D.R. Horton, Texas Industries, Chaparral, two other deals price; Calpine gyrates on asset-sale plan

By Paul Deckelman and Paul A. Harris

New York, June 29 - D.R. Horton Inc. brought an upsized, quickly shopped seven-year note offering to market Wednesday - one of several pricings seen as issuers apparently tried to clear the decks heading towards the upcoming July 4th weekend, which will see an abbreviated session on Friday and a full market closure Monday.

Other offerings, all scheduled calendar deals, that were heard to have priced included the tandem of Texas Industries Inc. and its Chaparral Steel Co. subsidiary, which came with separate deals, the latter restructured into one tranche from two; Commercial Vehicle Group Inc.; and Compression Polymers Holdings LLC. AmerUs Group Co. meantime said it will defer its $250 million perpetual preferred stock offering.

In the secondary market, Calpine Corp.'s bonds firmed smartly in the early going on the news that the San Jose, Calif.-based power generating company will sell its oil and gas properties in a deal valued at $1.05 billion, part of its effort to monetize assets and cut debt. However, traders said those bonds came back down from their highs later in the session and finished with only modest gains.

Overall sources characterized high-yield trading as "very quiet" to "extremely quiet" on Wednesday, with most of the attention commandeered by the primary market which saw seven tranches price totaling $1.315 billion and €400 million.

One source marked the market up a little less than a quarter of a point on the session while another had it slightly weaker on the day.

"For the most part we saw good executions in the primary market," one high-yield syndicate official commented after the close.

"That has to be a positive sign, especially when we're not getting a lot of good reads from the secondary market."

Chaparral, Texas Industries price

Two of Wednesday's seven tranches came from the transaction that sees Texas Industries Inc. spinning off its Chaparral Steel Co. unit.

The biggest of the two came from Chaparral Steel which priced a restructured $300 million issue of eight-year senior unsecured notes (B1/B) at par to yield 10%, 75 basis points beyond the wide end of the 9% to 9¼% price talk. The company abandoned a planned tranche of seven-year floating-rate notes.

Banc of America Securities and UBS Investment Bank ran the books.

One market source commented that the entire steel industry was watching the Chaparral deal.

The source added that U.S. steel prices have fallen for nine consecutive months and the outlook for prices remains weak.

Another market source said that Chaparral appeared to have paid up for being a spin-off deal and for its proceeds being earmarked to pay a dividend to parent Texas Industries.

The Ba3/BB- rated Texas Industries deal, on the other hand, was said to have gone extremely well.

The company priced a $250 million issue of eight-year senior notes at par on Wednesday to yield 7¼%, on top of price talk that was revised inward to the 7¼% area from earlier talk of 7½% to 7¾%.

UBS Investment Bank and Banc of America Securities, the same bookrunners from the Chaparral deal, only in reverse order, ran the books.

D.R. Horton drives through

Elsewhere Wednesday, D.R. Horton priced an upsized quick-to-market $300 million issue of 5 3/8% seven-year notes (Ba1/BB+/BBB-) at 99.45 to yield 5.472%, via Citigroup

The debt refinancing and general corporate purposes deal from the Fort Worth, Texas-based homebuilder was upsized from $250 million.

Compression Polymers' $215 million

The session's only multi-tranche deal came from Moosic, Pa.-based Compression Polymers Holding Corp., which priced a two-part $215 million offering of senior notes (B2/B-) via Wachovia Securities.

The company priced $150 million of eight-year fixed-rate notes at par to yield 10½%, tight to the 10½% to 10¾% price talk.

The company also priced $65 million of seven-year floating-rate notes at 99.50. The notes will pay a coupon of six-month Libor plus 675 basis points and will yield six-month Libor plus 685 basis points. Price talk was six-month Libor plus 650 basis points area.

Commercial Vehicle inside of talk

The only issue to price through talk on Wednesday came from New Albany, Ohio-based truck parts manufacturer Commercial Vehicle Group, Inc. which priced a $150 million issue of eight-year senior notes (Ba3/B+) at par to yield 8%, 12.5 basis points inside the 8¼% area price talk.

Credit Suisse First Boston ran the books for the debt refinancing and general corporate purposes deal.

Cell C returns

Finally, the Wednesday session featured a revival story.

South African cellular company Cell C (Pty) Ltd. priced €400 million issue of seven-year notes (BB-/B2) at par to yield 8 5/8%, in the middle of the 8½% to 8¾% price talk.

Citigroup led the deal, which was downsized from the €675 million offering that the South African telecom pulled during the spring sell-off in the junk market.

It will get quieter

In the wake of the busy Wednesday session in the primary market, under half a billion dollars of business remains to be transacted before the Independence Day break.

Neff Rental Corp. talked its $245 million of seven-year senior secured second-lien notes at a yield of 10¾% to 11% on Wednesday.

The company is contemplating adding a tranche of seven-year floating-rate notes which it is talking at Libor plus 700 basis points area. However the deal size is not expected to grow beyond $245 million.

Pricing is expected on Thursday via Credit Suisse First Boston has the books for the Rule 144A with registration rights offering.

And Psychiatric Solutions Inc. talked its $150 million offering of 10-year senior subordinated notes (B3/B-) at 7¾% to 8% on Wednesday.

The Citigroup-led deal is expected to price on Thursday.

D.R. Horton steady, Commercial Vehicle up in trading

A trader said that the new D.R. Horton 5 3/8% senior notes due 2012, which priced at 99.45, or 165 basis points over Treasuries, went into secondary dealings at a bid level equivalent to 168 bps over, and an offered level of 163 bps over, straddling the issue price.

Another trader, however, had not seen the homebuilder's new bonds. Its existing issues, he said, "tightened maybe two or three bps," with the recently priced 5¼% notes due 2015 coming in to 178-168 bps over from 180-170 bps previously.

The trader also saw Commercial Vehicle Group's new 8% senior notes due 2013 as having advanced to 101.5 bid, 102 offered, well up from their par issue price earlier in the session.

Calpine gains on asset sale, then slips

Back among the established issues, Calpine looked like it was going to notch some big gains after the company announced the planned sale of all of its domestic oil and gas exploration and production assets to an indirect subsidiary, Rosetta Resources Inc.

That announcement caused its 8½% notes due 2008 to push up to 73.5 bid, 74.5 offered from prior levels around 71 bid, 72 offered - but by the end of the day, "the rally faded," a trader said, and the bonds gained perhaps half a point to 71.5 bid, 72.5 offered.

"Right out of the gate, the bonds shot up 2½ points the first hour," he said, "but then the stock faded as well as the bonds." Calpine shares, which got as good as $3.75 in New York Stock Exchange dealings, actually ended at $3.48, down 12 cents (3.33%).

The trader saw the company's 8¾% notes due 2007 up perhaps a point from prior levels at 77.5 bid, 78.5 offered, while its 8½% notes due 2011 were half a point better at 68 bid, 69 offered.

A market source who had seen the 83/4s get as good as 80.5 bid, up three points on the session, saw those bonds going home with only half that gain at 79.

Yet another trader saw the 8½% notes opening at 73 bid, 75 offered, getting as good as 75 bid, but then falling back to 71 bid, 73 offered "when they [investors] realized they weren't going to get all the money they sold the plants for," an apparent reference to earlier Calpine sales of several generating plants.]

Calpine has set itself a goal of lowering its $17.9 billion debt load to about $15 billion by the end of this year, largely by using the proceeds of asset sales, in this case, its oil and gas fields.

Auto sector strong

Energy prices were on the minds of traders in other sectors as well, with automotive names seen continuing to do better, no doubt helped by a second straight session of falling crude oil prices. Those prices had spiked up to an all-time closing New York Mercantile Exchange high Monday of $60.54 per barrel of light sweet crude for August delivery, but then fell back from peak $58.20 on Tuesday and declined again to $57.26 in Wednesday's dealings.

The fall in oil prices - which has not yet been replicated at the gasoline pumps - has got to be good news for an automotive sector which has seen higher gas prices choking off sales of SUVs, pickup trucks and other large vehicles - reliable, profitable mainstays of General Motors Corp. and Ford Motor Co.

News of the continued decline in oil prices caused a market source to peg GM's benchmark 8 3/8% notes due 2033 a point higher at 84 bid, and Ford Motor Credit Co.'s 7% notes due 2013 likewise up a point at 96.25.

Visteon rises, helped by upgrade

The bonds of automotive suppliers who depend on Ford and GM for a large part of their sales were also seen higher, with Visteon Corp.'s 8¼% notes due 2010 helped by the general oil-price induced firmness in the sector. A trader said the bonds also "popped up a little on their upgrade," by Moody's Investors Service, "but then came off their highs."

He saw the Van Buren Township, Mich.-based auto components maker's 81/4s go as high as 92.75 bid before easing from that peak to end at 92 bid, 93 offered, up a point.

Moody's raised Visteon's corporate credit and other ratings to B2 from B3, citing the positive effects, including improved liquidity, from the company's recently announced restructuring deal with former corporate parent Ford, which will take over the running of a number of unprofitable plants, relieving its erstwhile subsidiary of that burden.

Other auto names seen better on the renewed sector strength included Goodyear Tire & Rubber Co.'s 7.857% notes due 2011, which were a point better at 97; ArvinMeritor Inc.'s 8¾% notes due 2012, up 1½ points at 103.5 bid, and Tenneco Automotive Inc.'s 8 5/8% notes due 2014, which also gained 1½ points, to end at par.

United up, Delta steady

Yet another sector which has been closely watching the ups and down of the oil markets has been the airlines, which are caught in a vise between rising fuel costs and essentially inflexible lower ticket prices.

A trader saw United Airlines parent UAL Corp.'s notes up a little at 13 bid, 14 offered, although Delta Air Lines Inc. bonds were seen little changed, its 7.70% notes due 2005 still hovering around the 90 level.

Even though the oil prices have moderated over the past several sessions, analysts are cautioning that the beleaguered sector's problems run considerably deeper than just sky-high fuel costs (see related story elsewhere in this issue).

William Lyon gains

The bonds of William Lyon Homes were higher, after the Newport Beach, Calif.-based homebuilder's controlling stockholder, retired General William Lyon, withdrew his previously announced offer to take the company private at $82 per share - well below the $96 at which the stock currently trades.

The company's bonds had fallen when the deal was first proposed back in April, on fears that Lyon might structure the going-private transaction as a debt-funded LBO deal. With the general having run up the white flag in the face of unified shareholder opposition to this plan, the company's 7½% notes due 2014 were two points better at 91 bid, 93 offered.

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