Liberty's upsized UPC, Health Management's downsized deals price; Dynegy climbs after filing

By Paul Deckelman and Paul A. Harris

New York, Nov. 8 - The junk market primaryside parade continued to roll on during Tuesday's session, though at a slightly less busy pace than Monday's more than $5 billion day.

UPCB Finance V Ltd., a funding unit of Liberty Global Inc.'s UPC Nederland cable and broadband service, came to market with an upsized, quickly shopped $750 million issue. The bonds rose in the aftermarket.

There was also a relatively rare downsized deal, as hospital operator Health Management Associates, Inc. cut the size of its eight-year issue down to $875 million before pricing. The bonds came too late to trade around.

There was brisk trading in Monday's new two-part deals from WPX Energy Inc. and Peabody Energy Corp., with the latter bonds doing especially well in the aftermarket.

Price talk emerged on offerings from Amerigroup Corp. and Petroleum Geo-Services ASA. Either or both could come to market by Wednesday afternoon, syndicate sources said.

And Ford Credit Canada Ltd., Newalta Corp., and Cara Operations Ltd. each priced Canadian-dollar high-yield issues on Tuesday.

Away from the new-deal arena, Dynegy Holdings Inc.'s bonds were active, on the upside, following the power-generating company's late-Monday Chapter 11 filing.

Community Health Systems Inc.'s benchmark bonds got a shot in the arm from the hospital operator's announcement that it will tender for about one-third of the issue.

Health Management downsizes

The primary market saw two issuers, each one bringing a single tranche of bonds, raise $1.63 billion on Tuesday.

Both deals priced at the tight end of talk.

Health Management Associates priced a downsized $875 million issue of eight-year senior notes (B3/B-/) at par to yield 7 3/8%.

The yield printed at the tight end of the 7½% area price talk.

Deutsche Bank Securities Inc., Wells Fargo Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc., RBS Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the underwriters for the issue, which was downsized from $1 billion.

The Naples, Fla.-based operator of acute-care hospitals plans to use the proceeds, together with initial borrowings under its term loans and revolver, to repay a portion of its outstanding credit facilities and for general corporate purposes.

UPC Netherlands upsizes

UPCB Finance V priced an upsized $750 million issue of 10-year senior secured notes (Ba3/B+/) at par to yield 7¼%.

The yield printed at the tight end of the 7¼% to 7½% price talk.

JPMorgan, Barclays and Goldman Sachs were the joint bookrunners for the quick-to-market deal, which was upsized from $500 million.

The issuer plans to use the proceeds to repay revolver debt.

UPCB Finance is a subsidiary of UPC Nederland, which is based in Lelystad, the Netherlands.

Ford Credit Canada drives by

An active day in the Canadian dollar-denominated market saw three issuers, each one bringing a single tranche, raise C$640 million.

Ford Credit Canada priced a C$450 million issue of 4.2% two-year senior notes (Ba1/BB+//DBRS BB) at a 325 basis points spread to the Canadian Government benchmark.

The spread came in line with talk that specified a 325 bps spread.

The notes were sold at a reoffer price of 99.949, resulting in a 4.227% yield.

CIBC World Markets, HSBC, RBC Capital Markets and Scotia Capital were the managers.

Elsewhere, Newalta priced C$125 million of seven-year senior debentures (B1/DBRS: BB) at par to yield 7¾% via CIBC.

And Cara Operations (/BB-/DBRS: B) priced C$76 million of debt subscription receipts due Dec. 1, 2015 at 99 to yield 7.42% via lead manager Scotia Capital.

Talking the deals

The dollar-denominated market looks like it will remain active for the last half of the shortened pre-Veterans Day week. Friday's close will mark the event in the United States.

Norway's Petroleum Geo-Services talked its $300 million offering of seven-year senior notes (Ba2/BB/) with a yield in the 7½% area on Tuesday.

The deal is set to price on Wednesday via Barclays, RBS and UBS.

Also, Amerigroup talked its $450 million offering of eight-year senior notes (Ba3/BB+) with a yield in the 7% area.

The deal, via bookrunner Goldman Sachs, is set to price on Wednesday afternoon or Thursday morning.

Primary should remain active

In addition to the above-mentioned deals from Petroleum Geo-Services and Amerigroup, the Wednesday session should see an add-on deal surface in the form of a drive-by, according to a syndicate banker who declined to furnish an issuer name or sector.

The primary should remain active, provided the European credit situation remains somewhat stable, the banker said.

"That's a big 'if,'" the syndicate official added.

Should market conditions permit, this official has visibility on a big transaction that will be rolled out during the post-Veterans Day week.

Meanwhile, ratings from both Moody's Investors Service and Standard & Poor's surfaced Tuesday for Entercom Communications Corp.'s $250 million of senior notes (Caa1/B-).

No syndicate banks had stepped forward to claim that deal late Tuesday, sources said.

However, Entercom is scheduled to hold a bank meeting on Wednesday to launch a proposed $395 million senior secured credit facility via Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley.

UPCB new issue moves up

When Liberty Global's new UPCB Finance 10-year notes began trading around, they were seen having moved up to 100½ bid from their par issue price earlier.

Several traders who quoted the issue there saw offered levels, variously, of 100 5/8, 100¾ and 101.

"There was not a lot of trading in that one," one of the traders declared.

The new Health Management Associates 2020 bonds, meantime, priced too late in the day for any meaningful aftermarket action.

Peabody pops up

A trader saw "a bunch" trading Tuesday in the new bonds from Peabody Energy and WPX Energy, both of which came to market too late in the day on Monday to generate any dealings.

St. Louis-based coal producer Peabody's quickly shopped $3.1 billion two-part issue - which was upsized from an originally announced $2.75 billion - was seen doing especially well once it started to trade.

A trader saw its $1.6 billion of 6% notes due 2018 having firmed to 101 bid, 101¼ offered from their par issue price, while its $$1.5 billion of 6¼% notes due 2021 were trading at 100 5/8 bid, 101 offered, also up from a par issue price.

A second trader quoted both tranches at 100 7/8 bid, 101 3/8 offered.

And yet another trader saw them even better than that, at 101 bid, 101½ offered, in fairly active trading.

WPX weighs in

The upside was less pronounced in WPX Energy's quick-to-market $1.5 billion two-part deal.

A trader who saw some brisk activity in the new deal quoted the Tulsa, Okla.-based natural gas and oil exploration and production company's $400 million of 5¼% notes due 2017 at par bid, 100½ offered and saw the company's $1.1 billion of 6% notes due 2022 trading at that same level.

At another shop, the 5¼% notes were seen at 100 1/8 bid, 1001/4, while the 6% notes hung closer to issue at par bid, 100¼ offered.

Windstream dies down

Monday's other deal, from Little Rock, Ark.-based telecommunications company Windstream Corp., saw less trading than that day's other two transactions, perhaps because at $500 million, that drive-by deal was smaller, and it actually saw some trading in Monday's aftermarket, with not much follow-up interest.

Those 7½% notes due 2022 - which had quickly pushed up as high as 101 bid when they were freed to trade after pricing at par, only to give it all back and go home Monday around issue price, were seen by a trader having eased further in Tuesday morning dealings to 993/4, although he saw the bonds later move back up to par bid, 100½ offered.

A second trader saw the bonds at par bid, 100 3/8 offered, but on not much volume.

Lyondell holds gains

A trader said that Friday's opportunistically timed and quickly-marketed $1 billion offering from Dutch chemicals manufacturer LyondellBasell NV "continues to defy gravity," seeing the 6% notes due 2021 still trading well above 102 bid, which he said was pretty exalted for a bond with just a 6% coupon, well under the average Junkbondland coupon north of 8%.

Another trader quoted the bonds - which on Monday had jumped to 102½ bid, 103 offered from Friday's initial aftermarket levels not far from par - continuing to gain, to 102¾ bid, 104 offered.

But he said that it was "a pretty slow day in that one."

New Canadian paper trades up

Among the newly priced Canadian dollar-denominated high-yield issues, when Ford Credit Canada's C$450 million of 4.2% notes due 2013 were freed for secondary dealings, traders in that market saw the paper having inched up from its issue price.

The Edmonton, Alta.-based company - one of U.S. auto giant Ford Motor Co.'s overseas financing units - had priced the paper at 99.949, or 325 basis points over the comparable Canadian government bonds, to yield 4.227%.

Investment-grade players as well as high-yield accounts were active in the Ford Credit bonds, which carry ratings of Ba1/BB+ from Moody's Investors Service and Standard & Poor's as well as a BB from Canada's Dominion Bond Rating Service.

Calgary, Alta.-based industrial waste management and environmental services provider Newalta's new 7¾% senior debentures, on the other hand, were seen doing fairly well in the aftermarket.

The C$125 million issue priced at par and then was quoted having moved up to 101 bid, 102 offered.

Vaughn, Ont.-based full-service restaurant operator Cara Operations' new 9 1/8% subscription receipts due 2015 were not immediately seen in the aftermarket after the C$76 million issue priced at 99 to yield 7.42%. However, the company's existing 9 1/8% notes due 2015 traded in the afternoon at 99, about the level where they have been range-bound for a couple of months, a market source said.

The new paper will be fungible with the existing 9 1/8% subscription receipts once the company's acquisition of Prime Restaurants Inc. closes in January.

Indicators seen mixed

Away from the new-deal arena, statistical secondary market performance indicators remained mixed on Tuesday.

A trader said the CDX North American series 17 High Yield index rose by ½ of a point on Tuesday to end at 93½ bid, 93¾ offered after having been about unchanged on Monday, which followed a loss on Friday.

The KDP High Yield Daily index eased by 1 bp on Tuesday to 73.04 after having come in by 3 bps on Monday.

Its yield inched up about 2 bps on Tuesday to 7.27% after having been unchanged for a second straight session on Monday.

But the Merrill Lynch U.S. High Yield Master II index dropped by 0.014% on Tuesday - its second straight retreat, including Monday's 0.011% loss, which had followed three straight sessions of gains last week.

The loss moved the index's year-to-date return down to 3.891% from Monday's 3.906%.

The cumulative return remains below its high-water market for the year of 6.362%, which was set on July 26, but is still well up from its 2011 low-point, a 3.998% deficit recorded Oct. 4.

Stocks meantime posted their second modest gain in a row on Tuesday after Italy's parliament passed a budgetary reform bill and that country's prime minister, Silvio Berlusconi, announced his intention of resigning.

The bellwether Dow Jones industrial average, which had risen by 85.15 on Monday, added on another 101.79 points, or 0.84%, on Tuesday, ending at 12,170.18.

The Standard & Poor's 500 index rose by 1.17% on the day, while the Nasdaq Composite index gained 1.20%.

Dynegy bounces on bankruptcy

Among specific names, none saw more upside action on Tuesday than Dynegy Holdings. The Houston-based power generating company's parent, Dynegy, Inc., announced on Monday night, well after the market close, that the unit and several subsidiaries had filed for Chapter 11 in order to deal with Dynegy Holdings' more than $3.5 billion bond debt burden.

The parent company and other subsidiaries, however, did not file for bankruptcy, pleasing its shareholders; Dynegy's New York Stock Exchange-traded shares jumped by as much as 40% in Tuesday's intra-day dealings before coming to rest up 81 cents, or 27.46%, at $3.76. Volume of 11 million shares was five times the norm.

The bonds had fallen on Monday across the capital structure as investors correctly anticipated the bankruptcy plunge. On Tuesday, a junk trader estimated that the paper was up "anywhere from 4 to 8 points across the board."

A second said that there were "a lot of trades, it was up quite a bit," and he attributed the gain, at least in part, to the fact that the bonds are now trading flat, or without their accrued interest, which becomes part of the bankruptcy claim.

He saw Dynegy Holdings' 8 3/8% notes due 2016 having moved up to 75¼ bid from earlier levels around 70.

Another trader saw those bonds ending at 763/4, calling it a more than 6-point rise on the day.

He saw Dynegy Holdings' 7½% notes due 2015 and 7¾% notes due 2019 both up more than 6 points on the session, at the 75 mark.

The Dynegy Danskammer, LLC 7.67% notes due 2016 moved up 3½ points to 57½ bid.

Community Health climbs

A trader said that Community Health Systems' 8 7/8% notes due 2015 jumped by 2 points to 104 bid, 104½ offered.

He said the Franklin, Tenn.-based hospital operator's benchmark issue zoomed on the new news that the company is tendering for $1 billion of the roughly $2.8 billion of outstanding bonds.

The tender offer lasts through Dec. 6.

Cristal Cody contributed to this report

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