Upsized Bombardier two-part prices, gains; Digicel, RadNet, Wyle slate, Boston Scientific off

By Paul Deckelman and Paul A. Harris

New York, March 12 - Almost exactly a month after dismaying investors by pulling its billion-dollar bond offering from the high yield forward calendar due to mid-February's deteriorating market conditions, Bombardier Inc. was back on Monday - with a vengeance. The Montreal-based aircraft and railroad equipment manufacturer quickly brought its newly revived mega-deal back to market and, in fact, upsized the offering by fully 50% to $1.5 billion. After pricing at par, both the eight-year and 10-year tranches were heard by traders to have firmed solidly in the aftermarket.

Syndicate sources also heard late Monday that Sitel, LLC/Sitel Finance Corp. had priced the Nashville-based business outsourcing services provider's offering of eight-year notes.

Meanwhile, medical imaging company RadNet Inc. announced plans for a $210 million issue of eight-year notes, while Caribbean wireless provider Digicel Group Ltd. and defense and information technology contractor Wyle Services Corp. began shopping new offerings around, with Kingston, Jamaica-based Digicel's $775 million deal expected to price on Tuesday.

Among recent deals, Sirius XM Radio Inc.'s upsized offering which came to market on Friday was seen little moved from its pricing level, but Huntsman International LLC's new bonds hung onto the gains they notched in the aftermarket.

Among names with no new-deal connections, Boston Scientific Corp.'s bonds, and shares, moved lower after the medical devices company halted sales of one of its most important products, admitting that it had not filed key documents in the regulatory process.

MGM Mirage's bonds were off amid negative news about the gaming giant, including its plans to sell its stake in Atlantic City's most profitable casino under pressure from regulators there, and news of a big lawsuit connected with its ambitious CityCenter development joint-venture in Las Vegas.

Bombardier returns, massively upsizes

Approximately one month after it postponed a $1 billion notes offer due to market conditions, Bombardier Inc. returned on Monday, and massively upsized the deal to $1.5 billion.

The Montreal-based manufacturer of air and rail transportation equipment, systems and services priced the upsized deal in two bullet tranches of senior notes (Ba2/BB+).

Bombardier priced $650 million of eight-year notes at par to yield 7½%. The yield printed on top of price talk.

The company also priced $850 million of 10-year notes at par to yield 7¾%, also on top of price talk.

J.P. Morgan, Deutsche Bank Securities and UBS Investment Bank were joint bookrunners for the quick-to-market deal.

Proceeds will be used to fund tender offers for the company's 6¾% notes due 2012, its 6.3% notes due 2014 and its floating-rate senior notes due 2013, as well as for general corporate purposes.

Similar rates

Bombardier will pay about the same interest rates they would have paid before the market sold off during late January into early February. Bombardier, along with about a dozen others, was pulled due to market conditions.

Although no official price talk surfaced on the deal that Bombardier withdrew in mid-February, the company expected a 7-handle yield, a syndicate source told Prospect News.

Then, when the euro-chill took hold of the global capital markets - triggered by worries of a possible sovereign default on the part of Greece, and higher-than-expected debt-to-GDP ratios in Italy, Portugal, and Spain - temporarily stalling a months-long quest for yield, discussions about a print on the Bombardier deal backed up significantly.

"The discussions moved into the 8s, and the company was just not prepared to pay that," a syndicate source reflected, on Monday.

So ultimately it paid to wait, as far as Bombardier was concerned.

The Monday drive-by is believed to have played to demand similar to that which had mounted in February, according to a trader from an East Coast high-yield mutual fund.

There were over 200 accounts in the book, said an informed source, who added that the deal was multiple-times oversubscribed.

Sitel prices $300 million

Meanwhile, Sitel LLC and Sitel Finance Corp. priced a $300 million issue of 11½% eight-year senior notes (Caa2/B-) at 97.454 to yield 12% late Monday.

The yield printed at the wide end of the 11¾% to 12% price talk.

Goldman Sachs & Co., Bank of America Merrill Lynch and Credit Suisse were joint bookrunners.

The Nashville-based business outsourcing services provider plans to use the cash from the note sale to pay down bank debt.

Digicel to bring $775 million

The build-up of the new issue calendar continued apace, on Monday, and will likely continue to do so.

"The high-yield is on fire right now," a syndicate banker commented.

Digicel Group Ltd. will host Tuesday investor calls at 10:30 a.m. GMT and 11 a.m. ET for a $775 million offering of eight-year senior notes.

Management will present at 7:30 a.m. ET.

The Rule 144A for life and Regulation S deal is set to price Tuesday afternoon, New York time.

Credit Suisse, Citigroup, JP Morgan and Deutsche Bank Securities are joint bookrunners.

Proceeds will be used to fund the acquisition of a 100% stake in Digicel Pacific Ltd.

Radnet plans $210 million

Meanwhile Radnet Inc. will market a $210 million offer of eight-year senior unsecured notes during the March 22 week.

Deutsche Bank Securities is the left bookrunner. Barclays Capital, RBC Capital Markets and Jefferies & Co. are joint bookrunners.

The Los Angeles-based provider of outpatient diagnostic imaging services will hold a bank meeting on Tuesday for a new senior secured credit facility.

Proceeds from the new bonds and credit facility will be used to repay first-lien and second-lien term loans and go to general corporate purposes.

Wyle starts roadshow Tuesday

Wyle Services Corp. will begin a roadshow on Tuesday for a $175 million offering of eight-year senior subordinated notes (expected Caa1/confirmed B+), according to an informed source.

The roadshow wraps up on Friday.

The notes are expected to price late this week or early next week.

JP Morgan and Barclays Capital are joint bookrunners for the Rule 144A and Regulation S for life notes offer. Wells Fargo Securities is the co-manager.

The notes come with four years of call protection.

Proceeds will be used to refinance debt.

Wyle is a McLean, Va.-based engineering firm specializing in high-tech testing, life sciences and technical-support services to federal government agencies, including the Department of Defense and NASA.

New 'Bombs' a blowout in aftermarket

When the new Bombardier Inc. eight-year and 10-year notes were freed for aftermarket trading late in the session, a trader saw the 7½% notes due 2018 at 101¼ bid, 102 offered and its 7¾% notes due 2020 at 101½ bid, 102½ offered, both well up from their respective par issue prices.

A trader at another desk - while noting that the company had upsized its two-part offering of senior notes to $1.5 billion from the originally announced $1 billion - added that despite the new deal's Ba2/BB+ ratings, "most of the interest in that is coming from the investment grade side, from what I can ascertain."

He said that "orders going into the book are easily 50-50 investment grade/high yield, or in some cases, 75% investment grade or core-plus accounts and 25% high yield. So that's an interesting book."

Yet another trader - noting that Bombardier plans to use the new-deal proceeds to fund a tender offer for several series of its existing bonds - said that "obviously the outstandings that they brought the tender for had a good day, so that paper in front of the Bombardier was up today by a point or two."

He also noted that Houston-based car-seller Group 1 Automotive, Inc. said Monday that it will use the proceeds from a $100 million offering of convertible senior notes to redeem its $74.6 million in 8¼% senior subordinated notes due 2013 at 102.75, plus interest.

"The theme remains the same - it's just taking debt out with new issues has been the driving theme of this market for the last couple of months, and it just continues to be the case."

Sitel coupon seen selling deal

The Sitel offering of eight-year notes came to market way too late for any kind of secondary dealings.

Before it priced, a trader opined that the anticipated big coupon - it eventually came in at 11½%, priced to yield 12%, a market source said - would "probably get people over the questions on the credit itself."

Digicel not unexpected

The trader also noted that Digicel's deal announcement had been preceded by last week's non-deal roadshow. He said that when news that Digicell was doing a deal began circulating around, "one portfolio manager said to me that 'every time they do a non-deal roadshow, I should put my order [for bonds] that day - because they'll come with a deal within a week or two."

Sirius 'disappointing'

Among the deals which priced on Friday, a trader flatly declared that "we view Sirius as a disappointment," because the New York-based satellite radio broadcaster's 8¾% notes due 2015 "traded a bunch today - but it's going out wrapped around issue."

The company priced those bonds on Friday at par, after having upsized the deal to $800 million from the originally announced $550 million.

"Basically, given that almost every [other] issue that's priced within the last two weeks has given you a nice two-point pop, you'd have to say that one is a disappointment - that one really didn't. They tightened it in, they grew it, and they really took all the juice out of it, and it's going out basically unchanged. So it's probably a little bit of a disappointment to people, given how well new issues have traded recently, that that one didn't give you anything."

Huntsman hangs in there

The trader said that the new Huntsman International 8 5/8% senior subordinated notes due 2020 which priced on Friday "are holding their gains" notched after the Sal Lake City, Utah-based chemical company's upsized $350 million tranche priced at par. The bonds had moved up to 101 bid, 101½ offered at the close of Friday's session.

"So they're right up to where they got to on Friday. And most of the others are holding their gains as well. I think they tried to weaken this market this morning, people backed bids off a little bit - but I don't think anybody early bought into it, so they're going to go out basically unchanged on the day."

Market indicators add to gains

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index unchanged on Monday at 99½ bid, 99¾ on Friday, after having gained 1/8 point on Friday.

The KDP High Yield Daily Index meanwhile rose by 5 basis points on Monday to finish at 71.86, after having pushed upward by 7 bps on Friday. Its yield narrowed by 1 bp on Monday, to 7.90%, after having tightened by 5 bps on Friday.

Advancing issues topped decliners for a 12th straight session on Monday, although their winning margin was just a couple of dozen issues out of the more than 1,400 tracked.

Overall activity, measured by dollar-volume levels, slid by almost 40% from Friday's pace.

A trader called Monday's session "one of the quieter days" that he's seen recently, although he said that prices were generally firm. Another called the day "pretty dead in a lot of names."

'There's not a great, great amount of movers today," said a third. "It's a relatively quiet start to the week."

Among the factors seen holding down the activity level was a drop in market attendance in the aftermath of the weekend's hurricane-like storm that hit New York and other Northeastern business centers, leaving in its wake many utility customers without electricity, downed trees and other property damage.

Another factor a trader mentioned was the start of the spring semester break in many school systems, with some market players scheduling vacation days accordingly, "so there wasn't a lot of volatility," one of the traders said. And perhaps the superstitious stayed home to heed Mr. Shakespeare's warning to Julius Caesar that the soon-to-be-assassinated Roman leader "beware the Ides of March."

Busy day for Boston Scientific

A trader noted a lot of activity in Boston Scientific Corp.'s bonds in the wake of the Natick, Mass.-based medical device maker's announcement that it had halted sales of one of its most important products due to paperwork errors in its regulatory filings with the federal government's Food and Drug Administration.

A market source saw over $35 million of the Boston Scientific 6% notes due 2020 having traded by mid-afternoon, along with over $10 million of its 4½% notes due 2015.

At another desk, a market participant estimated that by the time the close rolled around, over $60 million of the 6s had been traded and at least $15 million of the 41/2s, pegging the 6s down more than 3 points on the session at just under 96, while the 4 1/2s were 2 points off to end at 97.

Another a trader saw the 6% bonds having opened the session at 96.75 bid, and having gone out at 95.5 bid, 96 offered, on "a lot of volume."

He saw its 4.5% notes moving down to 97 bid from 97 3/8 bid, 98½ offered in the morning, also on "a lot of volume - but not as much as the 6% notes."

Boston Scientific's bonds - and its New York Stock Exchange-traded shares, which plunged as much as 18.8% at one point in the day before going out still down 12.60%, or 98 cents, at $6.80, on more than 11 times their usual volume -- fell after the company announced that it had suspended sales of its implantable cardiac defibrillators, because it had not submitted two changes in its manufacturing process for FDA approval.

The product accounted for nearly $1.8 billion in revenue last year, or over 20% of the company's total. Boston Scientific said in a statement that it is voluntarily recalling inventory of its devices.

It also said that there is no impact on patient safety.

Boston Scientific among big crossover credits

A trader noted that the company's split-rated (Ba1/BBB-/BB+) bonds "are owned by a lot of high yield accounts, but it's still in a lot of investment-grade accounts," even though Moody's and Fitch had dropped its ratings into the higher part of the junk spectrum back in 2007.

He said that Boston Scientific was one of only a relative handful of names on the junk "most actives" list that had volume of over $10 million on Monday - a list heavy in split-rated crossover credits like Boston Scientific, Freeport-McMoRan Cooper & Gold Inc., Qwest Corp. and in hybrid paper issued by junk- or split-rated units of nominally investment grade banks like Bank of America Corp., Capital One Financial Corp. and Wells Fargo & Co.

However, he noted that due to the different reporting requirements on Trace for purely junk bonds versus bonds "with three B's after their name," the latter -- which are often listed as having trades of $5 billion or more, versus $1 billion or more as the top trade in pure junk - "look like they have more activity, when frequently, it's just that they've got larger trades listed."

MGM faces choice

MGM Mirage's bonds slipped, even as the Las Vegas-based gaming giant was forced by New Jersey gaming regulators to reluctantly make a choice it had hoped it would not have to make - either give up its half-ownership of Atlantic City's most lucrative casino, or else shut the door on playing in the booming market for gaming in the Chinese enclave of Macau.

That plus adverse legal news resulted in as much as a 2 point loss for the company's bonds.

A trader called the 5 7/8% notes due 2014 down a deuce at 833/4.

Another trader pegged the issue at 83½ bid, 83¾ offered, though he called that down 1 point. He also saw the 6¾% notes due 2012 falling to 93½ bid, 94 offered. That compared to levels around "95-ish towards the end of last week."

And, the trader said the 7 5/8% notes due 2017 were quoted wide at 81 bid, 83 offered, down from bids around "83-ish" previously.

Yet another source saw the 6 5/8% notes due 2015 declining about a point to end at 821/2.

Late Friday, MGM announced that it had reached a settlement agreement with the New Jersey Division of Gaming Enforcement to sell off its 50% in the Borgata Hotel Casino & Spa and related leased land in Atlantic City.

The DGE had previously recommended to New Jersey's Casino Control Commission that MGM's "joint venture partner [Pansy Ho] in Macau be found unsuitable and the company be directed to disengage itself from any business association with this partner," MGM said in a press release. The DGE cited reports linking Ho's father, Stanley Ho, with Asian organized crime. However, as MGM pointed out, neither Ho nor her father has ever been charged with such crimes.

"We have the utmost respect for the DGE but disagree with its assessment of our partner in Macau," Jim Murren, chairman and chief executive officer, said in the release. "Regulators in other jurisdictions in which we operate casinos have thoroughly considered this matter and all of them have either determined that the relationship is appropriate or have decided that further action is not necessary. Since the DGE takes a different view, we believe that the best course of action for our company and its shareholders is to settle this matter and move forward with the compelling growth opportunities we have in Macau."

Murren also noted that the Borgata - which MGM Mirage co-owns with Boyd Gaming Corp. - "is the most successful property in the Atlantic City marketplace, and we expect there will be strong interest in this valuable asset."

As if being forced to fold its hand and walk away from the table in Atlantic City weren't bad enough, MGM also said late Friday that it had received a claim against its CityCenter project in Las Vegas from an unnamed contractor.

According to a regulatory filing, the main contractor of the project is filing a lien against MGM and its joint venture partner, Dubai World. The contractor is alleging the partners have failed to pay $492 million in construction bills.

"CityCenter believes that it has significant claims against the general contractor related to its role in connection with the Harmon Hotel construction, which construction was halted by local building inspectors due to construction defects," MGM said in an 8-K filed Friday. "While CityCenter's investigation into the general contractor's potential liability regarding the Harmon Hotel is continuing, and there can be no assurance at this point as to the ultimate outcome of any action CityCenter may undertake, CityCenter believes that the amount of its claim against the general contractor may exceed the amount of CityCenter's estimated remaining liability to the general contractor."

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