The primary market picked up as companies sought to raise cash at lower rates following a drop in bond yields after the recent employment data made it less likely the Federal Reserve will raise rates soon. Here are some notable offerings.
* Baked goods maker Mrs. Fields sold $115 million of 11 1/2% secured notes of '11, which were priced at a spread of 826 basis points over Treasuries. Investors say the B3/triple-C plus bonds were well received and traded a point and a half higher on the break. Relative to its last high-yield offering, the issuer sweetened the terms by adding stricter covenants to the deal to make it more attractive for investors, according to one investor, who says that the deal was priced at a reasonable level is a positive sign for the high-yield market. As an example of tighter restrictions, the deal includes a cash flow sweep provision that calls for the issuer to use half of its excess cash flow to redeem bonds. One investor says the offering indicates the market is being more prudent in pricing risk than it was in January, when the deal probably could have been done without the stronger covenant package. Jefferies & Co. underwrote the sale.
* Amkor Technology, a maker of semiconductors in Asia, sold $250 million of 7 1/8% senior notes due in '11 that are seen as an attractive play on outsourcing. The B1/B securities were priced at 407 basis points above Treasuries. The bonds were sold at a slight discount to those of Amkor's competitors, which helped attract buyers even though spreads in for the industry are, like the rest of the market, trading at tight levels. Ho Wang, a portfolio manager at Muzinich & Co. who participated in the deal, says "we think that sector is tight, but relative to its competitors, Amkor is priced well." Wang says that he sees Amkor as one of the companies that will benefit because of the current outsourcing trend. Amkor provides outsourcing production in many Asian countries, which he says keeps it competitive among domestic manufacturers. Citigroup Global Markets and J.P. Morgan Securities underwrote the deal.
