The primary market had another slow week, with the most excitement coming from the deal that wasn't-- Calpine Corp.'s $2.3 billion offering. Several smaller deals came through and investors are starting to look more at yield value and covenant packages. Here were some notable deals.
* Goodyear Tire & Rubber Co. was planning to sell $650 million in debt last Friday, on the back of a $650 million term loan that was completed at the end of the week. Traders say it is a difficult deal and the company may have to sweeten its terms to get it done. Martin King, an analyst at Standard & Poor's, says a successful offering should improve the company's liquidity and reduce refinancing risk for the next year. In addition to prepaying a term loan due next year and other debt, the proceeds will be used to support operating costs. King mentions the company's accounting troubles, and resulting Securities and Exchange Commission and internal investigations, as causes for concern among investors. One trader notes the deal is worth watching because "it's the largest and sketchiest" out there and adds that auto supplier names have been closely followed of late as the industry faces increasing pressures. Price talk on the new deal was around 11%, up from previous expectations of 9.5-10%. S&P rates Goodyear double-B minus has it on negative watch. J.P. Morgan Securities is underwriting the transaction.
*Roto-Rooter, Inc., a residential and commercial repair-and-maintenance-service, sold $110 million in floating-rate notes due in 2010 and another $150 million in fixed-rate 8 3/4% notes of '11 through Lazard Freres last Tuesday. The new debt--the company's inaugural offering--was part of a three-part financing deal that funded Roto-Rooter's merger of its subsidiary, Comfort Care Holdings, with VITAS Healthcare. One portfolio manager says the deal came very quickly and most likely was targeted to a specific customer base, perhaps hedge funds. After the merger, Roto-Rooter will control the revenue and earnings of VITAS, the largest provider of end-of-life care services in the nation.
