Bill Barrett, Royal Caribbean upsize and price, Targa, Digicel also sell; more deals Wednesday

By Paul Deckelman and Paul A. Harris

New York, June 30 - The month of June, the second quarter and the first half of the year came to a rousing conclusion on Tuesday, with four deals totaling nearly $1 billion - two of them upsized - successfully pricing, boosting the first-half high yield new issuance total to well over $60 billion, mostly from U.S.-based borrowers.

Bill Barrett Corp. was first out of the chute with an upsized offering of seven-year notes, and those bonds were clearly the star of the day in the aftermarket. When the Denver-based oil and gas exploration and production company's new issue crossed over to the secondary side of the fence, it was head to have initially risen a point on the break - and then to have continued gaining several more points to around the par level, before going home slightly off that peak level

Also out of the energy sector came a $250 million pricing of eight-year notes for Targa Resources Partners LP - the same size as the sector peer Bill Barrett's deal. Targa's new bonds gained nearly a point when they were freed for secondary dealings.

Apart from those energy deals, Royal Caribbean Cruises Ltd. hauled anchor with an upsized offering of six-year notes, while Jamaican wireless provider Digicel Ltd. came to market just hours after a morning announcement of plans for an add-on offering of the same kind of bonds that it had priced earlier in the year, as well as a secondary offering of a big chunk of existing bonds held by the company's principal owner.

Even as that quartet of deals was pricing, market participants were hearing price talk on three other deals which were seen as likely to price on Wednesday - the gigantic dollar- and euro-denominated mega-deal for Italian telecommunications operator Wind Telecomunicazioni SpA, a nearly $1 billion offering of eight-year notes from Wayne, N.J.-based specialty retailer Toys 'R' Us Inc., and a considerably smaller deal from Casella Waste Systems Inc.

Besides those deals, primaryside players were anticipating additional possible pricings Wednesday from One Communications Corp., Commercial Barge Lines Co. and Real Mex Restaurants Inc. They said the deals are more likely to get done on Wednesday than be floated off for Thursday's pre-holiday session, which, by all accounts, is expected to slow to a crawl and see an early end to business - even though officially it is supposed to be a regular, full-length session.

Apart from new deal-related activity, the secondary market was seen as sleepy, though with a firmer bias. There was fairly active trading in Weyerhaeuser Co.'s bonds, although no fresh news was seen out on the Federal Way, Wash.-based forest products company.

Ford Motor Co.'s long bonds - after languishing in the middle '50s for nearly two weeks, were seen back on the rise, with some quotes around 60 bid.

Overall junk outperformed stocks on Tuesday, market sources said.

Cash bonds were 1/8 to ¼ point higher on the day.

Money is moving into junk from stocks, the source said, adding that funds are taking money out of their stock baskets and putting it into their high-yield baskets.

A $1.5 billion day

As expected, Tuesday was a busy day in the primary market.

Four issuers combined to price a face amount of $1.5 billion of new junk.

Royal Caribbean upsizes

Royal Caribbean Cruises priced an upsized $300 million issue of 11 7/8% six-year senior unsecured notes (Ba3/BB-) at 97.399 to yield 12½% on Tuesday.

The yield came on the wide end of 12¼% to 12½% yield talk. The issue price came slightly rich to the "approximately 3 points" discount talk.

The issue was increased from $250 million

Morgan Stanley, Banc of America Securities and Goldman Sachs were joint bookrunners for the debt refinancing.

Bill Barrett on the tight end

Meanwhile, Bill Barrett priced an upsized $250 million issue of 9 7/8% seven-year senior notes (B1/B+) at 95.172 to yield 10 7/8%.

The yield came on the tight end of the 11% area price talk.

The deal was expanded from $200 million.

Banc of America Securities, Deutsche Bank Securities and J.P. Morgan were joint bookrunners for the debt refinancing from the Denver-based oil and gas exploration, development and production company.

The deal was multiple-times oversubscribed, according to a syndicate source, who cited the new Penn Virginia Corp. 10 3/8% notes due 2016 as a good comparable for the Barrett bonds.

Penn Virginia, which priced on June 11 in a $300 million issue, at 97.003, yields 11%, the syndicate source recounted.

The new Barrett bonds came 12.5 bps inside the Penn Virginias.

However the market was better on Tuesday than it was on June 11, the official conceded.

Targa oversubscribed

Elsewhere Targa Resources Partners LP and Targa Resources Partners Finance Corp. priced a $250 million issue of 11¼% eight-year senior notes (B2/B) at 94.973 to yield 12¼% on Tuesday.

The yield came at the tight end of the 12¼% to 12½% price talk.

Barclays Capital, Banc of America Securities, Deutsche Bank Securities and RBS Securities were joint bookrunners for the debt refinancing and general corporate purposes deal from the Houston-based midstream company.

The deal played to a solid book that was around 21/2-times oversubscribed, according to a syndicate source.

However, the source allowed, the book was substantially heftier prior to the company moving the deal to the tighter end of the price talk.

Digicel prices on rich end

Jamaican wireless company Digicel participated in a Tuesday transaction in which $250 million of its 12% notes due April 1, 2014 (B1//B-) were sold.

The transaction featured a $160 million add-on to the company's $350 million existing issue. In addition, company owner Dennis O'Brien sold $90 million of the 12% notes due 2014 which he held.

The notes were priced at 99.50 to yield 12.124%.

The re-offer price came rich to the 99 area price talk.

Credit Suisse, Citigroup and JP Morgan were joint bookrunners.

The company will use its share of the proceeds from Tuesday's transaction for general corporate purposes.

None of the proceeds from O'Brien's portion of the sale will go to the company.

Wind sets tranches and talks €2.7 billion

The Wednesday primary market session figures to be an extremely busy one, sources say.

In part that is because Wednesday is apt to be the final session during the pre-Fourth of July week where most of the market's participants will be in their seats.

As for Thursday, ahead of the Friday close, players are apt to begin drifting toward airports, golf courses and barbecue pits.

In that spirit, price talk surfaced on several deals, Tuesday.

Wind Acquisition Finance SA, a financing unit of Italy's Wind Telecomunicazioni SpA, set tranche sizes and price talk for its €2.7 billion equivalent offering of eight-year senior notes (B2/BB-).

The notes, to be sold in tranches sized at $2.1 billion and €1.25 billion, are talked with an 11¾% coupon to price at a discount and yield 12¼% to 12½%.

Deutsche Bank Securities, Credit Suisse and Banca IMI are joint global coordinators and lead bookrunners.

Proceeds will be used to refinance €2 billion of payment-in-kind loans due 2011 and to fund a dividend to Weather Investments SpA, the holding company that acquired Wind in 2005.

Toys talks $950 million

Another hefty deal set to price on Wednesday comes from New Jersey-based specialty retailer, Toys 'R' Us, Inc.

TRU 2005 Re Holding Co. I, LLC, a subsidiary of Toys 'R' Us, set price talk for its $950 million offering of eight-year senior notes (B3/B+) at 10¾% to 11% on Tuesday.

The notes are expected to price with approximately 3 points of original issue discount.

The order books close at noon ET on Wednesday, and the notes are expected to price after that.

Banc of America Securities, Deutsche Bank Securities, Goldman Sachs and Wachovia Securities are joint bookrunners for the debt refinancing deal.

Casella sets price talk

Elsewhere Casella Waste Systems talked its $205 million offering of five-year senior second-lien notes (B2/B+) to yield 11¾% with an original issue discount of approximately 3 points.

Pricing is set for Wednesday.

Banc of America Securities, J.P. Morgan and Calyon Securities are joint bookrunners for the debt refinancing deal from the Rutland, Vt.-based waste disposal and recycling company.

The rest of the calendar

Aside from the above, two deals are parked on the active forward calendar, under the heading of business expected to price before the holiday weekend.

Price talk is expected Wednesday for Commercial Barge Line Co.'s $200 million offering of eight-year senior secured notes, an informed source said late Tuesday.

The deal could also price Wednesday.

Banc of America Securities, UBS Investment Bank, SunTrust Robinson Humphrey and Wachovia Securities are joint bookrunners for the debt refinancing and general corporate purposes deal.

However no news was heard on One Communications Corp.'s $275 million offering of first-priority six-year senior secured notes via Morgan Stanley and J.P. Morgan.

Initial timing on the deal had it pricing early in the present week.

New Bill Barretts bounce, then back off

When the new Bill Barrett 9 7/8% senior notes due 2016 were freed for trading, they were initially seen at 96 bid, up from the 95.172 level at which they had priced.

However, within minutes the bonds had jumped further to levels as high as 991/2. A trader, queried about whether this represented a specific endorsement of the Colorado-based energy E&P company's deal specifically, or a generalized hunger for new paper, replied that "nobody owns it, so [buyers] have plenty of room to add."

However, after hitting those peak levels, the Barrett bonds backed away from their zenith. "The issue did OK," a trader said, "even as good as 99½ at one point, but then kind of just died." He saw them going out at 98¼ bid, 98½ offered. Another pegged them at 98 bid, 99 offered.

New Targas trade up

Traders saw the new Targa Resources Partners 11¼% notes due 2017 get as good as 96 bid, 97 offered, up from the 94.973 level at which the Houston-based natural gas company priced its paper.

A trader saw them moving between a low tick of 95 5/8 bid and a high of 961/4, before finally going home at 95 7/8.

At another desk, a market source saw the bonds late in the session at 95¾ bid, 96 1/8 offered.

Royal Caribbean, Digicel edge up

There was not very much secondary dealing in the new Royal Caribbean and Digicel bonds, both of which priced fairly late in the session.

A trader saw Miami-based cruise line operator Royal Caribbean's11 7/8% notes due 2015 - upsized to $300 million from $250 million initially - slightly firmer at 98 bid, 99 offered. Those bonds had priced at 97.399 to yield 12½%.

The new tranche of Digicel 12% notes due 2014, which had priced at 99½ to yield 12 1/8%, were quoted by a trader at 100½ bid.

New UAL bonds continue climbing

Elsewhere among the new or recently priced issues, a trader said that the new United Air Lines Inc. 12¾% senior secured notes due 2012, which came to market on Monday at a price of 90.07 to yield 17%, had moved up to levels between 93½ and 94, versus Monday's initial aftermarket levels of 92½ bid, 93½ offered.

However, he qualified that, noting that he "did not see a lot" of the Chicago-based airline operator's deal - he noted its relatively modest size at $175 million as a factor. While there actually was "more trading than I'd thought," still, he said, it was only "a few million bonds - probably two or three trades."

Although activity in it was quiet, he said the new United paper "traded up nicely, with that kind of yield [17%]." There was "not a lot of trading, though."

Toys takes a tumble

With Toys 'R' Us poised to price its $950 million of senior notes due 2017, probably during Wednesday's session, the retailer's existing 7 5/8% notes due 2011 were seen lower in fairly busy trading, down 1½ points on the day at 91 bid; those bonds had jumped to the mid-90s level last week, in active dealings, on the news that the company would do its new bond deal.

Market indicators rise again

Back among the established issues with no new-issue connections, the CDX Series 12 High Yield index - which had gained 1 1/8 point on Monday - was heard by a trader to have risen by another ¼ point on Tuesday to end at 84¼ bid, 84¾ offered.

The KDP High Yield Daily Index, which had gained 7 basis points on Monday, rose another 23 bps on Tuesday to end at 62.48, while its yield tightened by 6 bps to 10.59%.

In the broader market, advancing issues - which had led decliners on Monday for a fourth consecutive session - continued that pattern on Tuesday by a better than six-to-five margin.

Overall market activity, measured by dollar-volume totals, jumped 26% from Monday's levels.

Why Weyerhaeuser?

Traders said there didn't seem to be too much happening other than new deal-related activity.

However, one saw a fair amount of activity in Weyerhaeuser's 7 3/8% notes due 2032, which traded around the 80 bid level, with over $25 million of the bonds having changed hands. He saw "no special news" that might explain the sudden popularity of the forest products company's bonds, suggesting that recent analyst commentary about the desirability of consolidation in the sector might be a driver.

He also noted the fact that "it's a former investment grade [credit] and a big deal too" - $1.25 billion - "so they trade in bigger lots." He saw "a couple of $5 million-plus bond trades" at around the 79¾ level.

Last week, the bonds had traded around 791/2, and were trading at 79¾ for much of the day Tuesday, so despite the heightened activity, "it was not up a lot."

Ford edges back upward

A trader saw Ford Motor Co.'s 7.45% bonds due 2031 up 2 points on the day at 58 bid, 60 offered, while another trader also saw the Ford long bonds at 58 bid, 60 offered.

At yet another desk, a market source pegged the bonds up nearly 4 points on the day to the 60 level.

Those bonds had climbed steadily throughout April, May and early June to hit a peak level of 70 bid midway through the latter month - well up from levels below 30 at the beginning of April. The bonds had risen consistently following the company's successful debt exchange in early April that sharply reduced its obligations and put it on a better financial footing, as well as investor relief that the Dearborn, Mich.-based Number-Two domestic car manufacturer had managed to avoid the sorry fate of traditional "Big Three" rivals General Motors Corp. and Chrysler - sliding into bankruptcy and being at least partially dismembered as part of the restructuring process.

However, after having more than doubled in price by mid-June, Ford bonds began to run out of gas, and slid over the space of several sessions from around 70 down to the mid-50s, where they had remained for much of the past two weeks, until Tuesday's upside session.

Ford Motor Credit Co.'s floating-rate notes due 2012 were up 7/8 point at 77 1/8 bid.

Meanwhile, GM's own long bonds, the 8 3/8% benchmark bonds due 2033, were up ¼ point at 13 bid, 14 offered.

Among the parts suppliers, ArvinMeritor Inc.'s 8 1/8% notes due 2015 gained nearly 3 points to end at 53. TRW Automotive Holdings Corp.'s 7¼% notes due 2017 were being quoted up 5 points at 70 bid. Those bonds were seen having gotten a boost from the announcement late last week of the company's successful modification of its debt covenants and the following upgrade from J.P. Morgan Chase & Co., which called TRW "a clear survivor" in the troubled parts-supplier parking lot.

A trader saw Lear Corp.'s 5¾% notes due 2014 at 27 bid, 29 offered, up from 25½ bid, 26 offered on Monday, continuing to climb on speculation that the Southfield, Mich.-based maker of interior components might be nearing an announcement on a pre-packaged bankruptcy restructuring.

A market source at another desk saw the Lear bonds up 2 points at 28.

Meanwhile, the deadline for the company to make a $38 million interest payment on two series of bonds came and went, with no comment from the company Tuesday evening on whether it had made the payment or had reached an agreement with its lenders to restructure its debt..

Lear was supposed to have made the interest payment on its 8½% notes due 2013 and 8¾% notes due 2016 on June 1, but instead invoked the standard 30-day grace period, as it sought more time to resolve its debt problems.

Rite Aid rally resumes

A trader saw Rite Aid Corp.'s 8 5/8% notes due 2015 gain more than 2 points on the day to the 67 bid level, resuming the upside push seen last week after the Camp Hill, Pa.-based Number-Three U.S. drugstore chain operator unexpectedly reported a smaller than feared fiscal first-quarter loss.

Another trader saw those bonds at 66½ bid, 67½ offered, while pegging its 10 3/8% secured notes due 2016 at 89¼ bid, 90¼ offered, little changed from previous levels.

A market source called those bonds 90, up a little on the day.

Rest of the week seen quiet

Several traders said that they expect things to quiet down markedly from here on this week, with Friday's commemoration of Independence Day fast approaching; U.S. fixed-income markets and other financial markets as well will be closed that day.

For the first time in anyone's memory, that full-day market shutdown will not be preceded by the usual 2 p.m. ET close the day before -- which in actual practice usually amounted to a finish closer to noon ET - since the Securities Industry and Financial Markets Association, the body which recommends such closes, announced back in early April that it had changed its schedule for the remainder of 2009 and going forward after that to eliminate seven of the traditional 12 U.S. pre-holiday early closes throughout the year, starting with this year's Independence Day. (Early closes were also eliminated for the sessions immediately before Labor Day, Columbus Day, Veterans Day, Thanksgiving, and, beginning next year, Martin Luther King Day and Presidents Day; the usual full-day shutdowns on the holidays themselves remain in place, as does the early close on the Friday after Thanksgiving.).

Even without a Sifma early-close recommendation, though, some market participants say it definitely will not be business as usual on Thursday - they saw people scheduling themselves as if the April announcement eliminating those pre-holiday half-sessions had never occurred.

"No," said one trader who was asked if he was going to be in all day, until the regular closing time, on Thursday. "It's still going to be a half day." He predicted that "anybody who can be out on Thursday - will be. It's one of those days where you turn to the person next to you and ask "what is it worth to you to be off that day?"

"I assume that for all intents and purposes, after 10 o'clock [a.m. ET], it'll be really slow," another trader declared.

A third opined that "the only reason it's not an early close is, I guess, because [Treasury Secretary Timothy] Geithner had said he didn't see the need for an early close before those holidays, and everyone was like 'OK, fine.'"

He said that he had spoken to some people who planned to work through Tuesday night - "and then take Wednesday and Thursday, so they can turn it into a five-day weekend."

He predicted "a dramatic fall off" in the number of people who would be in the remainder of the week after that, following the ends of both the quarter and the month on Tuesday and with the looming three-day weekend that begins on Friday.

"A lot of people will try to stretch it into more - and then they can come back and put in a full week next week."

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