Sanmina, Bristow, Tristan deals price; Dura up, most other names down; funds see $167 million inflow

By Paul Deckelman and Paul A. Harris

New York, June 7- Sanmina-SCI Corp. priced a quickly-shopped issue of floating-rate notes Thursday, while scheduled forward calendar deals for Bristow Group Inc. and Tristan Oil Ltd. also came to market. The new bonds, as well as those of Reliant Energy Inc., which priced very late on Wednesday, were not seen having traveled very far when they were freed for secondary dealings.

High yield syndicate sources further heard Hub International Ltd. had restructured its upcoming bond issue, and was out with upwardly revised price talk on the deal as well.

In the secondary market, most names were seen trending lower, in line with a fall in U.S. Treasury debt and equity markets sparked by fears of higher inflation and less of a likelihood for any interest rate cuts in the near-term.

One exception was Dura Automotive Systems Inc., whose senior notes, especially, continued to plow upward, seemingly impervious to the concerns affecting the rest of the market.

Among the notable names seen on the downside were Wynn Resorts Ltd. and Tenet Healthcare Corp.

Funds see $167 million inflow

As activity was winding down for the day, market participants familiar with the weekly high yield mutual fund flow numbers compiled by AMG Data Services of Arcata, Calif., told Prospect News that in the week ended Wednesday $167.4 million more came into those weekly-reporting funds than left them.

That extends to $1.633 billion the year-to-date cash inflows to funds that report to AMG on a weekly basis.

Meanwhile funds that report on a monthly basis saw $1.074 billion of inflows during the most recent period, hiking their year-to-date flows to $4.834 billion.

Hence year-to-date aggregate flows, which tally both the weekly and the monthly reporting funds, were $6.467 billion to Wednesday.

The latest inflow follows the $40.7 million inflow seen in the previous week, ended May 30.

It was the eighth straight weekly inflow and the 10th in the last 11 weeks, according to a Prospect News analysis of the AMG figures. On a year-to-date basis, inflows have now been seen in fully 19 weeks out of the 23 since the start of the year.

The fund-flow numbers seem to have successfully regained the positive momentum they showed at the beginning of the year, when an aggregate total of $862 million came into the funds in the first two months, according to the Prospect News analysis. That stretch run was then interrupted by a choppy four-week period in March, characterized by alternating weeks of outflows and inflows, none larger than $25 million. Over the past 11 weeks, though, with 10 inflows seen, the funds have had a net total infusion during that period of $786.9 million, according to the analysis.

The flow of money into and out of the junk bond funds is seen as a generally reliable market barometer of overall high yield market liquidity trends - although they only comprise 10% to 15% of the total monies floating around the high yield universe, far less than they used to - because there is no reporting mechanism to track the movements of other, larger sources of junk market cash, such as insurance companies, pension funds and, most recently, hedge funds.

Primary stays busy

And the primary market continued to crank on Thursday.

Three issuers each priced a single tranche of notes for a total slightly topping the $1 billion mark.

But sources said that the downward move in Treasuries would likely serve to put the kibosh on quick-to-market four-B rated deals because those have the highest degree of sensitivity to Treasuries.

Sanmina prices $600 million

Sanmina-SCI Corp., a San Jose, Calif., electronics company, priced Thursday's largest dollar-amount of bonds: $600 million of senior floating-rate notes (Ba3/B+) in two $300 million tranches, one of three-year notes, the other of seven-year notes.

The company priced both tranches of notes at par to yield three-month Libor plus 275 basis points, on top of price talk.

Banc of America Securities LLC was the left bookrunner for the debt refinancing deal. Citigroup and Deutsche Bank Securities were joint bookrunners.

Bristow upsizes

Elsewhere Bristow Group Inc. priced an upsized $300 million issue of 10-year senior unsecured notes (Ba2/BB) at par to yield 7½%.

The issue, which was increased from $250 million, priced on the wide end of the 7¼% to 7½% price talk.

Goldman Sachs & Co. and Credit Suisse were joint bookrunners for the aircraft acquisition financing deal from the Houston-based offshore transportation services provider to oil and gas industry.

An informed source said that the upsized deal had gone well, and added that it had been healthily subscribed.

Tristan completes tap

Tristan Oil Ltd. priced a $120 million add-on to its 10½% senior secured notes due Jan 1, 2012 (B2/B+) at par.

There had been no official price talk on the Jefferies-led deal.

Proceeds will be used for general corporate purposes and capital expenditures by Tristan's Kazakh affiliates Kazpolmunay LLP and Tolkynneftegaz LLP.

Tristan is a British Virgin Islands oil and gas exploration and production company operating primarily in Kazakhstan.

Hub, Edcon raise price talk

Against the backdrop of Thursday's pain and suffering in the capital markets two prospective issuers hiked price talk on deals expected to price on Friday.

Hub International Ltd. downsized its junk bond offering to $700 million from $790 million, shifting $90 million of its LBO financing to the bank loan market.

Meanwhile the Chicago-based insurance broker abandoned a proposed tranche of 7.5-year senior floating-rate notes and increased price talk on the two remaining tranches it has in the market.

Hub is now talking a $305 million tranche of seven-year senior fixed-rate notes (B3/CCC+) at the 9% area, 25 basis points higher than the high end of the previous price talk of 8½% to 8¾%.

Hub also raised talk on its $395 million tranche of eight-year senior subordinated notes (Caa1/CCC+) to 10¼%, also 25 basis points higher than the high end of the previous talk, in this case 9¾% to 10%.

The deal, via Morgan Stanley and Merrill Lynch, is expected to price on Friday.

Meanwhile South Africa's Edgars Consolidated Stores (Edcon) raised price talk on all three tranches of its €1.83 billion notes offering.

The clothing retailer raised talk on its proposed €1.18 billion tranche of seven-year senior secured floating-rate notes (B2/B+) to Euribor plus 275 to 300 basis points from the Euribor plus 275 basis points area.

Edcon also raised talk on its planned €650 million of senior unsecured notes (Caa1/B-) in two tranches.

A tranche of unsecured fixed-rate notes is now talked to price with a yield in the 8 1/8% to 8 3/8% range, up from the previous 8 1/8% area price talk.

Meanwhile talk on a tranche of unsecured floating-rate notes was raised to Euribor plus 450 to 475 basis points from the Euribor plus 425 basis points area.

The sizes of the senior unsecured notes tranches remain to be determined.

Pricing is set for Friday.

Barclays Capital and Credit Suisse have the books.

Sanmina trades around issue

When the new Sanmina-SCI bonds were freed for secondary dealings, a trader saw both the three-year and the seven-year floaters hovering just below their par issue price at 99.75 bid, par offered.

Another trader did see them a little bit better, at 100.125 bid, 100.375 offered.

At another desk, a trader saw the high-tech manufacturer's established 8 1/8% notes due 2015 down a point on the session at 95.75 bid, 96.75 offered.

That seemed to be an extension of the price movements seen in Sanmina-SCI's bonds, and those of other tech names, which had moved up on Monday's news that contract electronics manufacturer Flextronics International Ltd. had agreed to acquire smaller competitor Solectron Corp. - news which boosted the latter's bonds solidly up to about the 108-109 level from prior soundings around par. Those sector peers, however, had then moved back down from those gains in subsequent sessions.

That sector retreat was extended into Thursday - although it came against a backdrop of a generally lower market, with Amkor Technology Inc.'s 7¾% notes due 2013 seen down a point at 97 bid, and Freescale Semiconductor Inc.'s 8 7/8% notes due 2014 quoted down 1½ points around the 98 area.

Bristow doesn't move much, Reliant lower

Back among the newly priced issues, a trader saw Bristow Group's 7½% notes due 2017 trading at 100.25 bid, 101 offered, up a little from the bonds' par issue price earlier in the session.

He also saw Reliant Energy's new 7 7/8% notes due 2017 and 7 5/8% notes due 2014, which priced very late on Wednesday and only began aftermarket dealings Thursday, as having lost about a point from their par issue price, at 99 bid, 99.5 offered for both tranches, an assessment echoed by a trader at another desk.

The first trader meanwhile said that the new Tristan Oil 10½% add-on due 2012 was "a Jefferies deal that just came and went" and was not seen in the secondary market.

Junk pushed down by stocks, bonds

Among the established names, a trader described the market as "a [expletive] shop. Everything's lower. It really took a bite out of the market."

He noted the slide in Treasury issues on renewed inflation fears, which lifted the yields on that government paper over the psychologically important 5% level for the first time since last summer, which in turn helped to send stocks plummeting, with the bellwether Dow Jones Industrial Average off nearly 200 points on the session and more than 400 points over the past three sessions.

That, he said, was enough to throw a big wet blanket over the junk market. "It was very quiet, but things were very heavy."

He said he saw "not a lot of outright selling," at least at that shop, "because stuff moved down pretty orderly," and while there was some widening out of spreads, "there was not a wholesale liquidation of credit."

In fact, he speculated, the current problems in other markets could actually turn out to give high yield a boost.

"You'll see sellers from the equity markets in here. I think people are taking profits out of equities as Treasuries backed up, and as spreads widened out, particularly high-grade corporates. Their spreads are widening across the board - not a lot, but consistently, two, three, five basis points. You'll have guys coming in and using their equity proceeds to buy fixed income."

He said that while "our stuff widened out, I think at lower levels, you'll see buyers.

"We haven't seen it yet - but that's what's coming."

One credit, he said, which could benefit from such a move into junk could be Claire's Stores Inc., which sold nearly $1 billion of new bonds in a three-part deal that priced at par on May 22, and since then, "it can't catch a break," with the bonds moving steadily downward. The 10½% notes due 2017 "are now [yielding] close to 11%, while the 9¼% notes are trading in the mid-90s. There has been enough deterioration of the new bonds' prices from their issue levels to make the specialty retailer's paper "a serious buying opportunity at these lower levels."

Another retailing name seen hitting the skids on Thursday was Bon-Ton Stores Inc., whose 10¼% notes due 2014 were seen down 1¼ points at just above the 104 level, in active dealings.

Tenet not looking healthy

Elsewhere, the trader said, Tenet Healthcare's 9 7/8% notes due 2014 was down to 101 bid, 101.25 offered from recent levels around 102.5 bid, 103.75 offered.

"Tenet had an investor day," in which company executives met investors in the Dallas-based Number-Two U.S. hospital operator to answer their questions and address their concerns, "and a lot of people looked at it as sort of lukewarm - a rehash expressing the same things they've said in the past."

These included the company's need to boost admissions, "which is difficult in some of their markets." Also, "bad-debt expense [from uninsured people who are treated at company hospitals but never pay up] remains problematic, and this turnaround that everyone's expecting keeps dragging out and dragging out."

Wynn no winner

Another downsider was Wynn Resorts after the Las Vegas-based gaming company announced a slowdown in its plans to expand its big new resort in Macau, due largely to Chinese governmental red tape.

The company also announced plans to buy back up to $1.2 billion of its shares and convertible notes - but not any of its straight bonds.

Wynn's 6 5/8% notes due 2014 were "down a couple" in "pretty active" dealings, at 97.5 bid, 98 offered, a trader said.

Dura climb continues, other autos off

Amid all of the bearish moves, traders saw Dura's bonds bucking the generally negative overall trend in the high yield markets, with one seeing its 8 5/8% notes due 2012 at 66 bid, 67 offered, up another five points on the day, and its 9% notes due 2009 at 16 bid, 17 offered, up a point.

Another trader called the senior Duras up 4 points at 65.5 bid, 66.5 offered.

The bankrupt Rochester Hills, Mich.-based automotive components manufacturer's bonds have been moving steadily upwards over the past week, having risen more than 20 points in that time by some estimates, although there's been no overtly positive news out about it in that time.

Elsewhere in the automotive arena, a trader saw Dana Corp.'s bonds - which had firmed smartly on Wednesday on asset-sale news from the bankrupt Toledo, Ohio-based automotive components maker-as having surrendered some of those gains Thursday. The 6½% notes due 2008 were off 2 points at 99.5 bid, 100.5 offered.

Elsewhere, the trader saw Remy International Inc.'s bonds, which had also risen on Wednesday, as unchanged.

Among the non-distressed automotive names, a trader saw ArvinMeritor Inc.'s 8 1/8% notes due 2015 down a point at 98 bid, 99 offered.

And another trader saw automotive benchmark General Motors Corp.'s 8 3/8% notes due 2033 down 1½ points at 90.5 bid, 91 offered, and said the 7.45% notes due 2031 of arch-rival Ford Motor Co. "got hit pretty good," down 1 5/8 points to 79.375 bid, 79.875 offered.

All told, he said, "it was a pretty lousy day, with not much secondary activity.

"People were just slogging around with stuff."

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