Global Crossing prices upsized deal; PanAmSat bonds seen better

By Paul Deckelman and Paul A. Harris

New York, Dec. 20 - Global Crossing (UK) Finance plc was heard by high-yield syndicate sources to have successfully priced an upsized dual-currency deal Monday, as the junk bond primary market hurries to clean off the desks before the upcoming holiday break.

In secondary dealings, the bonds of PanAmSat Holding Corp. were seen orbiting around at higher levels on news that the Wilton, Conn.-based satellite communications company - recently taken private - is returning to the equity markets with a $1.12 billion initial public offering somewhere in the not too distant future.

While Global Crossing priced its upsized, oversubscribed $405 million equivalent two-part deal, both tranches coming on top of price talk, otherwise new issue news was scarce during the Monday session.

Meanwhile sources around the market told Prospect News of holiday plans during the Monday session, as most anticipate that only one deal will price during the remainder of the pre-Christmas week.

"I think it's going to be pretty quiet," one syndicate official intoned shortly after terms emerged on the Global Crossing deal.

"There was no drive-by business today. And I don't believe that we're going to see any more before the end of the year.

"Whatever you do see happen will probably happen Tuesday. From Wednesday on, people are going to start to be pretty scarce."

However, the source added, January could easily pick up where the first three weeks of December left off.

"We have a pretty solid calendar," the syndicate official said. "Of course a lot of the opportunistic deals have gotten done over the past three weeks.

"But it could be a fairly busy January."

Global Crossing comes atop talk

Monday's sole transaction in the primary market was Global Crossing's upsized $405 million equivalent two-tranche sale of 10-year senior secured notes (Caa1/B-).

With Goldman Sachs & Co. as sole bookrunner, the company sold $200 million of 10¾% notes at 98.514 to yield 11 %, right on top of the 11% area price talk.

In addition Global Crossing sold £105 million of 11¾% notes at 98.575 to yield 12%, again right on top of the price talk which had the sterling tranche coming 100 basis points area behind the dollar tranche.

The deal, which the company brought in order to raise money to repay debt and fund its long-term liquidity requirements, was oversubscribed, according to an informed source.

Atrium talked 11%-11¼%

Meanwhile price talk was heard during the session on what several sources said could turn out to be the final high-yield bond deal of 2004.

Price talk of 11% to 11¼% emerged Monday on ACIH Inc. (Atrium holding company)'s $125 million proceeds of eight-year non-call-three senior discount notes (B3/CCC+), expected early Tuesday afternoon via UBS Investment Bank and Citigroup.

In discussing possible new issue business for the remainder of the Dec. 20 week several sources expressed the belief that Cajun Funding Corp. (Church's Chicken)'s $155 million offering of eight-year senior secured second lien notes (B3) could also price during the present week.

One sell-side source who mentioned the deal late in the session said that news of Cajun Funding Corp.'s offering first surfaced in mid-November, and that the word on it holds that the deal will be priced off SunTrust Robinson Humphrey's private placement desk, although it was expected to be marketed to high-yield accounts.

However the preponderance of opinion from sell-side sources on Monday was that the Atlanta-based franchisor and operator of Popeyes, Chicken & Biscuits, Church's Chicken restaurants and others, won't complete its deal during the run up to Christmas.

Deutsche sees "amazing efficiency"

In the latest edition Deutsche Bank's high-yield strategy organ, the One-Stop Weekly, that institution's co-heads of high-yield research, David Bitterman and Andrew W. Van Houten, make note of a close correlation between high-yield returns and new issuance.

They specify that the Deutsche Bank Global High Yield Index returned 0.41% during the seven-day period between Dec. 9 and Dec. 16, marking the 19th gain during the last 20 weeks, and taking the year-to-date return to 11.19%.

"New issuance was once again exceptionally strong with $6.6 billion of deals pricing [during the Dec. 13 week]," Bitterman and Van Houten write.

"This was slightly higher than [the Dec. 6] week's figure of $6.5 billion, which was one of the highest levels on record. This takes the issuance figure to $151 billion and firmly establishes 2004 as the most active year ever.

"Issuance levels were relatively low during the third quarter but rebounded sharply during November and December," the Deutsche Bank high-yield researchers continue.

"In fact, there was over $31 billion in new issuance during the last six weeks alone. This once again shows the close correlation between returns and issuance and points to the amazing efficiency of the primary market in bringing new issues as soon as demand picks up."

Global Crossing up in trading

When the new Global Crossing bonds were freed for secondary dealings, they firmed from the price at which they were issued. One trader saw the company's dollar-denominated 10¾% senior secured notes due 2014 get as good as 99.5 bid, 100.5 offered, well up from their 98.514 issue price.

However, a second trader saw the dollar bonds finishing up around 98.75 bid, 99.5 offered.

"I did not see them trade at all in the Street," he said. "They came at a Caa1, really big spreads [against Treasuries] and I think they were actually cheaper than they were supposed to be."

He continued "it looks like they got offered out there at par [after they broke], but no one cared about that. [Ninety] eight and 3/4, [ninety] nine and 1/2, that's how they broke down. So they were bid about a quarter point better than they were issued."

A trader saw the new Warner Music floating-rate notes due 2011, which had priced at par on Friday, as hanging in at that same 100 bid, 101 offered area and likewise saw Warner's zero-coupon/9½% discount notes due 2014 at 63 bid, 64 offered, little changed from their 63.002 issue price Friday.

PanAmSat gains

Back among the established names, PanAmSat's bonds were seen by one market source as having firmed three or four points on the day, with its operating company 9% notes due 2014 up three points on the session early on, around 113, and its holding company zero-coupon discount notes due 2014 at 68 bid, better than four points up.

However, later on in the session, the bonds were seen having come down a bit from those stratospheric levels, with a trader quoting the 9% notes up perhaps a point on the day at 111.5 bid, 112.5 offered, and the zeroes "up two or three points" at 66.75 bid, 67.75 offered.

At another desk, a market source pegged the 9s going out at 111, for a 1½ point gain.

"SPOT [the company's former ticker symbol] was up a little," another market observer said, "maybe two points on the 9s."

The flurry of activity followed news that the company had made an S-1 filing with the Securities and Exchange Commission, indicating that it would sell up to $1.12 billion of new equity - just four months after the formerly public company was acquired by a Kohlberg Kravis Roberts-led buyout group from its former owners, which included 80.5% stakeholder, DirecTV Group Inc. That $4.3 billion transaction included the assumption of $750 million of debt.

In the SEC filing, the company gave no details how many shares of stock it might offer or the expected price range to get to the $1.12 billion proceeds figure.

It said that it planned to use some of the anticipated net proceeds from the stock issue to redeem $353.5 million, or 35%, of the $1.01 billion of outstanding 9% notes under the equity clawback provision in the notes' indenture, which allows the company to repurchase those notes, issued earlier this year, at a price of 109 plus accrued and unpaid interest.

PanAmSat also said that it would use some $345.2 million of the net proceeds to repay a portion of the outstanding borrowings and accrued interest under its term loan A facility. The company said it also plans to use $200 million of the IPO's net proceeds to pay a dividend to its existing stockholders after the completion of the offering.

Secondary mostly quiet

Elsewhere, things were seen as pretty quiet, which a trader said would only get quieter as the week wore on.

"It was a quiet day on the home front," he said, "with not much shakin.' The equity market didn't do a whole hell of a lot, it was flat, the bond market was up a touch, not much, and high yield was either cleaning up some stuff or just closing some positions down for the next couple of days.

"It was completely dead. We traded some odd pieces across the board here, all names - but just real silly stuff, nothing of any consequence."

Among the few names he actually saw trading around much, he said there "some odd-lot buyers of Dillards [Inc.] paper, but that was noting really to write home about.

"Tenet Health Care seems stuck in a range. But the numbers aren't really good, nobody's excited about '05 with those guys."

The Santa Barbara, Calif.-based hospital chain operator is in the midst of a big downsizing campaign that will see it having sold or closed 27 non-core or underperforming hospitals when all is said and done.

He saw its 6 7/8% notes due 2013 at 85 bid, 86 offered, while its 6 3/8% notes due 2011 and 6½% notes due 2012 were at 93.25 bid, 94.25 offered, both unchanged on the session "or maybe down a quarter.

In the gaming sector, the trader said that there had been "some activity" in Mandalay Resorts' 10¼% notes due 2007 at 113.5-114, but otherwise, "there were just some sellers cleaning up positions, between Mandalay Bay, MGM and Station Casino."

The benchmark MGM Mirage 9¾% notes were unchanged around 111.5 bid, 112.5 offered, and "that was about it. Not much else of any excitement."

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