Windstream prices drive-by; Interactive Data, Calumet, Inaer shop deals; Fidelity bonds stay up

By Paul Deckelman and Paul A. Harris

New York, July 12 - Windstream Corp. blew into the high-yield market on Monday with a quickly shopped $400 million offering of eight-year notes. Traders saw the Little Rock, Ark.-based telecommunications company's new issue trading up a little to the par, bid level when they were freed for aftermarket dealings.

High-yield syndicate sources meantime saw a trio of deals launched.

Petroleum refiner and chemical products manufacturer Calumet Specialty Products Partners LP began a roadshow for a $450 million issue of 10-year bonds.

Financial market information provider Interactive Data Corp. was preparing to hit the road for a week beginning on Tuesday to market its $700 million offering of eight-year bonds.

And from Europe came word that Spanish helicopter services provider Inaer Aviation Finance Ltd. will roadshow a €470 million tranche of seven-year secured notes this week in Europe.

Among recently priced new deals, Fidelity National Information Services, Inc.'s $1.1 billion two-part offering, which priced late on Thursday and then shot up by several points on Friday, was seen holding onto those gains on Monday.

Among the more established issues, traders again saw more upside movement in the bonds of energy companies associated with the Gulf of Mexico oil spill, notably BP plc, which was reported in talks to possibly sell some assets to raise $10 billion and was also reported making progress towards finally capping its ruptured undersea oil well, which has been spewing thousands of gallons of oil per day into the Gulf since the April 20 drilling-rig accident.

Skilled Healthcare Group Inc.'s bonds were seen having risen into the upper 70s, albeit in light volume, buoyed, along with its shares, by the possibility that the embattled nursing home operator may yet avoid bankruptcy, despite a mammoth legal judgment against it last week by a California jury.

Windstream tight to talk

Monday's sole new issue came in the form of a drive-by from Windstream.

The Little Rock-based telecom priced a $400 million issue of 8 1/8% eight-year senior unsecured notes (Ba3/B+/BB+) at 99.248 to yield 8¼%.

The yield printed at the tight end of the 8 3/8% area yield talk. The re-offer price came slightly rich to discount talk of about 1 point.

Morgan Stanley, Deutsche Bank Securities and Goldman, Sachs & Co. were the joint bookrunners.

Proceeds will be used to repay the company's revolver and to finance the acquisition of Iowa Telecom. Any remaining proceeds will be used for general corporate purposes.

The order book was heard to be roughly two times oversubscribed, according to a trader from a high-yield mutual fund who spoke shortly before terms on the Windstream deal rolled out on Monday afternoon.

The trader was looking for the deal to upsize. However, that upsizing did not materialize.

Away from the bookrunner, the Windstream 8 1/8% notes due 2018 were 99¾ bid, par ½ offered versus the 99.248 issue price, according to a debt capital markets banker who spoke just after the Monday close.

Interactive Data's $700 million

The forward calendar built out on Monday.

Interactive Data, in conjunction with Igloo Merger Corp., will start a roadshow on Tuesday for a $700 million offering of eight-year senior notes (Caa1/B-).

The roadshow wraps up on July 20.

Barclays Capital Inc., Bank of America Merrill Lynch, Credit Suisse and UBS Investment Bank are the joint bookrunners.

Proceeds will be used to help fund the $3.4 billion LBO of the company by Silver Lake and Warburg Pincus.

Calumet starts roadshow

Elsewhere, Calumet Specialty Products and Calumet Finance Corp. began a roadshow on Monday for their $450 million offering of 10-year senior unsecured notes

The roadshow concludes on Friday.

JP Morgan and Bank of America Merrill Lynch are the joint bookrunners.

The notes are expected to receive mid-single B credit ratings.

Proceeds will be used to repay the Indianapolis-based specialty hydrocarbon products producer's senior secured term loan and repay a portion of its revolver.

Inaer €470 million deal

Meanwhile from Europe, Spain's Inaer Aviation began a brief roadshow for its €470 million offering of seven-year senior secured notes (B2/B).

The roadshow wraps up on Thursday.

JP Morgan, Barclays Capital, BNP Paribas, KKR Capital Markets and Banco Santander are the underwriters.

Proceeds will be used to refinance debt, to fund Kohlberg Kravis Roberts & Co.'s 49.9% stake in Inaer and for general corporate purposes.

Inaer is one of two European companies expected to price junk notes during the present week.

England's Care UK Health & Social Care plc was scheduled to begin a brief roadshow on Monday for its £250 million offering of seven-year senior secured notes (B2).

That roadshow also wraps up on Thursday.

Citigroup, Royal Bank of Scotland, BNP Paribas, HSBC and ING are the joint bookrunners.

Proceeds will be used to fund the leveraged buyout of the company by Bridgepoint Capital.

$12 billion month?

With Windstream in the tally, month-to-date issuance at the July 12 close came to just over $3.2 billion, according to Prospect News data.

Heading into the Independence Day holiday, a debt capital markets banker said that the month of July could see $12 billion to $15 billion of issuance.

Although this assertion generated a few sniffing noises, one high-yield mutual fund manager, reckoning that there are still 14 sessions left to play out before the beginning of August, said that $12 billion looks completely possible.

Should these market-watchers prove correct and July will have indeed seen $12 billion-plus, it would come out as the biggest month for issuance since April, which saw just under $34.7 billion.

Fidelity bonds hold gains

A trader saw Fidelity National Information Services' big two-part mega-deal holding its own in Monday's dealings, quoting the Jacksonville, Fla.-based banking and payments technology provider's $600 million of 7 5/8% notes due 2017 at 103½ on the bid side versus their par issue price.

He also saw the company's $500 million of 7 7/8% notes due 2020 at 103¾ bid, also versus their par issue price.

"So they could be a tad higher," he said, "I just never really saw the offering.

"It sounds like everyone got pretty beat up in their allocations."

Those bonds had priced late in the session on Thursday and then, according to another trader, "had a great day on Friday," soaring more than 3 points that session and then holding onto those gains on Monday.

Market indicators are mixed

Among established issues having no new-deal connections, a trader saw the CDX North American HY Series 14 index off by ¼ of a point on Monday to end at 96 3/8 bid, 96 5/8 offered, after having gained ¼ of a point on Friday.

But the KDP High Yield Daily index meantime rose by 7 basis points on Monday to finish at 71.07, after having shot up by 28 bps on Friday. Its yield came in by 3 bps on Monday to 8.49%, after having narrowed by 10 bps on Friday.

Advancing issues led decliners for a sixth consecutive session on Monday, although their advantage narrowed to around a six-to-five margin from the seven-to-four ratio seen on Friday.

Overall activity, represented by dollar-volume levels, rose by 11% on Monday, after having nosedived by 45% on Friday.

A trader said that the over junk market was up by about ¼ of a point to ½ a point "across the board," although he added, "Nothing was standing out, it was just better buying."

Another trader said that it seemed to him that most names were lower, except for the oil credits.

Gulf of Mexico energy names move up

A trader said that the paper of oil companies connected with the Gulf of Mexico oil spill were up around a point to 1½ points, probably helped by news reports that international oil major BP, the 65% owner of the blown-out Macondo Prospect well that has been spewing thousands of gallons of oil per day into the Gulf, is in talks with Apache Corp. and possibly other would-be buyers of assets, as BP looks to raise another $10 billion to augment the $20 billion it has pledged to a cleanup and claims-paying fund.

Also helping to boost BP's bonds, as well as its shares - which gained nearly 8% on greater-than-average volume - was the news that BP had installed a new sealing cap on the blown-out well, raising the possibility that the flow of oil from the well might finally be halted, which would be a key step in bringing the company's nearly three-month environmental, financial and public relations disaster to a conclusion.

However, BP cautioned that it could be another 48 hours before the company knows for sure if the cap has entirely sealed the well - or whether it's back to the old drawing board.

The trader saw the company's BP Capital Markets plc's 5¼% notes due 2013 around 98 bid, up 1½ points, while its 4¾% notes due 2019 were also up 1½ points, to around 92 bid.

He noted news out on the beleaguered British oil giant: "You can scroll the headlines and see all that good stuff, all the cute things they're talking about - the stock is up, they're talking about plugging the hole, asset sales, yadda yadda yadda."

He saw also saw Anadarko Petroleum Corp.'s 5.95% notes due 2016 around 94½ bid, up a point on the day, and saw that the Woodlands, Tex.-based independent energy exploration and production company's 6.20% bonds due 2040 were trading in an 86-87 context, last quoted at 87 bid, which he called up 1½ points.

Anadarko is 25% owner of the busted well, but has so far refused to pay a dime of the well's enormous cleanup costs, asserting that the sinking of the leased drilling rig Deepwater Horizon back on April 20 after an explosion and a fire aboard the craft was totally due to managing partner BP's negligence, a charge BP has denied.

Deepwater Horizon owner Transocean Inc.'s 6% notes due 2018 were first trading around a 951/2-96 bid context, up about a point on the day, but by the end of the day had moved up to 97, "where more of the activity was," calling that up almost 2 points.

And he saw ATP Oil & Gas Corp.'s 11 7/8% second-lien senior secured notes due 2015 around 73 bid, 74 offered versus levels around 71 on Friday, on "a lot of volume, a lot of action."

The Houston-based energy exploration and production company's bonds had recently had dipped as low as around 68 bid, 69 offered on investor worries that the tough federal restrictions on deepwater oil drilling in the Gulf of Mexico in the wake of the Deepwater Horizon disaster might hurt the company, since a large portion of its oil and gas reserves are in the deepwater sectors of the Gulf.

The government announcement late in the day that it had reinstated the deepwater ban in the Gulf of Mexico through the end of November had no apparent impact on ATP's bond levels.

ATP was "hanging in there," another trader said, quoting the bonds in a 72 bid, 73 offered context.

Skilled Healthcare rebound continues

A trader saw Skilled Healthcare's 11% notes due 2014, which had been trading in the low-to-mid 70s last week, ending the day up at 78½ bid, 78¾ offered, which he called up 2½ to 3 points. However, he said that high print at the end of the day represented only one trade.

With a relatively small outstanding balance of less than $130 million, "it's a thin trader," he said of the credit, "so it's more quotes, not significant."

He added that they were "up 8 points from the bottom - but on only one trade, whatever that means."

With so relatively few bonds out, he further declared, "A trader can move that almost anywhere he wants."

Another market source actually saw two trades around the end of the day, both of round-lot size, quoting the bonds going out at 78¾ bid, well up from previous levels.

The Foothill Ranch, Calif.-based nursing home operator's bonds had gyrated around last week in the upper 60s and low 70s, well down from pre-news levels above par, after a California state court jury hearing a class-action suit against the company socked it with a staggering $671 million in damages, and that figure could rise still further should the jury decide on big punitive damages. While the company has indicated that it may appeal the verdict, some observers doubt that it can because it would have to post a bond for at least $1 billion in order to appeal - cash it does not have and has no way of getting.

Analysts have raised the possibility the company may be forced into bankruptcy if the judgment is allowed to stand.

But at another desk, a trader who also saw bonds in the upper 70s said the bonds may have gone up because "there's definitely a camp out there that believes this verdict is going to be overturned.

"With that in mind, obviously, there are people willing to take a shot down here at these levels - they were 104-105 prior to the news."

Investors were also heartened somewhat by a Barclays plc research note to clients on Friday in which analyst Brendan Strong theorized that even with that scary-sounding $671 million judgment, Skilled Healthcare might still reach a settlement over the next few weeks to satisfy the plaintiffs in the class-action suit without having to go bankrupt.

Skilled Healthcare's New York Stock Exchange-traded shares - which on Thursday had jumped some 54% from the low-down levels to which they had plunged on Wednesday on news of the verdict - were seen up another 15 cents, or 6.94%, on Monday, ending at $2.31 apiece. Volume of nearly 1.8 million shares was almost triple the norm.

Sorenson slippage continues

A trader saw Sorenson Communications Inc.'s 10½% notes due 2015 trade as low as a wide 54 bid, 59 offered context, before trading in a 58 bid, 60 offered range and finally ending around 58 bid, which he called down a couple of points on the session from the levels in the lower 60s to which the bonds had fallen last week from their prior levels near 70.

Sorenson, a second trader concurred, "was talking a little more of a trip down," quoting the bonds in that 54 bid, 59 offered area.

Those bonds had apparently been pushed lower by market reaction to the federal government recently granting a lower reimbursement rate than the Salt Lake City-based provider of video relay services to deaf people had asked for, leaving it with a potential revenue shortfall.

Traders also noted a feeling among some investors that the very viability of the company's business model was in jeopardy, given the recent proliferation of new iPhone models that have video calling features that could compete with Sorenson's own videophone service to the hearing impaired.

Tronox trades in narrow range

A trader saw Tronox Worldwide's 9½% notes due 2012, ending around a 77 bid, 78 offered level, though on "not a lot of volume - no real volume to speak of."

Those levels were little changed from Friday, as investors continued to evaluate the Oklahoma City-based chemical pigments maker's reorganization plan, filed last week with the federal bankruptcy court in Manhattan.

The plan would give bondholders and other unsecured creditors holding over $470 million in claims 80% to 100% recoveries, while secured creditors holding just $1 million in claims will be repaid in full.

Trusts will be set up to deal with the kind of environmental liabilities from former corporate parent Kerr-McGee Corp., which Tronox claimed it got stuck with when it was spun off from the energy and chemical manufacturer in 2006 and the remaining, more profitable part of the parent, unencumbered by environmental claims, was sold to Anadarko Petroleum. Tronox shareholders are suing Anadarko, the corporate successor to KMC, for having allegedly misled them.

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