMAC and ResCap by three notches to B, from CCC previously, reflecting the agency's increased confidence that ResCap and GMAC will be able to meet their financial obligations to trading partners or other parties.

The trader said that ResCap's 9 5/8% notes due 2015 were at 98¼ bid, 99¼ offered during the day, calling them up ½ point, even as "some of the comments with the headlines were a bit confusing." Later on in the day, the bonds ended up a full point at 99 bid, on "a decent amount of trading."

He meantime saw GMAC's 8% bonds due 2031 also a point better at 93 bid, 94½ offered.

U.S. Concrete climbs, though on no news

A trader expressed surprised that as many as $10 million of U.S. Concrete Inc.'s 8 3/8% notes due 2014 traded. He saw the bonds going home at 69¼ bid, 69 3/8 offered, while the day's low was 68 3/8. The Houston-based ready-mixed concrete producer's bond price "has moved up - we were trading these things in the 50s, they're up 15 points from when we got involved," just before the end of last year.

He continued that "to see that many bonds trade up at that level, it starts to lead me to believe that something could be going on with this company - or at least somebody thinks that there's more value than other people do."

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