Corporate Bond Dealers Close A Week Filled With New Issues
April 28, 2011
But heading into the final weeks of August, market watchers expect the pace of issuance to cool down. Many companies recently tapped the debt market to take advantage of falling Treasury yields, as the long bond fell to around 6.76% from about 7% at the end of July. In the secondary market, spreads of Columbia/HCA Healthcare's debt tightened .02 to .04 percentage point following an upgrade from Moody's Investors Service. The company's 6.91% notes due 2020 rose to a spread of 0.50 to 0.52 percentage point above Treasurys. The yield spread is the difference in the yield of a given debt instrument and that of a similar-term Treasury issue, with a tightening of the spread suggesting a decreased perception of risk. Moody's said it upgraded Columbia/HCA Healthcare's debt ratings based on improving operating performance, an expanding competitive position in the healthcare industry, and on expectations that the company will maintain its strong financial position. Moody's raised ratings on Columbia/HCA Healthcare's debentures, notes, and medium-term notes to single-A2 from single-A3. The agency also upgraded the company's senior subordinated notes to Baa1 from Baa2. Elsewhere, spreads on investment-grade debt were mostly unchanged in light trading. On the high-yield side, Penn Traffic's debt staged a minor comeback Friday after falling earlier in the week on news of a decline in July same-store sales. The supermarket chain's 10 1/4% senior notes due 2017 were quoted up 1 point at 90, though the issue was still down 1 from the beginning of the week, before the declining sales figures were announced. Prices of Nextel Communications debt also rebounded slightly after falling for much of the week. The wireless company's 9.75% senior notes due 2019 were quoted at 55 3/8, up about 1 point. Market watchers said the glut of telecom debt in the junk market generally depressed wireless company's prices. Overall, prices of high-yield debt were mostly unchanged. In new issuance, Sterling Chemicals priced $375 million in a two-part offering through lead manager CS First Boston Inc.. The first part, $275 million of 10-year senior subordinated notes, was priced at par to yield 11 3/4%. Sterling's second part, $100 million of 12-year senior secured discount notes, was priced with a five-year zero coupon and with a yield-to-maturity of 13.5%. Lincoln National issued $100 million of trust preferred securities with an 8.35% dividend rate via Merrill Lynch & Co.. The four million shares were priced at $25 each. And in the Rule 144a private placement market, Casino Magic of Louisiana priced $115 million of first mortgage notes at par to yield 13% via lead underwriter Wasserstein Perella Inc.. Issuers of Rule 144a deals sell them privately on the primary market, but have the right to register them as public issues six months later.
