Esterline prices upsized deal; Interactive Data up next; Vantage, Accuride, Entravision slate

By Paul Deckelman and Paul A. Harris

New York, July 19 - Esterline Technologies Corp. priced an upsized $250 million offering of 10-year notes on Monday, high-yield syndicate sources said. The Bellevue, Wash.-based high-tech defense contractor's opportunistically timed and quickly shopped deal was not seen trading around in the aftermarket.

The syndicate sources meanwhile reported that price talk had emerged on Interactive Data Corp.'s pending $700 million issue of eight-year notes. The books are scheduled to close on Tuesday morning on the Bedford, Mass.-based financial market data provider's deal, with pricing expected on Tuesday afternoon.

The primary side also saw a busy session of forward calendar-building on Monday, with formal new-deal announcements from Vantage Drilling Co., a Houston-based deepwater energy drilling operator selling $960 million of five-year secured notes; Accuride Corp., an Evansville, Ind.-based maker of metal wheels for the auto industry shopping a $300 million issue of eight-year secureds; and Entravision Communications Corp., a Santa Monica, Calif.-based Spanish-language media company offering $385 million of seven-year secured paper.

Syndicate sources heard Vantage and Accuride beginning roadshows to shop their deals to prospective investors, and they awaited details on Entravision's marketing plans.

On the secondary side, traders saw another largely featureless and, as one put it, "boring" day. There was some erosion in the recently strong bonds of BP Capital Markets plc, Anadarko Petroleum Corp. and ATP Oil & Gas Corp. amid new concerns that the cap, which BP put on its ruptured Gulf of Mexico oil well last week, while apparently stopping the flow of oil out of the top of the undersea well, may be forcing the oil out elsewhere, potentially keeping the pollution problem going.

Esterline upsized, tight to talk

High-yield bonds traded flat on Monday, according to market sources.

"Things may have been oversold a bit on Friday," a high-yield syndicate official remarked, but added that the market could remain volatile throughout the week, given that earnings reports are expected to be mixed, at best.

Esterline completed Monday's sole new deal, an upsized $250 million issue of 10-year senior notes (Ba3/BB) that priced at par to yield 7% in an a.m.-to-p.m. drive-by.

The yield printed at the tight end of the 7 1/8% area price talk.

Bank of America Merrill Lynch and Wells Fargo Securities were joint bookrunners.

Traders said that the new Esterline notes came to late too late in the session for any aftermarket dealings.

The company's existing 7¾% notes due 2013 were meantime slightly firmer than the 101½ level at which the bonds had opened.

Among other recently priced new deals, a trader called them "active."

Proceeds will be used to tender for the company's existing 7¾% senior subordinated notes due 2013 and for general corporate purposes.

The Bellevue, Wash.-based supplier to the aerospace and defense industries saw its deal play to an order book that was two times oversubscribed, which allowed it to price in an upsized amount, and at the tight end of price talk, according to a source close to the deal, who added that it went very well.

Interactive Data price talk

Interactive Data helped set the stage for Tuesday's session.

The Bedford, Mass.-based provider of financial market data talked its $700 million offering of eight-year senior notes (Caa1/B-) with a 10 3/8% area yield.

The books close at 10:30 a.m. ET on Tuesday. Pricing is set for mid-afternoon on Tuesday.

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

Vantage Drilling brings $960 million

From a lately beleaguered sector, Vantage began a roadshow on Monday for its $960 million offering of five-year senior secured first-lien notes.

The roadshow wraps up on July 26.

Jefferies & Co. and Deutsche Bank Securities are joint bookrunners.

Low single-B credit ratings are expected to be assigned to the notes.

Proceeds will be used to acquire the remaining interest in Mandarin Drilling Corp., the owner of the construction contract for the Platinum Explorer, an ultra-deepwater drillship. Proceeds will also be used to fund the remaining construction payments for the Platinum Explorer, as well as to refinance debt and for general corporate purposes.

Accuride starts roadshow

Meanwhile, Accuride began a roadshow on Monday for its $300 million offering of eight-year first-priority senior secured notes.

The deal is expected to price during the July 26 week.

Credit Suisse and Deutsche Bank Securities are joint bookrunners for the bank debt refinancing.

Entravision $385 million

Elsewhere, Entravision is in the market with a $385 million offering of seven-year senior secured first-lien notes, according to an informed source.

Although the source declined to discuss the timing of the deal, market sources expect it to come with a full roadshow.

Citigroup is the left bookrunner. Wells Fargo Securities and UBS Investment Bank are joint bookrunners for the bank debt refinancing.

Cedar Fair up in secondary

A trader saw Cedar Fair LP's 9 1/8% notes due 2018 trading at 100½ bid, 101 offered.

That was up slightly from the levels around 100¼ bid, 100½ offered at which the Sandusky, Ohio-based amusement park operator's new paper had traded at on Friday, which, in turn, were not much changed from where those bonds had traded late Thursday following the pricing of the $405 million offering - upsized from the originally announced $300 million - at 98.613 to yield 9 3/8%.

The Cedar Fair deal finally came to market last week literally several months after it had been initially shopped around to investors, who had seen the original version of the deal - larger at $500 million and with different covenants - back in late May.

A trader meantime saw the new NXP BV 9¾% senior secured notes due 2018 at 102 7/8 bid, 103 1/8 offered.

The Dutch semiconductor manufacturer had priced $1 billion of those bonds last Tuesday - upsized from the $600 million size announced earlier that session - in a quickly marketed offering at par. The bonds then firmed smartly in the aftermarket, getting as good as 103¼ bid, 103¾ offered, before settling in a little lower than that peak level over the next several sessions.

Among the company's existing bonds, which had shot up last week by as much as 5 points on the new-deal news since the deal proceeds will be used to take out a portion of the existing debt - a trader saw its 7 7/8% senior secured notes due 2014 still at par bid, 100½ offered, the anticipated takeout level, slightly less than 3 points over the mid-97 levels at which those bonds had traded before the announcement of the new deal and its intended use of proceeds.

The company's 9½% notes due 2015 edged up by 1/8 of a point to 94¼ bid.

Market indicators stay mixed

Among established issues having no new-deal connections, a trader saw the CDX North American HY Series 14 Index ease by ¼ of a point on Monday to end at 95 5/8 bid, 96 1/8 offered, after having lost ¾ of a point on Friday.

The KDP High Yield Daily index meantime was up by 5 basis points on Monday to 71.64, after having lost 3 bps Friday, while its yield tightened by 2 bps Monday to 8.34% after having increased by 2 bps on Friday.

The widely followed Merrill Lynch High Yield Master II index finished Monday with a year-to-date return of 6.827% versus Friday's close at 6.755%.

Advancing issues led decliners for an 11th consecutive session on Monday, its bulge widening a little to around a six-to-five margin versus Friday, when just a relative handful of the roughly 1,200 issues tracked separated the winners from the losers.

Overall activity, represented by dollar-volume levels, declined by 5% on Monday, on top of the 23% falloff on Friday.

Monday, a trader said, was "a big blah of a day - there was not a whole lot of activity."

A second trader said that there was not much going on, with the overall market a little softer. "It was not a very fun-filled day," he opined. "It was boring."

At yet another desk, a trader recalled, "The past few years, we were busy on summer Mondays," but now, he said, "no one shows up on summer Mondays and Fridays; it really had that tone." He saw the market overall as "firm, but very quiet."

"There was very little activity. The equity market was up a little bit, then unchanged, up a little bit, unchanged," he added.

He also attributed the "lackluster" pace to the fact that we are at the start of another earnings season, with many investors presumably wanting to see which way quarterly results for well-known companies start to break before making any decisive moves.

That said, however, he did see "a lot of buying across the short end of the curve," theorizing that this was linked to the $1.275 billion of high-yield mutual fund inflows reported last week, considered a reliable barometer of overall liquidity trends in Junkbondland and an indicator of renewed investor interest in high yield.

Gulf energy names take a step backward

A trader said that BP's 5¼% notes due 2013 dropped by ¾ of a point to 98 bid, 98½ offered, probably hurt by the possibility of new undersea leaks near its blown-out Macondo Prospect well in the Gulf of Mexico.

While the containment cap, which the beleaguered British oil giant put on the leaking underwater well, has stopped the flow of oil since Thursday, early euphoria that the environmental crisis caused by the well might now come to a quick end was dashed by reports that government officials now are worried that oil and gas could be escaping elsewhere.

Pressure tests on the cap have meanwhile been inconclusive. BP continues to dig a set of relief wells to siphon the oil away from the leaking well, although those relief wells are still several weeks from conclusion.

A second trader said he saw "better buyers across the curve," though on "not much movement." He saw particular activity at the short end of the curve.

At another desk, a trader saw BP's 25% partner in the Macondo well Anadarko's bonds lower, coming off the highs they had hit last week. He saw the Woodlands, Tex.-based energy exploration and production operator's 5.95% notes due 2016 at 95 bid at the start of the day, but ending closer to 94 in a 94 bid, 95 offered trading range, down ½ a point to 1 point on the day.

Anadarko's 8.7% notes due 2019 retreated nearly 2 points to 104.5 bid.

Another trader quoted the 6.95% notes due 2019 down 2 points at 96 7/8 bid, 97 7/8 offered.

But, he saw ATP's 11 7/8% second-lien senior secured notes due 2015 trading in a 73¼ bid, 74¼ offered context, apparently able to hold their own. The Houston-based E&P company's paper - which had priced at just under par on April 19, the day before the Deepwater Horizon oil drilling rig explosion that ruptured the well and started the environmental carnage - had been beaten down as far as the 60s in subsequent weeks on investor worries about the impact the tough federal deepwater drilling ban imposed in the wake of the disaster.

A second trader saw the bonds gyrating in a 72 bid, 74 offered context all day, before drifting down to 731/2, off ½ a point from their opening levels.

A red flag for A&P?

He noted that the Great Atlantic & Pacific Tea Co.'s 5 1/8% notes due 2011 were relatively firm at 94 bid, 95 offered, and its 11 3/8% senior secured notes due 2015 were "hanging in there" around an 83 bid, 84 offered context, but its 6¾% notes due 2012 have come down to the mid-70s and "keep drifting lower."

He had seen no concrete news about the Montvale, N.J.-based supermarket company, but suggested that "someone may have put a red flag" on A&P over its ability to repay its debt. He said that he believes an analyst had noted in a report that the company seems to have the money available for when it comes time to pay off the $165 million of 5 1/8% notes coming due next year, but might not be able to redeem the 2012 63/4s when that $245 million issue is due and payable.

Meanwhile, he said the 11 3/8s were showing strength because the $260 million deal was secured, "so those holders will get back what they're expecting. But someone has put a caution flag out on this company - can they refinance the 202s?"

TXU up as market digests exchange

Energy Future Holdings Corp. - probably better known under its old name of TXU Corp. - saw its debt improving in an otherwise unchanged marketplace, though a trader noted that volume was "not as much as I would have thought," with about $30 million to $40 million of the utility operator and merchant power producer's various issues trading.

The trader opined that the lack of action was due to "uncertainty over what you actually get" in regards to a recently announced debt swap.

The trader called the 10 7/8% notes due 2017 the "most active" of the trading issues, deeming them "marginally up" at 73 bid, 74 offered.

However, he noted that he saw a trade around 64 for the 10¼% notes due 2015, which he called "a fair bit lower." He speculated that the trade could be a mistake.

A market source at another desk pegged EFHC's 10 7/8% paper up ¾ of a point on the day at 73½ bid, while seeing the 101/4s in a 68-69 context..

The company's bonds had fallen on Friday after the initial announcement of the debt exchange.

Under the terms of TXU's proposed swap of debt for debt and cash, the Houston-based company is looking to exchange $2.7 billion of the 11¼%/12% senior toggle notes due 2017 and $1.78 billion of the 10 7/8% senior notes due 2017 for new debt and cash. The new debt consists of $2.18 billion of 10% senior secured notes due 2020, and the company is also paying up to $500 million in cash.

For each $1,000 principal amount of notes tendered by the early deadline date, holders will receive $720 for the toggle notes or $785 for the 10 7/8% notes. If tendered after the early deadline, holders will get $670 for the toggle notes and $735 for the 10 7/8% notes.

The breakdown of new debt and cash per each $1,000 tendered will be dependant on how much is tendered by the early deadline. If all bonds are accepted by the early deadline, then holders of the toggle notes would get $134.33 in cash and $585.67 in new notes, while the 10 7/8% noteholders would receive $146.46 in cash and $638.54 in new notes.

However, no cash will be paid out to those tendering after the early deadline.

The early tender deadline is 5 p.m. ET on July 29. The offer expires midnight ET on Aug. 12.

On Monday, Fitch Ratings said it had placed TXU's ratings on review. The rating agency said that while a successful exchange would result in the removal of about $3.6 billion in old notes, the overall reduction in debt would likely not be enough to substantially improve credit metrics.

Stephanie N. Rotondo contributed to this report.

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