Foresight, PHH, Insight price; Exide slates; $12 billion week possible; ATP slides on numbers

By Paul Deckelman and Paul A. Harris

New York, Aug. 6 - Foresight Energy LLC, PHH Corp. and Insight Communications Co., Inc. closed out a busy week in the high yield primary market on Friday by pricing a trio of new deals. Coal mining concern Foresight sold $400 million of seven-year notes, while PHH, which provides mortgage and vehicle fleet management services, brought an upsized $350 million issue of 51/2-year notes to market. Cable operator Insight priced a $95 million add-on to the issue of eight-year notes which it priced at the end of June.

When PHH's new deal was freed for aftermarket trading, the Mt. Laurel, N.J.-based company's paper was seen by traders to have firmed several points from its par issue price.

Foresight's new deal hung in a little above issue. The traders did not see any aftermarket in Insight Communications.

Recent new deals from Ferro Corp., Borgata Hotel Casino & Spa and Continental Airlines, Inc. were seen continuing to trade at least a point - and sometimes more - above their respective issue prices.

Primaryside players meantime heard that Exide Corp., which on Thursday announced plans for a $675 million two-part senior secured offering, will begin marketing the deal via a conference call Monday, with pricing expected to take place some time during the Aug. 9 week, a week the promises as much as $12 billion of pricings.

Away from the new-deal arena, secondary market indicators were mostly firm. ATP Oil & Gas Corp., whose bonds had recently been seen moving up solidly from the lows they had hit in connection with the Gulf of Mexico oil-rig disaster, were clearly in retreat Friday after bad second-quarter numbers.

Foresight prices at revised talk

Three issuers, each bringing a single tranche of junk, raised a combined total of $848 million of proceeds on Friday.

Foresight Energy LLC and Foresight Energy Corp. priced a $400 million issue of 9 5/8% seven-year senior notes (Caa1/B) at 99.374 to yield 9¾%.

The yield printed on top of price talk that had been upwardly revised from previous talk of the 9½% area.

In addition to revised price talk there were covenant changes.

Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Investment Bank and Credit Agricole CIB were the joint bookrunners for the debt refinancing deal.

Once price talk increased, the order book built, market sources said.

There is presently considerable demand for paper from coal producers, according to an analyst who spoke to Prospect News Friday.

Earlier in the week, Arch Coal, Inc. priced a $500 million issue of 10-year senior notes (B1/BB-) at par to yield 7¼%, at the tight end of the 7 3/8% area price talk.

However, prior to setting that 7 3/8% area price talk, the St. Louis-based coal producer had been discussing a yield range of 7 3/8% to 7½%, a buy-side source said.

Such was the demand for Arch Coal's paper that everybody seemed to stay aboard as pricing ratcheted lower, the source added.

Meanwhile, in the week ahead Peabody Energy Corp., also of St. Louis, is expected to show up with a deal sized at north of $1 billion, according to a buy-side source.

PHH upsizes

Elsewhere, on Friday, PHH Corp. priced an upsized $350 million issue of 5.5-year senior notes (Ba2/BB+/BB+) at par to yield 9¼%.

The yield printed 12.5 basis points inside of 9½% area price talk. The amount was increased from $250 million.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and RBS Securities Inc. were the joint bookrunners.

Proceeds will be used to repay bank debt.

Insight brings add-on

Meanwhile Insight Communications Co., Inc. priced a $95 million add-on to its 9 3/8% senior notes due July 15, 2018 (B3/B-) at 105.75, resulting in a yield of 8.129%.

The reoffer price came in the middle of the 105.50 to 106 price talk.

The sale generated $100.463 million of proceeds.

Bank of America Merrill Lynch, JP Morgan, Credit Suisse and Morgan Stanley were the joint bookrunners for the quick-to-market sale.

Proceeds will be used to pay down the credit facility of subsidiary Insight Midwest Holdings LLC and for general corporate purposes.

The original $400 million issue priced at par on June 30.

$6 billion week

With Friday's deals into the tally, the first week of August saw $6 billion of issuance.

It's only the second week since the April-May correction to top the $6 billion mark. The July 26 week saw $6.1 billion

However that week's deal count, 13, was surpassed by the most recent week's 14 junk-rated, dollar-denominated tranches.

The total for the first week of August extends year-to-date issuance to $144 billion, which puts 2009's all-time issuance record of $162 billion just $18 billion away, according to Prospect News data.

$12 billion expected

That record would appear to be in serious and immediate jeopardy.

Two-thirds of that $18 billion amount - as much as $12 billion - is expected to come to market during the week ahead, sources said on Friday.

In addition to the $2.58 billion announced calendar, and the above-mentioned Peabody Energy deal, sources look for the following issuers to show up with $1 billion-plus offerings during the Aug. 9 week:

* Chesapeake Energy Corp. via Credit Suisse;

* NRG Energy, Inc.;

* GMAC; and

* Energy Transfer Partners LP.

Apart from those expected $1 billion-plus deals, Chemtura Corp. is expected to bring a $750 million senior notes deal via Citigroup, Bank of America Merrill Lynch, Barclays Capital and Goldman Sachs, during the week ahead to help fund its exit from Chapter 11 bankruptcy.

Multiplan Inc. is also expected to bring its $675 million offering of eight-year senior unsecured notes (Caa1), via Bank of America Merrill Lynch, Barclays Capital Inc. and Credit Suisse. That deal could launch Monday, according to a market source.

And First Data Corp. is expected to bring a $500 million offering of first-lien secured notes, a mutual fund manager said.

Exide sets Monday call

However, the Friday session was rather muted with regard to new deal announcements.

Only one such announcement surfaced.

The market heard that Exide Technologies, Inc. will host an investor call on Monday for its $675 million two-part offering of first-lien senior secured notes, via Morgan Stanley, Deutsche Bank Securities and Wells Fargo Securities.

That deal is also expected to price during the week ahead.

PHH bonds pop powerfully

PHH's new 9¼% notes due 2016 were clearly the star of the day in the new-deal aftermarket, traders said.

When that upsized $350 million issue was freed for secondary market dealings, a trader said "they really traded up," reaching 102½ bid, 103¼ offered, well above their par issue price.

A second trader saw the bonds at 102½ bid, 103 offered, while a third had them going out at 1021/2, 1031/2.

Foresight firms, a little

In contrast, Foresight Energy's new 9 5/8% notes due 2017 did not have all that much pop to them.

A trader said that the bonds, which had priced at 99.374 earlier in the session, then traded into a 99 5/8 bid, and then 99½ bid.

"So there was not a lot of activity, and they were trading just above issue."

Another trader saw the bonds at 99½ bid, 100 offered.

Insight an aftermarket no-show

Several traders meantime said that they had not seen any trace of the new Insight Communications Co. 9¾% 2018 add-on notes, which had priced at 105.75, reasoning that the small $95 million deal was probably quickly put away, while the original $400 million offering that the New York-based cable company priced in late June normally isn't seen very much in the market.

Recent deals hold their own

Among offerings that came earlier in the week, a trader said that he had seen some morning trading in the new Borgata bonds, although after that flurry, "they seemed to quiet down."

He saw the Atlantic City-based hotel and casino operator's 9½% senior secured notes due 2015 trading around 100½ bid, 101 offered, down a little from the 101 bid, 101½ offered level where he had seen the bonds trading on Thursday - and that in turn was off from the levels approaching 102 at which the bonds had traded when they were freed on Wednesday. Still, they remained well up from the 98.943 level at which the Boyd Gaming Corp./MGM Resorts International joint venture had priced the $400 million of those notes on Wednesday to yield 9¾%.

The trader meantime saw Borgata's 9 7/8% senior secured notes due 2018 at 100 7/8 bid, 101 3/8 offered - not too much off Thursday's level around 101 bid, 102 offered, though down from their Wednesday post-pricing levels near 102 bid. The company had priced $400 million of the bonds at 99.315 to yield 10% earlier Wednesday.

Another trader on Friday quoted the Borgata five-year paper at 101 bid, 101½ offered and the eight-year notes at 100 7/8 bid, 101 5/8 offered.

Among other recent bonds, he saw Ferro Corp.'s 7 7/8% notes due 2018 hanging in there at 102¾ bid, 103¼ offered - up about ¼ point from the levels to which the Cleveland-based industrial materials company's $250 million issue had shot up smartly on Thursday after pricing at par earlier in the day.

EnergySolutions, Inc.'s $300 million offering of 10¾% notes due 2018 were trading Friday at 99 7/8 bid, 100¼ offered, up more than a point from the 98.69 level where the Reno, Nev.-based nuclear industry services provider had priced its deal on Thursday to yield 11%.

And Continental Airlines' 6¾% senior secured notes due 2015 were quoted by a trader at 100 1/8 bid, 100¼ offered, hovering at about the same altitude the Houston-based airline company's $800 million issue - upsized form an original $750 million - had reached on Thursday, The bonds priced on Wednesday at 98.938 to yield 7%.

Market indicators mixed, but up on week

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index down ¼ point for a second straight session on Friday to end at 98 bid, 98½ offered. The index thus closed out the week up a little from the 97 5/8 bid, 97 7/8 offered level seen the previous Friday, July 30.

The KDP High Yield Daily index meantime eased by 1 basis point on Friday to end at 72.48, after having retreated by 3 bps on Thursday. Its yield was 1 bp higher on Friday at 8.08%, after having been unchanged on Thursday. On the week, the index improved modestly from the previous Friday's 72.29 reading and 8.12% yield.

The Merrill Lynch High Yield Master II index continued to hit new highs for the year on Friday, when it rose 0.055% to end at a year-to-date return of 8.928%, a new 2010 peak level, eclipsing the previous mark of 8.868%, seen on Thursday. It thus improved from the prior Friday's 8.37% year-to-date gain.

Advancing issues led decliners for a 25th consecutive session on Friday, although their winning margin narrowed to around five-to-four from Thursday's six-to-five advantage.

Overall activity, represented by dollar-volume levels, plunged by 40% Friday, on top of the 13% decline seen in Thursday's session.

A trader chalked the sharply reduced volume levels up to the usual suspects - a sunny and sweltering summer Friday better suited for lounging on a beach somewhere than staying in an office, even if air-conditioned.

Another said that "nothing" was happening, while a third allowed that it was "pretty quiet," apart from numbers-driven trading in such names as ATP and NewPage Corp.

ATP knocked lower by numbers

A trader said that "from my point of view, the bond of the day" was ATP Oil & Gas, whose 11 7/8% second-lien senior secured notes due 2015 gyrated around after the Houston-based energy exploration and production company released disappointing second-quarter results.

"What a great, action-packed bond today," he exclaimed. "There was an awful lot of trading, huge volume out."

He said the bonds started the day around the 81 bid, 81½ offered level, but then after release of the numbers they "crashed right through 80," moving down to as low as 77 bid, 79 offered. "Then it started slowly getting back up."

At their worst, he estimated that right after the numbers were released and digested by the market, the bonds were down around 3 points, and then were going out around 79 bid, 80 offered, a 2 point loss on the day, on "a lot of volume." He said the volatile movements were all numbers-driven.

ATP "was pretty volatile," said another trader, who also noted that the company's New York Stock Exchange-traded shares plunged $2.17, or 16.38%, to end at $11.08 on volume of 9.1 million shares traded, around twice the norm.

As for the 2015 bonds, he noted that the credit had "run up during the week," starting in the low 70s and eventually making its way up to peak levels in the lower 80s by Thursday, when he said he heard one quote as good as 82½ bid, 83½ offered. He was skeptical about that latter level, pegging the bonds going out Thursday at 81¼ bid, 83 offered. Then Friday he quoted them at 79 bid, 80 offered - but said that he had "not seen anything in the numbers to make the stock and the bonds get hammered."

ATP on Friday reported a net loss of $82.9 million, or $1.63 per share in the quarter - a far wider deficit than the loss of $4.4 million, or 12 cents per share, a year ago. Wall Street was only expecting a loss of around 20 cents per share.

While revenues were actually up by 25% year over year to $101.1 million, led by a 24% rise in production, they fell short of analysts' projections of about $120 million,.

The trader acknowledged that "it was a big loss" - but he added that "a lot of that was special items."

For instance, the company took a $78.2 million charge - almost as big as the entire net loss - for debt financing, relating to ATP's issuance of $1.5 billion of the 11 7/8s in mid-April and its entering into a new $100 million secured revolving credit facility at that same time, with proceeds from the new financing used to repay existing bank debt.

ATP also took an $8.7 million charge against earnings related to the halt in its deepwater drilling operations due to regulatory changes following the BP oil spill that grew out of the sinking of the sinking of the Deepwater Horizon drilling vessel on April 20 - ironically just one day after the company had priced its junk bond mega-deal at just a little under par.

With the proviso that he had not listened to the company's conference call after the release of the numbers, he marveled that he was "not sure what [investors] hated about the numbers," since so much of the loss was attributable to one-off, non-recurring items, opining that "something changed their minds between [Thursday]," when the bonds were continuing a several-session rebound from recent lows, "and today."

Rather than being solely driven by the numbers, he agreed that there was merit in the notion that perhaps the bonds had just gotten ahead of themselves with the strong gains - nearly 10 points - posted over the previous several session and that some investors just wanted to pocket their profits and take their money off the table and not be long heading into a weekend - especially given the murky regulatory outlook for Gulf of Mexico deepwater drilling in light of the legal battle raging over the government's efforts to restrict it in the wake of the BP disaster.

Trico still in trouble

In that same energy sector, a trader saw Trico Marine Services Inc.'s bonds moving around, a day after Thursday's wild gyrations, which occurred after the troubled Woodlands, Tex.-based oilfield services firm warned that it may need to seek bankruptcy protection.

He saw the company's 11 7/8% senior secured notes due 2014 start the day around 88 bid, up from the wide 86 bid, 90 offered level at which they were seen going home on Thursday on the company's bad news. The bonds had been trading in the mid 90s earlier in the week, before the bankruptcy warning came out.

"They traded pretty actively," on Friday, he said. Nearing the end of the day, he saw "a decent amount" of the bonds trading at bid levels between 88 and 90. "Then they started to fade," finally ending around 87 bid, "but on a lot of activity. They moved 1 to 2 points to the upside, then settled back 1 point," ending around 87.

He also said Trico's 8 1/8% notes due 2013 -- which on Thursday had plunged down to levels in the mid-20s from prior levels in the lower 40s - "stayed where they were" at the close on Thursday at 25 bid, 27 offered.

Besides warning on Thursday in an 8-K filing with the Securities and Exchange Commission that it may have to file for Chapter 11 - even if currently ongoing talks to restructure its debt are successful - Trico also cautioned that it may violate its financial covenants due to its poor second-quarter results.

NewPage holds around lower levels

A trader said that NewPage's bonds "bounced around a bit," particularly its 11 3/8% senior secured notes due 2014. "That's the big one, the most active one" in the company's capital structure, he said, although afternoon volume in the $25-$30 million range was well below the previous day's very heavy trading levels.

He saw those bonds around 87 bid, 87½ offered, with "a decent amount of activity in the name."

The bonds had fallen around 4 points on the session on Thursday, from the lower 90s at the close Wednesday to 87½ bid, in very heavy trading approaching $100 million, after the Miamisburg, Ohio-based coated-paper company reported bad second-quarter numbers both relative to a year ago and to the previous quarter, and disclosed that a large liquidity-boosting asset sale that was expected to be completed in this year's current second half has been delayed by regulatory red tape and now will not close until sometime next year, at the earliest.

In Friday's action, he saw the bonds initially having improved a little from Thursday's closing lows to stand at around 89 bid early in the morning, but "it came off that level pretty quickly," to fall to the 87 range, with most of the day's action between 87 and 871/2.

A market source at another desk saw the bonds swing between about 87 bid and 89, before going home down a ¼ point on the day at 88.

A&P up a little bit

A trader said that Great Atlantic & Pacific Tea Co. Inc.'s bonds "sort of slowed down," quoting the Montvale, N.J.-based supermarket operator's senior secured notes due 2015 as having risen about a point on the day to bid levels around 73, although activity trailed off from earlier in the week.

In late July, those bonds had fallen as low as the lower 60s from prior levels around 83 bid, 85 offered immediately after the company - which operates the iconic A&P supermarket chain as well as several other supermarket operations like PathMark, primarily in the Northeastern United States - reported poor second-quarter numbers and the abrupt exit of the company's chief executive officer after only a few months in that post.

Auto bonds stay firm

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 up ½ to 1 point, ending around 35 bid, on "decent volume."

Meanwhile,. he saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 trading as high as 99 bid, par offered, before ending at 98½ bid, on "not a whole lot of activity."

Another trader saw the GM benchmark bonds unchanged on the day at 34½ bid, 35 offered and Ford's long bonds likewise steady at 97½ bid, 98 offered.

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