GenOn, Abitibi, drive-by issues spur primary to $4 billion day; new LifePoint bonds rise

By Paul Deckelman and Paul A. Harris

New York, Sept. 20 - After a relative lull on Friday, the high-yield primary market was back in business and up to full speed on Monday, pricing a half-dozen new deals carrying a total price tag of over $4 billion, while another half-dozen prospective transactions climbed onto the forward calendar, and price talk was heard on several other offerings already in the market.

A pair of megadeals led the pricing parade, as GenOn Escrow Corp., a Houston-based financing vehicle for the pending merger of power producers Mirant Corp. and RRI Energy, Inc., priced a two-part $1.225 billion deal - downsized from the originally envisioned $1.4 billion - with the eight-year and 10-year notes pricing at a discount to par.

Also pricing was a $1 billion offering from Charter Communications Inc., which came to market with a tranche of seven-year notes, upsized from the originally planned $750 million. The St. Louis-based cable service provider's offering was opportunistically timed and quickly shopped around to investors, pricing just hours after the initial new-deal announcement.

This was the case with similar drive-by deals from LifePoint Hospitals, Inc., CMS Energy Corp. and Hertz Corp. The latter deal - a $400 million offering of 7½% 2018 bonds - was a fungible add-on to the Park Ridge, N.J.-based vehicle rental giant's $300 million issue of the exact same bonds, which priced just this past Thursday. Abitibi Bowater Inc. meantime priced an upsized $850 million secured deal off the calendar.

Most of the newly priced bonds traded at, or perhaps slightly above, their respective issue prices when they hit the aftermarket. However, Brentwood, Tenn.-based hospital operator LifePoint's new $400 million deal was seen to have firmed smartly in its initial trading.

As was the case last week, secondary market activity away from the new deals was muted. However, Ally Financial Inc.'s bonds moved up by several points, with a trader citing news that the lender formerly known as GMAC has halted foreclosure-related evictions and home sales in 23 states - although the Detroit-based company also denied initial reports stating that it had halted the foreclosure actions themselves.

GenOn prices $1.225 billion

Half a dozen issuers priced a combined seven tranches, raising a total of $4.82 billion on Monday.

GenOn Escrow priced a downsized $1.225 billion amount of senior notes (B3/B) in two tranches.

GenOn, which will be the surviving entity following the merger of Mirant Corp. and RRI Energy Inc., priced $675 million of 9½% eight-year notes at 98.623 to yield 9¾%.

The yield printed at the wide end of the 9½% to 9¾ % price talk.

GenOn also priced a $550 million tranche of 9 7/8% 10-year notes at 97.676 to yield 10¼ %.

The 10-year notes priced on top of price talk that had them coming 50 bps behind the eight-year notes.

J.P. Morgan Securities Inc., Credit Suisse Securities, Deutsche Bank Securities Inc., Goldman Sachs & Co. and Morgan Stanley & Co. Inc. managed the deal, which was downsized from $1.4 billion.

Proceeds will be used to refinance debt at Mirant Corp. and at RRI Energy Inc. in connection with the merger.

Charter upsizes to $1 billion

Charter's CCO Holding, LLC and CCO Holdings Capital Corp. priced an upsized $1 billion issue of seven-year senior unsecured notes (B2/B) at par to yield 7¼%.

The yield printed on top of the price talk.

Citigroup was the left bookrunner for the quick-to-market deal which was upsized from $750 million.

Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank Securities and UBS Investment Bank were the joint bookrunners.

Proceeds will be used to repay debt under one or more term loan portions of Charter Operating's credit facilities, which may include term loans held by affiliates of the initial purchasers of the company. Proceeds will also be used for general corporate purposes.

The deal saw plenty of demand, according to a syndicate source, who remarked that Charter is name well known to the high-yield market.

Abitibi upsized

AbitibiBowater Inc. priced an upsized $850 million issue of eight-year first-lien senior secured notes (B1//) at par to yield 10¼%, at the wide end of the 10% to 10¼% price talk.

JPMorgan, Citigroup and Barclays Capital were the joint bookrunners for the Chapter 11 exist financing which was upsized from $750 million.

LifePoint drives through

Elsewhere, LifePoint Hospitals priced a $400 million issue of 10-year senior notes (Ba1/BB-) at par to yield 6 5/8%, at the tight end of the 6¾% area price talk.

Barclays Capital, Bank of America Merrill Lynch, Citigroup and Goldman Sachs & Co. were the joint bookrunners for the quick-to-market deal.

The Nashville, Tenn.-based hospital company will use the proceeds to refinance its existing credit facilities and for general corporate purposes.

Hertz adds $400 million to 7½% notes

Hertz priced a $400 million add-on to its 7½% senior notes due Oct. 15, 2018 (B2/CCC+) at par to yield 7½%.

The reoffer price came on top of the price talk.

Barclays Capital, Deutsche Bank Securities and Wells Fargo Securities were the joint bookrunners for the quick-to-market issue.

Proceeds will be used for general corporate purposes, including the Dollar Thrifty acquisition, or if the acquisition does not close, to repay corporate debt.

The add-on came less than a week following the print of the original $300 million issue, which priced at par on Sept. 16.

CMS: record low yield

CMS Energy priced a $250 million issue of 4¼% five-year senior notes (Ba1/BB+/BB+) at a 285 basis points spread to Treasuries.

The spread came at the tight end of the Treasuries plus 285 bps to 290 bps spread talk, which had been downwardly revised from Treasuries plus 295 bps area.

The bonds were sold at a reoffer price of 99.892, resulting in a 4.274% yield.

JP Morgan, Bank of America Merrill Lynch, Barclays Capital, Citigroup and Deutsche Bank Securities managed the quick-to-market deal, which was priced on the investment-grade desk.

The Jackson, Mich.-based public utility will use the proceeds to pay the cash portion of CMS Energy's 4½% cumulative preferred stock, series B, and for general corporate purposes.

CMS's 4.274% yield is the lowest yield recorded for a speculative-grade bond going back to 2001, according to the Prospect News data base.

The next lowest print came from iStar Financial Inc., which priced 4 7/8% notes due in 2009 at 99.892 to yield 4.9%, in January 2004.

NBTY sets price talk

NBTY Inc. talked its $650 million offering of eight-year senior notes (/B/) with a 9% to 9¼% yield.

The order books close at 5 p.m. ET on Tuesday. The deal is set to price on Wednesday.

Bank of America Merrill Lynch, Barclays Capital Inc. and Credit Suisse are the joint bookrunners for the LBO deal.

Whiting Petroleum for Tuesday

Whiting Petroleum Corp. plans to price a $350 million offering of eight-year senior subordinated notes (expected ratings B1/BB) on Tuesday afternoon.

Bank of America Merrill Lynch, JP Morgan and Wells Fargo Securities are the joint bookrunners for the debt refinancing deal.

LodgeNet rolls out $435 million

Meanwhile, the forward calendar continued to build on Monday.

LodgeNet Interactive Corp. will market its $435 million offering of six-year senior secured second-lien notes (expected single B ratings) during the present week.

The deal is expected to price before the end of the week.

Bank of America Merrill Lynch and JP Morgan are joint bookrunners for the debt refinancing and general corporate purposes deal.

Vertellus Specialties starts roadshow

Vertellus Specialties Inc. began a roadshow on Monday for its $325 million offering of five-year senior secured notes.

The deal is set to price early in the Sept. 27 week.

Credit Suisse and Jefferies & Co. are the joint bookrunners for the debt refinancing.

Stoneridge $175 million

Finally, Stoneridge, Inc. began a roadshow on Monday for its $175 million offering of seven-year senior secured notes.

The roadshow wraps up on Friday, and the deal is expected to price on the same day.

JP Morgan and Deutsche Bank Securities are the joint bookrunners for the debt refinancing.

LifePoint pops after pricing

When LifePoint Hospitals' new 6 5/8% notes due 2020 were freed for secondary dealings after their late-session pricing, a trader saw the bonds at a wide 100½ bid, 102½ offered on the break, up a little from the bonds' par pricing level.

But a second trader saw the $400 million issue push up to 101 bid, 102 offered, while a trader at another desk saw the bonds even better, at 101½ bid, 102 offered.

CMS coupon confounds

CMS Energy's new five-year bonds were seen by a trader at 99¾ bid, 100¾ offered, versus the Jackson, Mich.-based power producer and utility operator's 99.892 pricing level.

A trader said that he was "marveling" at the CMS deal, "for the simple reason" of its unusually low coupon: 4¼%.

"I told people to print that one out because that is the all-time - ever - lowest par-bond high-yield issue," he declared, "not a zero [coupon bond], not an OID. For all intents and purposes, it's a par bond."

He said that the fact that the company was able to get away with so small a coupon and yield - 4.274% for the latter - "is just mind-boggling."

Another trader said, tongue only partially in cheek, "I don't think you're allowed to call CMS a junk bond with that kind of a low coupon." He said that coming at a spread over comparable Treasury issues of just 285 basis points, "That's just on the tip of investment grade."

He noted, ironically, that "people were talking about the Ford [Motor Credit Co.] deal last week", which had raised some eyebrows in the market when the automotive lender was able to price $1 billion of 5 5/8% notes due 2015, which came at 99.466 to yield 5¾%. Traders at that time said that it was amazing that junk investors would accept such a small yield, even if they liked the credit and its story and that of parent Ford Motor Co.

The first trader opined that the amount of money coming into Junkbondland was "just mind-boggling," adding that "prices are going to levels that are unrealistic."

New deals trade around issue

The other new deals that made it into the aftermarket, like CMS, were seen trading near their respective issue prices, although Charter's CCO Holdings 7¼% notes due 2017 managed to push up to around 101 bid versus its par issue price, a trader said.

Among recently priced bonds, Visant Corp.'s 10% notes due 2017, $750 million of which had priced at par on Friday and then shot up to 102 bid on the break, were seen continuing to gain Monday, going out at 102¾ bid, 103¾ offered, a trader said.

Market indicators stay to the upside

Away from the new-deal world, a trader saw the CDX North American HY Series 14 index firm by ½ of a point on Monday to end at 98½ bid, 98¾ offered, after having gained ¼ of a point on Friday. The index has not yet rolled into the next series yet and is not scheduled to do so for another week, even though the company's investment grade index already did so on Monday.

The KDP High Yield Daily index meantime rose by 10 basis points on Monday to finish at 72.97, on top of the 4 bps improvement seen on Friday, while its yield came in by 3 bps to 7.76%, after having tightened by 1 bp on Friday.

The Merrill Lynch High Yield Master II index rose by 0.196% on Monday, after having improved by 0.099% on Friday. It continued to hit successive new year-to-date 2010 peak return levels, ending the day at 10.986%, up from Friday's 10.769%, the previous zenith for the year.

Advancing issues led decliners for a 13th consecutive session on Monday, holding a better than 8:6 advantage after having led by a 7:5 ratio on Friday and the previous three sessions.

Overall activity, represented by dollar-volume levels, fell by 9% on Monday, continuing the slide seen over the previous several sessions, including a 12% decline on Friday.

Ally has friends among investors

Among specific names, a trader said that Ally Financial's bonds rose by several points across the board. He called Ally "the bond of the day - up two or three points."

He saw Ally's 8% bonds due 2031 up 2½ points to 107 bid, 108 offered, while its 6¾% notes due 2014 were "also up a couple" at 103 bid, 104 offered. There was, he said, "not a lot of trading in [the two issues] - but they were definitely quoted higher." He said that in toto there was "a lot of trading in the name," even if not necessarily in those particular issues.

By the same token, Ally's 7½% notes due 2020 finished at 107½ bid, 108 offered, also up at least two points. Ally priced $1.75 billion of those bonds on Aug. 9 at 99.116 to yield 7 5/8%, and they had gradually risen since then.

At another desk, a market source saw Ally's 6 7/8% notes due 2012 at 104½ bid, up¾ point on the day, while the 8% long bonds were pegged up as much as 4¼ points, at 108½ bid. Its 11 3/8% notes due 2014 firmed by several points to 90½ bid.

"Those were big moves," the trader said, "for a [normally] quiet name,"

He said that the bonds shot up in the wake of the news reports swirling around whether the former GMAC - which does both automotive and residential lending - had imposed a foreclosure moratorium in 23 states.

Ally said that contrary to news media speculation, there was no such stoppage of the whole foreclosure process, instead indicating that "all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice."

The company said that what was being suspended was foreclosure-linked evictions and the resale of seized homes in those 23 states, which have complex judicial procedures regulating such actions.

Ally said that its GMAC Mortgage unit had previously directed "certain of its outsource vendors to allow time to address a potential issue that was raised in a number of existing foreclosures challenging the internal procedure we used for executing one or more judicially required forms."

They were directed to suspend evictions and resale closings on REO properties - Real Estate Owned, or property in the possession of a lender as a result of foreclosure or forfeiture - "where the related foreclosure could have been impacted by the same internal procedure."

The company further said that it is "reviewing certain previously completed foreclosures where the same procedure may have been used."

Ally added that a new process has already been developed and implemented so that while there might be delays in some existing foreclosures while corrective action is taken, "there will be no interruption in new foreclosures. These delays are expected to be resolved within the next few weeks and certainly before year end, without serious consequence. GMAC Mortgage has been addressing the procedural challenge for more than three months. In all other respects, the mortgage business is operating as usual."

Autos stay active

A trader said that Ally's former corporate parent back when the company, and not just the mortgage unit, was still known as GMAC, General Motors Corp., "was doing nicely," quoting the top domestic carmaker's benchmark 8 3/8% bonds due 2033 ending around 32 bid, although he said that was "pretty much where they had been." He said that the GMs had "some activity" before ending unchanged.

He meantime saw GM domestic arch-rival Ford's 7.45% bonds due 2031 around 102 bid, which he called up a point.

Another trader pegged the GM benchmarks at 32¼ bid, 33¼ offered, calling that a 3/4-point gain on the day, but saw the Ford long bonds unchanged at 100¼ bid, 101½ offered.

NewPage notes steady

A trader said that NewPage Corp.'s 11 3/8% senior secured notes due 2014 were finishing at 91 bid, 91½ offered, calling the Miamisburg, Ohio-based coated-paper manufacturer's bonds unchanged, just as they had been on Friday.

He said there had been "moderate volume" in the credit. "There was some trading there."

Blockbuster comes off peaks

From out of the distressed-debt precincts, a trader saw Blockbuster Inc.'s 11¾% senior secured notes due 2014 at 55 bid, 56 offered and said the bonds traded as high as 56 bid, 57 offered during the session, before coming off those peaks to end at 54 bid, 55 offered.

He said that was "pretty much unchanged" versus Friday's levels, but he noted that the beleaguered Dallas-based video and game rental company's bonds had pushed upward at the end of last week, presumably given a boost by a news report, echoed in other media but not officially confirmed by anyone, that billionaire investor Carl Icahn - who formerly was Blockbuster's largest individual shareholder but who sold most of what used to be a 16.5% equity stake early this year - was buying up the company's bonds, accumulating as much as one third of the company's over $900 million of outstanding bond, purportedly to be in a commanding position should Blockbuster, as expected, enter Chapter 11 to reorganize.

Elsewhere, a trader said that Sorenson Communications Inc.'s 10½% senior secured notes due 2015 trading around 57½ bid, 58 offered, calling that a 1-point rise on the day, which followed a similar-sized gain on Friday and further gains earlier last week. A week ago, the bonds had been seen around a 53-54 bid level.

There was no fresh news out on the Salt Lake City, Utah-based provider of communications equipment and services to the hearing impaired that might explain the rise.

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