Berry leads $2 billion primary, new bonds firm; Qwest up on deal; funds add $512 million

By Paul Deckelman and Paul A. Harris

New York, April 22 - Another day, another half-dozen new high yield pricings, as the junk bond primary sector kept up its recently torrid pace on Thursday.

More than $2 billion came to market during the session, with the biggest deal being a $500 million drive-by offering of eight-year secured notes - upsized from the originally shopped $300 million - from Evansville, Ind.-based packaging products producer Berry Plastics Corp.

In entertainment and media, Allbritton Communications Co., an Arlington, Va.-based television broadcaster, priced $455 million of eight-year notes, while Live Nation Entertainment, Inc., a concert promoter and event ticket seller based in Beverly Hills, Calif., did $250 million of eight-years.

Two new deals came out of the energy sector - Radnor, Pa.-based coal and natural gas operator Penn Virginia Resource Partners, LP/Penn Virginia Resource Finance Corp.'s $300 million of eight-years, and a $200 million seven-year note offering from Global Geophysical Services, Inc., a Missouri City, Tex.-based provider of seismic services to the oil and gas drilling industry.

Telcordia Technologies, Inc. weighed in with an upsized $350 million tranche of second-lien secured eight-year notes. The Piscataway, N.J.-based communications software developer's new bonds were reported by traders to have firmed smartly when they were freed for aftermarket dealings. The same held true of the Penn Virginia and Live Entertainment deals, and Global Geophysical's as well. The new Allbritton bonds, on the other hand, were little moved in secondary activity, while Berry Plastics priced too late in the day for an aftermarket.

Price talk surfaced on apparel maker Phillips-Van Heusen Corp.'s offering of 10-year notes, which is expected to price on Friday morning. Iconic blue-jeans pioneer Levi Strauss & Co. meantime announced a two-part, dollar- and euro-denominated bond deal seen pricing in a week, while Dutch cable and broadband operator Ziggo Bond Co. BV hit the road to market a euro-denominated mega-deal.

Away from the primary market, Qwest Communications International Inc.'s bonds, and those of its various subsidiaries such as Qwest Corp., were seen solidly higher on the news that the Denver-based telecommunications company is to be acquired by sector peer CenturyTel Inc. in a roughly $22 billion deal, which includes debt assumption. The big news pushed Qwest's paper to the forefront, elbowing aside the recent object of Junkbondland's affections, Teck Resources Inc.

Junk funds gain $512 million

And as trading was winding down for the session, market participants familiar with the 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 $512.3 million more came into those weekly-reporting high yield funds than left them, a sign of continued investor support for the junk market.

It was the ninth consecutive weekly cash infusion. Since that winning streak started in late February, $4.223 billion has come into the funds, according to a Prospect News analysis of the AMG figures, including the latest inflow and the $282 million cash injection seen in the previous week, ended Wednesday, April 14.

In the 16 weeks since the beginning of this year, inflows have now been seen in 13 of those weeks and outflows in just the remaining three, although these included two massive cash hemorrhages seen in mid-February, each north of $900 million, which totaled $1.9 billion, according to the Prospect News analysis.

However, the mutual funds have more than fully bounced back from that big cash exodus to show a year-to-date cumulative net inflow of $3.866 billion, according to the analysis - a new peak level for the year, eclipsing the old mark of $3.354 billion seen the previous week.

The year-to-date fund flow totals have gyrated between that new peak cumulative inflow level and a net outflow of $357 million seen in the week ended Feb. 17, which had been the first such year-to-date net loss for the funds since early April 2008, according to the analysis.

EPFR sees $864 million cash gain

Another fund-tracking service - Cambridge, Mass.-based EPFR Global, whose methodology differs somewhat from AMG - meantime reported that $864 million more came into the funds than left them in the latest week.

That cash infusion followed the $651 million inflow seen in the previous week. Following the pattern seen in the AMG figures, the EPFR statistics have now shown nine straight weeks of inflows, lifting the funds from their two-week rut in the Feb. 10 and Feb. 17 weeks, which EPFR calculated to have produced some $1.76 billion of combined outflows.

Reflecting the difference in the way AMG and EPFR calculate their respective fund-flow totals, the latter - which includes results from certain non-U.S. domiciled funds as well as the domestic funds - said that on a year-to-date basis, the mutual funds are now showing a $7.7 billion net inflow, a new peak level for the year. That eclipsed the old mark of $6.85 billion seen the week before.

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

The flow of money into and out of the junk bond funds is seen as a generally reliable barometer of overall high yield market liquidity trends - although they comprise less of the total monies floating around the high yield universe than they did in the past. Last year's strong pattern of inflows - with AMG reporting over $20 billion having come in to the weekly-reporting funds over the course of the year, along with over $10 billion more into funds which only report on a monthly, rather than weekly basis, and EPFR posting similarly robust numbers - was seen as a proxy for the overall surge of liquidity into the junk market from all sources, which helped to fuel record 2009 new issuance of over $160 billion and unprecedented secondary returns topping 57%.

Berry three-times oversubscribed

Half a dozen issuers, each bringing a single tranche of junk, priced $2.055 billion face amount of bonds as the new issue market continued to roar on Thursday.

Berry Plastics Corp. priced a massively upsized $500 million issue of eight-year second priority senior secured notes (Caa1/CCC) at par to yield 9½% on Thursday.

The yield printed on top of the price talk. The amount was increased from $300 million.

The deal played to $1.5 billion of orders - three times the upsized amount - according to a high-yield mutual fund manager, who spotted the par-pricing bonds trading at par bid, par 3/8 offered later in the session.

Bank of America Merrill Lynch, Barclays Capital and Goldman Sachs & Co. were joint bookrunners for the quick-to-market issue.

Proceeds will be used for general corporate purposes, which may include debt repayment, capital expenditures and the funding of potential future acquisitions.

Allbritton prices at tight end

Meanwhile, Allbritton Communications Co. priced a $455 million issue of eight-year senior notes (B2/B) at par to yield 8%.

The yield printed at the tight end of the 8% to 8¼% yield talk. The reoffer price came at the rich end of the 0 to 1 point discount talk.

Deutsche Bank Securities Inc. was the left bookrunner. Bank of America Merrill Lynch was the joint bookrunner.

Proceeds will be used to repay the company' sexisting 7¾% senior subordinated notes due 2012.

The Allbritton bonds were at par ¾ bid, 101¼ offered heading into Thursday's close, a syndicate source said.

Telcordia upsizes

Telcordia Technologies, Inc. priced an upsized $350 million issue of eight-year senior secured second-lien notes (Caa2/CCC+) at par to yield 11%.

The yield printed at the tight end of the 11% to 11¼% price talk while the size was raised from the original $300 million.

Credit Suisse Securities, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. were joint bookrunners.

Proceeds will be used to refinance the company's existing senior secured floating-rate notes due 2012 and its 10% senior subordinated notes due 2013.

Penn Virginia sells $300 million

Penn Virginia Resource Partners, LP and Penn Virginia Resource Finance Corp. priced a $300 million issue of eight-year senior notes (B2/B) at par to yield 8¼%.

The yield printed at the tight end of the 8¼% to 8½% price talk. The reoffer price came at the rich end of the 0 to 2 points of discount talk.

Wells Fargo Securities was the left lead bookrunner. Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and RBC Capital Markets Corp. were the joint bookrunners.

Proceeds will be used to repay a portion of the partnership's revolving credit facility.

Live Nation comes tight to talk

Elsewhere, Live Nation Entertainment, Inc. priced a $250 million issue of eight-year senior unsecured notes (B1/B) at par to yield 8 1/8%.

The yield came at the tight end of the 8¼% area price talk.

J.P. Morgan Securities Inc., Goldman Sachs & Co. and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds will be used to repay bank debt and to take out preferred stock.

Global Geophysical four-times oversubscribed

Finally, Global Geophysical Services, Inc. priced a $200 million issue of 10½% seven-year senior notes (B3/B) at 97.009 to yield 11 1/8%.

The yield printed in the middle of the 11% to 11¼% price talk.

The deal was four-times oversubscribed, according to a high-yield mutual fund manager, who had the bonds trading 98 3/8 bid, 98 7/8 offered just after the close.

However Global Geophysical's IPO did not go nearly as well, the buy-sider added.

Talk on the shares started at $14 to $16, then fell back to $13 to $14, before they ultimately priced at $12, the source said.

Barclays Capital Inc., Bank of America Merrill Lynch and Credit Suisse were the joint bookrunners.

Proceeds will be used to refinance the Missouri City, Texas-based seismic data services provider's credit facility and for general corporate purposes.

A syndicate source who spoke well after Thursday's close saw the new Global Geophysical 11½% notes due 2017 trading at 99 5/8 bid, versus the 97.009 issue price.

Phillips-Van Heusen for Friday

The Friday session ought to be a relatively quiet one, sources said.

The only deal on deck for the final session of the busy April 19 week is Phillips-Van Heusen Corp.s $525 million offering of 10-year senior notes (B2/BB).

The notes were talked Thursday to yield 7 3/8% to 7 5/8%.

Allocations will be severe, a syndicate source warned, adding that an order book containing $7 billion of "nominal" orders includes a who's who of the universe of high-yield accounts.

Barclays Capital Inc., Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Credit Suisse Securities and RBC Capital Markets Corp. are the joint bookrunners for the public deal.

Proceeds will be used to partially fund the acquisition of Tommy Hilfiger and to repurchase the company's 7¼% notes due 2011 and the 8 1/8% senior notes due 2013.

Also for Friday, Reynolds Group could roll out $1 billion of bonds, as business expected to price during the week ahead, sources say.

Look for Credit Suisse to lead that deal.

Meanwhile, the benchmark, dollar-denominated deal from India's Essar Steel Holdings Ltd. and Gallop Holding LLC (B2/B) had been expected to price before the end of the present week.

However, management was sidelined in Europe, due to the airborne ash generated in the eruption of Iceland's Eyjafjallajokull volcano, a buy-side source said.

Management is now expected to meet with accounts in New York on Monday.

UBS Investment Bank, Bank of America Merrill Lynch, Deutsche Bank Securities and Standard Chartered Bank are the joint bookrunners for the deal, which is being marketed via Rule 144A and Regulation S, without registration rights.

Levi Strauss plans dual-currency deal

Also from the apparel sector, Levi Strauss & Co. announced plans to place two tranches of senior notes (current ratings B2/B+), in a dual-currency deal set to price on April 29.

The San Francisco-based apparel maker is in the market with $460 million of 10-year notes, non-callable for five years, and €275 million of eight-year notes, non-callable for four years.

Bank of America Merrill Lynch and JP Morgan are joint bookrunners for the deal.

Proceeds will be used to refinance the company's 8 5/8% euro senior notes due 2013 and its 9¾% senior notes due 2015, and for general corporate purposes.

Ziggo starts roadshow for €1.2 billion

The euro market also saw Dutch cable TV operator Ziggo begin a roadshow on Thursday for its €1.2 billion offering of eight-year senior unsecured notes.

Issuing via financing unit, Ziggo Bond Co. BV, the company will roadshow the deal in Europe through Tuesday, and plans to price it after that.

Credit Suisse and Goldman Sachs are joint physical bookrunners. BNP Paribas, Deutsche Bank, ING and J.P. Morgan are joint bookrunners.

Proceeds will be used to refinance mezzanine debt.

New deals trade up

A trader said that the story in Thursday's secondary market was "new issues, new issues, new issues."

He added that "obviously, a couple of them traded very well today."

He saw Penn Virginia's 8¼% notes due 2018 moving up by 2 points on the break. "That was a good one," he opined.

He also saw Live Nation Entertainment's 8 1/8% notes due 2018 up about 2 points on the break, and Telcordia Technologies' 11% second lien senior secured notes due 2018 up as much as 2½ points on the break. All three had priced at par, "so all of these deals did very well."

On the other hand, he said that Allbritton Communications' new 8% notes due 2018, which also came at par, "didn't do as well" as the aforementioned new deals, gaining just ½ point in the aftermarket.

A second trader saw the Telcordia bonds jump out to 101½ bid almost as soon as they began trading around, and then push up from there.

He saw Live Nation's paper get as good as 102 3/8 bid, 102 5/8 offered, while Penn Virginia's deal was in a 1011/2-102½ context.

Another gainer right out of the box, he said, was Global Geophysical's 10½% notes due 2017, which had priced at 97.009 to yield 11 1/8% - the only one of the day's deals to price at a discount to par. After the pricing, he said, the bonds had moved up by not quite 2 points to 98 5/8 bid, 98 7/8 offered.

The trader saw the new Allbritton paper as having originally gotten as good as 100½ bid, 101 offered, before dropping back to par bid, 100 3/8 offered. However, later on, he said, those bonds had edged back up to around 100 3/8 bid.

At another desk, a trader quoted the new Live Nation, Penn Virginia and Telcordia deals all in the same 102-103 range, versus their respective par pricings earlier.

Wednesday deals steady to slightly higher

Among bonds which priced on Wednesday, a trader said that RBS Global Inc./Rexnord LLC's 8½% notes due 2018 edged up to 100 3/8 bid in the morning - up from the 100¼ bid, 100½ offered level at which the Milwaukee-based industrial manufacturer's $1.145 billion offering of the bonds had traded to after having priced earlier Wednesday at par. However, by the end of the day Thursday, they had eased a little off that peak to finish at 100¼ bid.

Standard Pacific Corp.'s 8 3/8% notes due 2018 traded at 100 1/8 bid, 100 5/8 offered, up a little from the par price at which the Irvine, Calif.-based homebuilder's $300 million deal - upsized from the originally announced $200 million - had priced on Wednesday.

A trader said that Gray Television Inc.'s $365 million offering of 10½% second-lien senior secured notes due 2015, which priced late in the session on Wednesday - too late for any meaningful aftermarket action at that time - "faded a little from their highs."

Another trader saw the Atlanta-based television stations operator's issue trading on Thursday morning at 100 1/8 bid, 100½ offered - well up from the 98.085 level at which those bonds had priced late Wednesday to yield 11%. He saw the Gray bonds drop back to 99½ bid, par offered, but managed to climb back up to 100 1/8 bid, 100½ offered.

Market indicators stay mixed

Among bonds not connected with the new deal market, a trader saw the CDX Series 14 index gain 1/8 point on Thursday to end at 100½ bid, 101 offered, after having lost ¼ point on Wednesday.

The KDP High Yield Daily Index meantime was up by 8 basis points on Thursday at 72.86, after having gained 7 bps on Wednesday, while its yield came in by 3 bps, to 7.54%, after having narrowed by 4 bps on Wednesday.

Advancing issues fell behind decliners on Thursday after having led them in the prior two sessions, although the losing margin was just a few dozen issues out of the more than 1,400 tracked.

Overall market activity, represented by dollar-volume levels, fell by 15% on Thursday from levels seen the previous session.

"It was pretty busy," a trader said, referring to the steady stream of primaryside pricings, price talk and new deal announcements.

Another said that it "was clearly a new-issue focus," he said, "and obviously, Qwest."

However, apart from the primary arena and the surge in Qwest paper, a trader said that from where he sat, "that "there wasn't a whole lot of activity." While "a couple of things settled off the top," on the whole, he said, "it was a sort of boring day."

Qwest deal dominates secondary

But not for anybody holding Qwest Communications International, Qwest Corp. or Qwest Capital Funding paper.

The news that CenturyTel plans to acquire Qwest for $10.6 billion in stock - and assume $11.8 billion of outstanding Qwest net debt, bringing the total deal valuation to over $22 billion - sent the Colorado-based telecom operator's various bond issues surging higher.

A trader saw Qwest Corp.'s 8 3/8% notes due 2016 - easily the busiest Qwest issue - as having gotten as good as 115 bid versus around 112 on Wednesday before there was any news in the market. However, the bonds came off their highs to settle in a 1133/4-114 context.

That issue was "pretty active today. It was the big leader, with over $75 million traded."

A second trader said that the '16s had "run up 3 to 5 points in the morning and then settled down," going out at 114½ bid, while the company's 8 7/8% notes due 2012 was ending at 110, on as much as $40 million of trading.

Another trader said that "Qwest news was kind of dominating" the market. But he noted that "there is a difference of opinion on how this is going to shake out. Our people find it hard to believe it will retain its investment grade rating," even after the company's takeover by the Baa3/BBB-/BBB- CenturyTel.

He added: "These things have been moving up like they are going into investment grade - but I don't think they are going to get there. Nobody really loves wireline [businesses]."

Besides torrid trading in the 8 3/8s, he saw brisk activity in the 8 7/8% 2012s, with the latter ending at 109½ bid, 110½ offered.

Looking across the combined Qwest Communications/Qwest Corp./Qwest/Capital Funding capital structure, a market source said that some of the issues, like the Qwest Corp. 7¼% notes due 2025, were up by only ½ point, ending at 102 bid, while others, like Qwest Capital Funding's 7 5/8% notes due 2021, jumped out to a more than 5 point gain on the day, ending at 100\1/2. However, he indicated that despite the wide swing in prices, those deals were considerably less active than the 8 3/8% 2016s.

A trader at another shop called the Qwest story "significant news. It will definitely be interesting to see whether this is a precursor of more deals to come, or whether it's just a one-off transaction."

Teck trading tapers off

After having pretty much dominated the non-new deal portion of the high yield secondary market for the past several sessions, ever since getting a ratings boost to investment grade from Standard & Poor's, Teck Resources Inc.'s bonds quieted down somewhat on Thursday, pushed aside by the flurry of activity generated by announcement of Qwest Communications International Inc.'s coming purchase by CenturyTel Inc.

"It's like a boxing upset," joked one trader in noting how Teck was pushed off its recent pedestal as the busiest name.

A market source saw Teck's 10¾% notes due 2019 up ½ point on the session at 125¼ - but saw a volume of only about $51 million - slightly more than half of Wednesday's total. The Vancouver, B.C.-based energy and mining concern's 9¾% notes due 2014 were likewise ½ point firmer at 121 5/8 - but there too, volume had been knocked down to around the $32 million level from nearly $70 million the day before.

High yield traders noted that ever since the upgrade, there has been strong interest shown in the now split-rated (Ba1/BBB/BBB) issues by high-grade investors, boosting the debt's volume totals.

Autos spin their wheels

A trader said that General Motors Corp.'s 8 3/8% benchmark bonds due 2033 "did have some activity," and were "bouncing around" 36-37 most of the day before ending at 37 bid, which he called mostly unchanged.

He saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 unchanged at 92-93. "Some traded right in there," he said.

Another trader saw the GM benchmarks off 1/8 point at 36 7/8 bid, 37 3/8 offered, while Ford's long bonds were down ¼ point at 92½ bid, 93½ offered.

A trader saw Cooper-Standard Automotive Inc.'s existing 8 3/8% notes due 2014 at 78 bid on "one little trade" but otherwise saw "virtually no activity" in the Novi, Mich.-based automotive components company's paper, this a day after it began shopping a new $450 million eight-year bond deal around to investors.

-Stephanie N. Rotondo contributed to this report

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