New issues still the focus; Wynn gains on tender news; Ford debt better on loan repayment

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., March 29 - The high-yield marketplace continued to feel stronger, despite a lack of "tremendous volume," a trader said on Monday.

The primary market remained investors' top choice, as new deals continued to flood the market.

Provident Funding Associates, LP priced its $400 million issue of seven-year secured notes during the day's session. North American Energy Partners Inc. also set pricing on a deal, a C$225 million debenture.

Midwest Gaming and NES Rental Holdings meantime are expected to price new issues this week. Both companies released guidance on their respective issues.

And, LINN Energy LLC - which is also expected to price a new issue this week - announced it had upsized its previously announced new debentures. The company now intends to sell $750 million of the 10-year senior notes.

Along with the waiting-to-be-launched new issues, other new issues that have already come to trade remained the overall focus. However, some - like New Communications Holdings Inc. - were losing some upward momentum.

With the lazy-market Monday, the secondary market had little teeth to it, traders reported.

Wynn Resorts LLC was one of the more active credits as the bonds inched their way higher. The gains came following the company's announcement on Friday that it would tender for some of its outstanding debt.

Meanwhile, Ford Motor Co. saw its debt - corporate and bank - moving up on news the company planned to repay about $3 billion on its credit facility.

Washington Mutual Inc. filed its plan of reorganization late Friday. Come Monday, the bank seniors continued to climb.

And, the paper products sector closed the day in mixed fashion. Smurfit-Stone Container Corp.'s bonds were either better or worse, depending on whom you talked to, while NewPage Corp.'s debt was unchanged.

Cash bonds improved but underperformed synthetics, in Monday's secondary market, according to a high-yield syndicate official.

Provident prices $400 million

After last week's record-setting surge of issuance it was good to pass a moderately quiet Monday in the primary market, the high-yield syndicate official mused, just after the market closed.

The opening session of the pre-Easter week saw Provident Funding Associates, LP and PFG Finance Corp. price their $400 million issue of seven-year secured notes (Ba3/B+) at par to yield 10¼%.

The yield printed at the wide end of the 10% to 10¼% price talk.

JP Morgan ran the books for the bank debt refinancing and general corporate purposes deal.

LINN Energy upsizes, sets talk

Meanwhile LINN Energy LLC and LINN Energy Finance Corp. upsized a previously announced new issue of 10-year senior notes to $750 million from $500 million.

Talk has the issue around the 9% mark, including approximately 2 points of original issue discount.

The books are set to close late Tuesday morning.

RBC Capital Markets Corp., Barclays Capital Inc., BNP Paribas, Citigroup Global Markets Inc., Credit Agricole, RBS Securities Inc. and Wells Fargo Securities are the joint bookrunners.

Proceeds from the new issue will be used to reduce debt under the company's revolving credit facility and to unwind interest rate derivative contracts.

Midwest Gaming sets talk

Midwest Gaming Borrower, LLC and Midwest Finance Corp. talked their $175 million offering of six-year senior secured notes at the 12% area.

Pricing is set for Wednesday.

Goldman Sachs & Co. is the left lead bookrunner, and Credit Suisse is the joint bookrunner.

Proceeds will be used to finance the development costs related to the Des Plaines Casino, and to fund the interest reserve account.

Continental Resources sets Tuesday call

Continental Resources Inc. will host an 11 a.m. ET conference call on Tuesday for its $200 million offering of 10.5-year senior notes (B2/BB).

Bank of America Merrill Lynch, RBS Capital Markets and JP Morgan Securities Inc. are the joint bookrunners.

The notes will have the same covenants at the company's existing 8¼% notes due 2019.

Proceeds will be used to repay a portion of the amount outstanding under the company's revolving credit facility.

Learning Care postpones

Finally, Learning Care Group (US) No. 2 Inc. postponed its restructured $265 million high-yield notes and warrants offer, an informed source told Prospect News on Monday.

The company had plans to sell 13% five-year senior secured PIK notes, with attached penny warrants for 10% of the company's common equity.

Barclays Capital Inc., Wells Fargo Securities and Morgan Stanley & Co. Inc. were joint bookrunners.

In late February the company began marketing five-year senior secured cash-pay notes, with no warrants.

Proceeds were to be used to refinance the company's term loan and mezzanine loan and for general corporate purposes.

Market firms

A trader said the secondary market was "firm but quiet" during Monday's session - a theme that is expected to continue throughout the holiday week.

The CDX High Yield Index gained nearly a point to end at par ½ bid, par ¼ offered. The KDP High Yield Index was also better at 72.15, yielding 7.79%. That compared to Friday's reading of 72.10, with a yield of 7.82%.

And, recent new issues were still dominating trading, traders reported. In that space, a trader said that it was in Consol Energy Inc. and New Communications Holdings Inc. - formerly Frontier Communications Inc. - that most of the action took place.

The trader said Consol's 8% notes due 2017 were up a quarter-point to 102 5/8 bid, 103 offered, versus 102½ bid, 102¾ offered on Friday.

In New Communications' debt, the 8½% notes due 2020 were a bit lower at 101 bid, 101½ offered. However, he added that the 7 7/8% notes due 2015 were "up half a point this morning" at 103 1/8 bid, 103¼ offered. He noted that they "backed off" some by the end of trading.

The 8¼% notes due 2017 were meantime unchanged at 102½ bid, 103 offered.

Wynn gains on tender news

Wynn Resorts' debt "popped up a bit," a trader said, following news out Friday regarding an exchange offer.

The trader saw the 6 5/8% notes due 2014 up about a point at par 1/2. He said the bonds had traded at 99½ previously.

Another trader pegged the notes at par ¼ bid, 101¼ offered.

On Friday, the Las Vegas-based casino operator announced it would exchange all of the 6 5/8% first mortgage notes for 7 7/8% notes due 2020.

"Tender takes them out at 101, but it is for [qualified institutional buyers] only," the second source noted.

The debt exchange is contingent upon receiving valued tenders of at least $250 million of the 6 5/8% notes. There is also an early tender premium.

Elsewhere in the gaming world, a trader quoted MGM Mirage's 13% notes due 2013 at 117 bid, 117½ offered.

Ford better on loan repayment

Ford Motor's debt gained some ground in trading on Monday as the company revealed plans to repay $3 billion of its revolver borrowings on April 6, according to traders.

In the bonds, a trader called the benchmark 7.45% notes due 2031 up - though slightly so - at 93¾ bid, 94¾ offered.

Another trader had the term loan B-1 quoted at 97 bid, 97½ offered, up from 96½ bid, 97 offered, the term loan B-2 quoted at 96 bid, 97 offered, up from 95½ bid, 96½ offered and the revolver quoted at 86½ bid, 88½ offered, up from 86 bid, 88 offered.

Meanwhile, a second trader had the term loan B-1 quoted at 96 7/8 bid, 97 3/8 offered, up from 96½ bid, 97 offered.

Ford said in an 8-K filed with the Securities and Exchange Commission that it is paying down the debt as a result of the improved state of the capital markets and global economic conditions.

At Dec. 31, 2009, the Dearborn, Mich.-based manufacturer and distributor of automobiles had $7.9 billion utilized under its $8.1 billion revolver.

Also in the autosphere, General Motors Corp.'s 8 3/8% notes due 2033 "continued to be active, but there was not that much price movement," a trader said.

The trader pegged the issue at 38 bid, 8¼ offered. Another trader placed the bonds at 37¾ bid, 38¼ offered.

WaMu plan filed, bonds still firm

Washington Mutual's bonds continued to improve during Monday trading as a result of the company's filing of its reorganization plan late Friday.

A trader said the bank seniors - like the 5.55% notes due 2010 - earned a point to end around 47.

"The others were trading, but they were pretty unchanged," he said.

On Friday, traders told Prospect News that WaMu paper was climbing. However, they had expected the Seattle-based company's plan of reorganization to be filed that day, and by the end of business, none was seen.

As it turned out, the company filed the plan late Friday, giving investors a chance to digest the news.

The plan incorporates the recent settlement reached with JPMorgan Chase Bank and the Federal Deposit Insurance Corp. WaMu noted in a press release announcing the filing that the FDIC has not yet agreed to all terms of that settlement, but that "discussions are ongoing among the parties and they are hopeful that such agreement will be obtained in the near future."

"WMI is pleased to have reached this important milestone in the Chapter 11 process," the company said in its statement. "The proposed plan will provide substantial recoveries for the company's creditors and reflects WMI's diligent efforts over the last 18 months to maximize the value of the bankruptcy estate."

The plan has received support from JPMorgan, as well as "significant creditor groups."

WaMu has requested a May 19 confirmation hearing and hopes the plan will be accepted by July 20.

Paper products arena mixed

In the paper products sector, Smurfit-Stone Container's bonds were "maybe a little bit lower," according to a trader.

The trader saw the 8¼% notes due 2012 at 89 bid, 89½ offered, "down maybe as much as three-quarters to a point."

Another source, however, deemed the paper up a point at 92 bid.

Meanwhile, NewPage notes were unchanged. The first trader placed the 10% notes due 2012 around "69-ish," while the 11 3/8% notes due 2014 were seen "still around par."

At another desk, a trader said he saw only "small trades" in NewPage's debt, seeing the 10% notes around 69 and the 11 3/8% notes at par bid, par ¼ offered.

Also, the trader pegged Catalyst Paper Corp.'s 7 3/8% notes due 2014 at 68½ bid, 70½ offered.

"That was the market in the street, but I don't think there was any trading," he said.

Lyondell loan set to trade

Lyondell Chemical Co.'s credit facility is expected to break for trading on Tuesday, according to sources, who said that originally the event was supposed to take place on Monday but it got pushed off.

The $2.25 billion credit facility consists of a $1.75 billion ABL revolver and a $500 million six-year senior secured term loan B (Ba3).

Pricing on the term loan B is Libor plus 400 bps with a 1.5% Libor floor, and it was sold at an original issue discount of 99.

During syndication, the term loan B was downsized from $1 billion as the company's bond offering was increased to $2.75 billion from $2.25 billion, pricing was reduced from Libor plus 425 bps, the Libor floor was lowered from 2% and the financial covenants - which included a maximum first-lien leverage ratio and a minimum interest coverage ratio - were eliminated.

Proceeds from Lyondell's credit facility, the new senior secured notes, a new European securitization facility and a $2.8 billion rights offering will be used to repay and replace existing debt when the company exits bankruptcy.

The notes, comprised of a $2.25 billion dollar tranche and a €375 million euro tranche, priced last Wednesday at par to yield 8%.

Joint bookrunners on the term loan B are UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo, with UBS the left lead. Citigroup is the left lead on the ABL revolver.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

Sara Rosenberg contributed to this article.

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