HealthNet add-on prices; Thomson Learning slates mega-deal; HCA on the rise

By Paul Deckelman and Paul A. Harris

New York, May 29 - It was back to work Tuesday for the junk bond market - but you wouldn't know it by looking at the overall activity levels, as participants straggled back to their offices after the 31/2-day Memorial Day holiday weekend, with some traders saying that the activity levels were about as bad as Friday's had been.

HealthNet Inc. was heard by high yield syndicate sources to have successfully priced a small add-on offering late in the session. It was the only deal of the day.

Elsewhere in the new-deal arena, Thomson Learning is expected to hit the road the second full week in June to market a $2 billion-plus mega-deal, split into three parts.

Roadshow news also emerged on upcoming offerings by Pinnacle Entertainment Inc., Hub International Ltd. and Forest Oil Corp. Other companies said to be doing deals sometime soon include Ardagh Glass Group Ltd. and Reliant Energy Inc., the former seen bringing a euro-denominated deal to market this week, the latter planning to sell more than $1 billion of new paper in a two-part deal.

In the secondary market, Forest Oil's outstanding bonds were seen little moved by the news that the company has agreed to sell its Alaskan oil and gas operations for about half a billion dollars of cash and stock.

Traders were also split on the impact of Swift & Co.'s announcement that the Greeley, Colo.-based Number-Three U.S. meatpacking company has agreed to be acquired by a unit of Brazilian beef giant JBS SA.

HCA Inc.'s bonds were seen improved in what passed for active trading in a generally restrained session, although no fresh news was seen out on the Nashville-based hospital operator.

On the downside, bonds of such forest products companies as Bowater Inc., Abitibi-Consolidated Inc. and Tembec Inc. were seen lower across the board.

Health Net sells day's sold deal

The high yield primary market saw a single issue priced on Tuesday.

Health Net priced a $100 million add-on to its 6 3/8% senior notes due June 1, 2017 (Ba2/BB+) at a 168 basis points spread to Treasuries.

There had been no official price talk.

The issue price was 98.637, resulting in a yield of 6.562%.

Banc of America Securities LLC and Credit Suisse ran the books for the debt refinancing deal.

The original $300 million issue priced less than two weeks ago at Treasuries plus 170 basis points. The dollar price of the original issue was 99.769. The yield was 6.406%.

The issuer is a Woodland Hills, Calif., managed health care company.

Calendar builds dramatically

As primary market sources forecast, the new issue calendar saw a dramatic build-up as players in the United States returned from the extended Memorial Day weekend.

Hub International will start a roadshow on Wednesday for its $790 million three-part notes offer.

The Chicago-based insurance brokerage is in the market with tranches of seven-year fixed-rate and floating-rate senior notes (B3/CCC+).

In addition Hub is offering a tranche of eight-year senior subordinated notes (Caa1/CCC+).

Morgan Stanley and Merrill Lynch & Co. are joint bookrunners for the LBO financing.

Meanwhile Forest Oil will roadshow a $500 million offer of 12-year senior notes (existing ratings B1/B+) on Wednesday and Thursday.

JP Morgan, Banc of America Securities LLC, Citigroup, Credit Suisse, Deutsche Bank Securities are joint bookrunners for the acquisition financing, which is set to price on Friday.

Elsewhere Pinnacle Entertainment will start a roadshow on Wednesday for a $350 million offering of eight-year senior subordinated notes (B-), via Lehman Brothers, Bear Stearns & Co., Deutsche Bank Securities and Banc of America Securities.

The Las Vegas-based gaming company expects to price the debt refinancing and capital expenditures deal next week.

Ardagh kicks off €310 million

From the European high yield primary market, Dublin, Ireland-based Ardagh Glass Group is expected to price €310 million of 10-year senior notes (existing ratings B3/CCC+) this week.

The glass container company is offering tranches of fixed-rate notes and toggle notes in an acquisition financing deal being led by Citigroup.

Farther along

Looking past Friday, Houston-based Reliant Energy is expected to market and price a $1.25 billion two-part offering of senior unsecured notes next week.

The company is offering seven-year and 10-year tranches of notes.

Goldman, Sachs & Co., Deutsche Bank Securities, JP Morgan, Merrill Lynch & Co. will be joint bookrunners for the debt refinancing.

And Thomson Learning will begin a roadshow during the week of May 11 for a $2.14 billion three-part offering of notes.

The Stamford, Conn., publisher of textbooks and other learning products will offer $1.35 billion of senior unsecured toggle notes, $250 million of senior subordinated notes, and $540 million holdco PIK notes, according to the source.

RBS Greenwich Capital, Citigroup and UBS Investment Bank will run the books for the acquisition financing.

Puget Sound brings hybrid

Puget Sound Energy, Inc. is expected to price a $250 million offering of 60-year junior subordinated notes (Ba1/BB) on Wednesday.

Lehman Brothers, JP Morgan, and Merrill Lynch are the joint bookrunners for the deal, which will be used to refinance debt and repurchase preferred shares.

HCA bonds just what the doctor ordered

In the secondary market, HCA's bonds were looking mighty healthy, despite a lack of fresh positive news about the hospital giant, which is in the process of going private.

A market source saw its 6¾% notes due 2013 at 94.5 bid, up 1¼ points

Another source noted that its bonds were actively traded, pegging its 7 7/8% notes due 2011 up 5/8 point on the day, above the 103.5 level. However, its 6.95% notes due 2012 were seen unchanged on the day - this after having recovered from a 3 point retreat earlier - to end at 99.

Swift bonds mostly little changed

Traders generally did not see too much movement in meatpacker Swift's bonds, despite the news that the privately held company will be bought out by a unit of Brazilian meatpacker JBS in a $1.4 billion deal that includes assumption of some $1.16 billion of Swift debt.

"It's gotta be good news for them," said a trader - who added that he "didn't see a thing in Swift."

Another trader quoted its 12½% notes due 2010 not much changed at 98.5 bid, 99 offered.

But another source had those bonds firming smartly to the 104.625 level from prior levels in the mid-99 range, although trading was restrained. Swift's 10 1/8% notes due 2009 were seen at that desk essentially unchanged at 104.

Yet another trader split the difference, seeing both Swift issues up around 104.5 - but saying that this represented only a ½ point rise for each.

JBS plans to finance the deal with $700 million of new bank debt and $600 million of new 10-year bonds.

Forest Oil little moved on asset sale

Also on the deal-making front, Forest Oil announced plans to sell its Alaskan oil and gas operations to Pacific Energy Resources for $448 million in cash, most of it earmarked to pay down existing loans, and 5.5 million Pacific Energy shares, worth about $16 million by Friday's closing prices.

However, that did little for the Denver-based independent energy company's bonds, with a trader calling the 7¾% notes due 2014 unchanged at 102.875 bid, 103.625 offered.

Timber and newsprint names tumble

In the forest products sector, bonds of such companies as Bowater, Abitibi - which is in the process of being bought by Bowater - Domtar Corp. and Tembec were all lower.

A trader said Abitibi's slide "was due to some weakness in the whole sector," in quoting the Montreal-based company's 8 3/8% notes due 2015 at 89.5 bid, 90.5 offered, down a point on the session.

At another desk, Abitibi's 8½% notes due 2010 were seen a point lower at 96 bid, while its 7 7/8% notes due 2009 lost ½ point to end at 97.5

Meantime, Bowater's 6½% notes due 2015 were down ¾ point on the day at around the 89 level, while its 7.95% notes due 2011 were down ½ point at 95.75.

A trader saw Tembec's 8 5/8% notes trading unchanged to a little lower in a 60-61 context, although the credit came off its high around 61, where "a lot traded," to end at 60 bid, 61 offered. Tembec's 8½% notes due 2011 were off ¼ point at 94.5.

Domtar's 7 1/8% notes due 2015 were seen down ½ point to around the par bid level.

Those companies as a group have all recently posted soft, disappointing numbers, as they have been hurt by an ongoing slump in demand, and prices, for their principal paper output, newsprint. Most also have wood products and lumber operations as well- a business which has been adversely affected by the housing slump in the United States.

And on top of that, the recent rise in the Canadian dollar has hurt their export sales to the U.S. and other non-Canadian buyers - all of the named companies but Bowater are Canada-based - and even the South Carolina-based Bowater also has extensive Canadian operations that are affected by the currency's rise. On Tuesday, the loonie hit its highest level versus the U.S. dollar in some 30 years, after the Canadian central bank said it might raise interest rates to fight inflation. It closed at 93.37 U.S. cents, while one U.S. dollar buys C$1.0734.

Overall, a trader said, Tuesday's activity levels were "even worse than Friday's, if that's possible."

Another concurred that things were extremely quiet, pegging the widely followed CDX junk bond performance index unchanged at 100 9 1/6 - 100 11/16.

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