Primary Market Sees Handful of Deals, Mostly Unrated

The high yield new issues market saw a couple of new deals last week, but overall the market was characterized by one investor as feeling like a "slow burn." The month of January, for the most part, was disappointing for investors who had expected to see a plate full of new issues to choose from.

Several of the deals that priced last week were actually in the unrated category, but those seemed to be the deals that have performed better so far this year (see related story on page 4).

E*Trade Group, for example, priced a $500 million offering at par that didn't carry a rating. The paper is initially callable in 2003 at 103.429, and then prices fall to 102.571, 101.714, 100.857 and par in each subsequent year.

Aavid Thermal Technologies Inc. priced a $150 million offering in the 144A market that carried a B2 rating from Moody's Investors Service and single B-minus from Standard & Poor's Ratings Service.

The transaction priced at a slight discount at 98.87 to yield 624 basis points over comparable Treasurys. It is callable in 2006 for the first time at a price of 102.

Aavid provides thermal management solutions for microprocessors and integrated circuits for digital and power electronics applications, according to published reports.

PSEG Energy Holdings, for its part, priced a $300 million transaction, that also was unrated. It carried a 9.125% coupon. The use of proceeds was unclear at press time, but a business unit of power developer PSEG said last week that it plans to build a $320 million heating and power plant in Poland to replace an existing property.

Poland has recently opened up its power industry to foreign investors, according to published reports, to meet minimum standards to be a member of the European Union.

Globix Corp. priced one of the larger deals last week, at $600 million. The offering, which carried a coupon of 12.5%, was priced at par. It also was unrated.

First call for the high yield paper is in 2005 at 106.25, and then prices decline in subsequent years to 104.167, 102.083, and par.

Globix said the proceeds will be used to buy back its 13% senior notes due in 2005 as well as continued expansion of its data centers and for general corporate purposes.

Nextel Communications, though, priced the biggest deal of the week. At $1.1 billion, the deal priced at par. It carried a B1 rating from Moody's and single-B rating from Standard & Poor's.

The call schedule is as follows: It is initially callable in 2003 at 103.5, and then prices fall in succeeding years to 102.917, 102.333, 101.75, 101.167, 100.583, and par in each year thereafter.