Thornburg Mortgage seen up on no news, MGM Mirage also; Wendy's falls; primary seen quiet

By Paul Deckelman

New York, April 25 - Thornburg Mortgage Inc.'s bonds were seen up about 3 points on Friday, although there was no fresh news seen out about the sometimes troubled mortgage lender that might explain that rise.

Other gainers in equally featureless trading included MGM Mirage and Six Flags Inc.

On the downside, Idearc Inc. was several points lower although, again, no one saw any significant negative news out about the company.

One big loser about whom there certainly was notable negative news was Residential Capital LLC, whose bonds continued to react to the news earlier in the week that its debt ratings - as well as those of corporate parent GMAC LLC - had been cut by both Moody's Investors Service and Standard & Poor's.

Wendy's International Inc.'s bonds were lower in apparent belated reaction by investors to plans to merge the big fast-food operation with Triarc Cos. Inc., the parent of rival industry operator Arby's.

Primaryside players saw little going on Friday, although they noted that it was a fairly decent week with new deals priced for CCS Inc. and Inergy LP. The former's new bonds were meantime seen to have gone nowhere fast in Friday's aftermarket dealings, but the latter's just-priced paper moved up about a point.

Market indicators trend higher

A trader saw the widely followed CDX index of junk bond market performance up ½ point to 97¼ bid, 97¾ offered. The KDP High Yield Daily Index was meantime up 10 basis points to 75.72, while its yield tightened by 3 bps to 9.23%.

In the broader market, advancing issues led decliners by a nearly five-to-three margin, while activity, as measured by dollar volumes, eased by 19% from Thursday's levels.

"The market definitely had a better overall tone," a trader said, although he saw no real features standing out or trends to latch on to.

Another trader, while seeing the market feeling a little stronger said that essentially "it was a pretty quiet day."

Yet a third trader agreed that the junk market "was relatively quiet. In most spots, it drifted up higher. I think the stuff that had been moving up [already] was moving up." He characterized the market as "strong most of the day - it seemed to [be up] kind of across the board."

Thornburg gains ground

Several traders noted the rise in Thornburg Mortgage's 8% notes due 2013. One said that the bonds moved up 3 points at 76.75 bid, 77.5 offered. He said that he had not seen any positive news about the company that might explain such a move.

A second trader saw the bonds get as good as 77.75 bid, before going out at 76 bid, 78 offered, somewhat firmer on the day

Another trader pegged the bonds at 77 bid, up about 3 on the day. He too had seen no news on the Santa Fe, N.M.-based provider of jumbo mortgages, whose paper has bounced around for some weeks on questions about whether the company would be able to meet the margin calls on its mortgage-backed short-term borrowings.

Yet another trader, though, said he had not seen the Thornburg paper.

ResCap retreat continues

Out of that same mortgage sector, Residential Capital LLC's 8 7/8% notes due 2015 dropped 3 points to 49 bid, while its 6½% notes due 2013 also fell to 49 bid, from 52.25, in continued reaction to multiple-notch ratings downgrades the company suffered at the hands of S&P and Moody's.

Its floating-rate notes coming due on June 9 lost more than 2 points to close at 92.

ResCap parent GMAC LLC, whose credit ratings were also lowered by the two agencies on Wednesday and on Thursday, also continued to struggle. Its 6 7/8% notes due 2012 were ½ point lower at 82.5 bid, while its 6¾% notes due 2014 lost 1½ points to end at 77.

The agencies dropped their ratings on ResCap's bonds by several notches after a shakeup in the Minneapolis-based mortgage originator's board of directors resulted in the exit of two independent directors, which they each said was a potentially worrisome development.

The agencies each dropped GMAC's ratings by one notch, citing their concerns that the Detroit-based parent will likely have to come across with further support for its struggling mortgage business.

MBIA better

A trader saw MBIA Inc.'s 14% surplus notes due 2033 - nominally investment-grade rated but trading around in the junk market - move up 2 points to 92 bid, 94 offered.

The bonds had fallen from the mid-90s to lows as bad as 88 bid earlier in the week on the large quarterly loss reported by MBIA's main rival in the bond-insurance field, Ambac Financial Group Inc. However, after hitting that trough at mid-week, they gradually moved back to somewhat firmer levels.

MGM Mirage, Harrah's trading around

MGM Mirage's 8½% notes due 2010 were being quoted by a market source more than 4 points better at the 105 bid level, although there was no fresh news out on the Las Vegas-based gaming giant.

The company's bonds had already gotten a boost at mid-week on the news that authorities in China's Macau special administrative region had decided to give out no further casino licenses - a decision seen as good for MGM Mirage as well as fellow operators Las Vegas Sands Corp. and Wynn Resorts, all of which already have casinos in the former Portuguese colony.

Also in the gaming sector, a trader said that he saw "a lot of trading" in Harrah's Entertainment Inc.'s 10¾% notes due 2018, "enough to make you think that they will try to get some more bonds from the underwriter and do another add-on or something."

He was referring to a recent transaction which saw a portion of the nearly $5 billion of the bonds which had priced at par in January repriced at 84, as a result of a reverse inquiry.

Six Flags better on no news

A market source saw Six Flags' 8 7/8% notes due 2010 up 2½ points at the 83.5 level. At another desk, the New York-based theme park operator's 9 5/8% notes due 2014 were seen having gained 2 points to the 65 level.

However, there was no fresh news out on the company, which recently got a boost when it released substantially better-than-expected preliminary first-quarter attendance figures for its 21 theme, water and animal parks. The company's top management also expressed optimism that high gasoline prices and rising air fares would make its theme parks - located within driving distance of many major metropolitan areas - more attractive destinations this summer versus more exotic, but further off traditional vacation spots.

Massey Energy warms up

A trader saw Massey Energy Co.'s bonds better after the Richmond, Va.-based coal producer reported a 29% rise in first-quarter earnings versus a year ago due to higher coal prices. He saw the company's 6 7/8% notes due 2013 up about ½ point at 99.75 bid, while its 6 5/8% notes due 2010 were unchanged at 100.5 bid, 100.875 offered.

"It makes sense that the longer maturity is more volatile," he said, opining that the '10s "are trading pretty tight to [their anticipated call price]."

The company said that net income for the three months ended March 31 rose to $41.9 million, or 52 cents per share, from $32.6 million, or 40 cents per share, during the same period a year earlier. Wall Street was anticipating earnings of around 33 cents per share.

Freescale leads techs higher

Elsewhere, a trader said that Freescale Semiconductor Inc.'s bonds were "up another ½ point to a point," in "sort of steady trading - nothing was popping back and forth."

He said the bonds would go up by "1/8 to 1/4, and then a few trades took place."

The Austin, Tex.-based computer chip maker's 8 7/8% notes due 2014 were seen up 1¼ points at 85.75, while its most actively traded bond - the 10 1/8% notes due 2016 also gained more than a point to 75 bid.

He said that "most of the tech sector seemed better right off the bat," including Freescale, Amkor Technology Inc. and NXP. There was "nothing spectacular - just better buying, anywhere from ¼ point to ¾ point."

Another market source saw the company's 9 1/8% notes due 2014 gain 2 points to finish just below the 79 level.

United Rentals is busy

The first trader also saw some activity in United Rentals Inc., "its 7¾% notes due 2013 kind of continuing to trade around the price that they were [Thursday]."

Its 7½% notes due 2013 were among the most actively traded junk bonds, although they were only perhaps 1/8 point better at just above 86. He noted that the Greenwich, Conn.-based equipment rental company is scheduled to release its first-quarter results Wednesday and hold a conference call.

Wendy's holders find merger unappetizing

On the downside, Dublin, Ohio-based burger chain Wendy's International's 6.20% notes due 2014 were seen down more than 1½ points in active trading to end just below 94. In fact, according to a market source, the Wendy's bonds were among the most busily traded credits of the day.

The bonds fell even as the company's shares went up on the official announcement that Wendy's and Triarc Cos., which franchises the Arby's restaurant chain, have agreed to a $2.3 billion merger.

The combination would create the third largest fast-food restaurant chain in the United States, with about $12.5 billion in annual sales and more than 10,000 units, the companies said in a release Thursday.

Idearc moves down

Also on the downside, Idearc Inc.'s 8% notes due 2016 were a point lower, just below 70 bid.

Another market source saw the bonds down over 1½ points to just above 69.

No one saw any negative news out about the Dallas-based telephone directory publisher that would explain the retreat. Sector peer Dex Media Inc.'s 8% notes due 2013 were ½ point lower at 79.

New Inergy bonds hot, CCS not

Among recently priced issues, the new Inergy LP/Inergy Finance Corp. 8¼% add-on notes due 2016 were seen having moved up by around a point to 103 bid, 103.5 offered; they had priced at 102 on Thursday.

While those bonds were "up a little," a trader said, the new CCS Inc. 11% senior notes due 2015, which had priced Thursday at a drastically discounted 89.484, "were kind of the same," at 88 bid, 90 offered.

Two other traders said that they had not seen any dealings in either new bond on Friday. "They never did show up," one of them said.

Primary quiet with slate cleared

Those two deals, totaling $512 million - $300 million for CSS and an upsized $200 million for Inergy - had been the only real features of the week's forward calendar. With those transactions out of the way, the new-deal arena fell what one junk syndicate source called "enjoyably quiet" Friday. Another said that "nothing at all" was going on.

Newport TV deal a harbinger? Maybe...or not

Looking ahead, the only item on the upcoming week's forward calendar is Newport Television Holding LLC's $394.5 million two part deal, which went on the road Thursday and which is expected to price late in the upcoming week via joint book-running managers Wachovia Securities, Goldman Sachs and UBS Investment Bank, along with coo-manager Merrill Lynch.

The offering consists of $200 million of 13% senior PIK toggle notes due 2017, with a 75 bps step-up should the coupon be paid in notes rather than cash, and $194.5 million of 13¼% senior discount notes due 2018.

Interestingly, the Rule 144A deal for the Kansas City, Mo.-based TV station holding company carries a Caa1 rating from Moody's and a CCC+ rating from S&P.

Is it a sign of the primary's comeback from its nearly comatose condition earlier in this troubled year that an issuer is now daring to put a "triple-hook" offering out in front of potential investors?

"I wouldn't say the high yield market is back going for triple-C issuance yet," a syndicate source said, somewhat skeptically. "It's still definitely a lot of work" to bring such a deal to fruition.

However, he noted, "sometimes, with the right credit and enough explaining - you can get something done."

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