Primary quiet, awaits downsized Golden Nugget; new United Continental busy; Alcatel-Lucent up

By Paul Deckelman and Paul A. Harris

New York, Nov. 4 - The high-yield primary sphere kicked off the first full trading week of November on a quiet note on Monday with no new junk-rated dollar-denominated deals heard to have priced, a far cry from Friday's nearly $1.5 billion session.

However, high-yield syndicate sources said that price talk had emerged on gaming and lodging concern Golden Nugget, Inc.'s downsized eight-year deal, which is expected to come to market after the order books close on Tuesday afternoon.

The sources said that Miami-based commercial real estate investment firm Rialto Holdings, LLC is scheduled to launch a $250 million five-year offering via an investor call on Tuesday, with pricing expected later in the week.

A slew of new developments was heard as several non-U.S. companies were shopping around dollar- and euro-denominated junk paper.

Among the issues that priced at the end of last week, traders said that Garda World Security Corp.'s six-year deal protected the gains it had notched in initial aftermarket trading after pricing on Friday, but airline operator United Continental Holdings, Inc.'s new notes continued to fly just under their its par issue price as the busiest Junkbondland credit of the day.

Away from the new deal arena, the traders called the session quiet and lackluster.

Telecommunications network equipment maker Alcatel-Lucent SA's bonds firmed in moderately active trading on the news that the company plans to raise some $2.7 billion-equivalent of fresh capital via offerings of new equity, bonds and a loan and is planning on using some of those proceeds to repay existing debt.

Statistical measures of market performance were mixed for a fourth consecutive session.

Golden Nugget sets talk

Although no new issues priced on Monday, the news flow was vigorous in the European and North American high-yield primary markets.

Golden Nugget downsized its offering of eight-year senior notes (Caa1/CCC+) to $295 million from $300 million.

The notes are talked to yield 8½% to 8¾%.

Books close at 1 p.m. ET on Tuesday, and the deal is set to price shortly thereafter.

Jefferies and Deutsche Bank Securities Inc. are the joint bookrunners.

Rialto investor call Tuesday

Rialto Holdings and Rialto Corp. have set an investor conference call for 12:30 p.m. ET on Tuesday to present a $250 million offering of senior notes due 2018 (expected ratings B2/B) to investors.

The deal is scheduled to price late in the present week.

Wells Fargo is the left bookrunner. JP Morgan and Deutsche Bank are the joint bookrunners.

Proceeds will be used to provide working capital to Rialto Mortgage Finance (RMF), as well as to repay sums that were advanced by Lennar Corp. to enable RMF to begin originating and securitizing loans, and make investments in funds or entities managed or advised by Rialto Capital or its subsidiaries.

CBC Ammo starts roadshow

Brazil-based CBC Ammo began a roadshow on Monday for its $250 million offering of eight-year senior notes.

An investor call is set for Tuesday.

Deutsche Bank is the bookrunner.

Proceeds will be used to repay debt, help fund the acquisition of Magtech USA and fund a sponsor dividend.

Albea PIK toggle deal

France-based Albea plans to price a $150 million offering of five-year senior secured PIK toggle notes (expected ratings Caa2/CCC+) on Wednesday, according to an informed source.

An investor call is scheduled for Tuesday.

JPMorgan and BofA Merrill Lynch are the joint bookrunners.

The Gennevilliers, France-based personal care produces company plans to use the proceeds to fund a dividend.

Global Closure roadshow

France's Global Closure Systems plans to start a roadshow on Tuesday for its €335 million offering of senior secured notes due 2018 (expected ratings B2/B.

Physical bookrunner Credit Suisse will bill and deliver for the debt refinancing deal. BNP Paribas, Commerzbank, Goldman Sachs and KKR are the joint bookrunners.

Univeg secured deal

Univeg Holding BV began a roadshow on Monday for its €265 million offering of seven-year senior secured notes, set to price at the end of the present week.

Jefferies, Petercam and KBC are the joint bookrunners.

The Belgium-based vertically integrated supplier of fresh fruits and vegetables plans to use the proceeds to repay debt as well as for general corporate purposes.

UAL active but little changed

In the secondary sphere, a market source said that Friday's $300 million issue of 6% notes due 2020 from United Continental Holdings "was the big trader of the day." He estimated that over $50 million of those bonds had changed hands.

The source saw the notes trading in a 99¾ to par bid context, off a little from the par level at which the Chicago-based airline company - the corporate parent of number two U.S. carrier United Airlines - priced that quickly shopped offering on Friday.

Monday's levels were little changed from Friday's initial aftermarket levels.

A second trader, who said that he had not been involved with the United Continental issue, but had heard it being traded around 99½ bid, par offered, said that it seemed like the deal "is not really going anywhere."

Yet another market source saw the bonds get as good as 99¾ bid, 100¼ offered.

Garda holds gains

While those UAL bonds continued to hit aftermarket turbulence, nothing was standing in the way of Garda World Security's 7¼% notes due 2021.

A trader on Monday quoted the notes in a 101¼ to 101¾ or a 101½ to 102 bid context, although he said that he "really didn't see that much trading" in it.

Garda, a Montreal-based global provider of security guard and armored-care services, priced its $300 million scheduled forward-calendar transaction at par on Friday, and the new bonds quickly moved above the 101 bid mark when they were freed for secondary dealings.

MEG Energy, Tullow steady

Among the other two deals that had priced on Friday, both out of the oil and gas sector, a trader said that Tullow Oil plc and MEG Energy Corp.'s new bonds were both little changed from their late Friday levels.

He saw London-based energy operator Tullow's 6% notes due 2020 at par bid, 100½ offered, the same level at which he had seen the bonds finish on Friday.

Earlier in that session, the company had priced $650 million of that paper at par, after upsizing the scheduled forward calendar deal from an originally expected $500 million.

A market source at another desk said that there actually had been a fair amount of the bonds trading on Friday, pushing as high as 100¾ bid near the end of the day.

However, he said that on Monday the notes had come back in to end the day right around par, on over $4 million of volume.

One of the traders also saw MEG Energy's 7% notes due 2024 at 102 bid, 102½ offered, calling them unchanged from their going-home level on Friday.

That was when the Calgary, Alta.-based pure-play oil sands company had priced its quick-to-market $200 million tranche of bonds as an add-on to the company's existing $800 million of the notes, which had been sold back in September.

The add-on priced at 101 to yield 6.83%.

Older deals untraded

Several traders also said that they had not seen any dealings in some of the other issues that had come to market earlier last week, such as the issues from Kinder Morgan Inc., Seagate Technology plc and Level 3 Communications Inc.

Level 3, a Broomfield, Colo.-based telecommunications and internet backbone provider, priced a quickly shopped $640 million of 6 1/8% notes due 2021 at par last Wednesday via its Level 3 Financing, Inc. subsidiary. The bonds rose to 101½ bid, 102 offered by the end of the week.

Kinder Morgan, a Houston-based energy pipeline owner, did a $1.5 billion drive-by deal on Thursday, upszing that two-part transaction from an originally shopped $1 billion.

The company priced $750 million of 5% notes due 2021 at par, which firmed modestly to a 100 5/8 bid, 101 1/8 offered context. Its new $750 million of 5% notes due 2023 also priced at par and had last been seen straddling that issue price.

Seagate, a Dublin, Ireland-based maker of computer hard drives and other data-storage devices, priced a quick-to-market $800 million issue of 3¾% notes due 2018 on Thursday via its Seagate HDD Cayman Sub entity. The bonds priced at par after having been upsized from an original $500 million.

The split-rated deal (Ba1/BBB-/BBB-) mostly generated interest from high-grade investors as a crossover play, but high-yield traders said they did see some junk market interest as well.

The bonds had finished last week at 100 7/8 bid, 101 3/8 offered.

Secondary stays quiet

Away from the new deal realm, a trader opined, "The market continues to grind away, not lower and not higher."

He later modified that assessment, saying that it was "generally in a little bit on [exchange-traded fund] arbitrage, but no really significant customer selling."

"There's so much cash around and there's no real [new issue] calendar - other than the one-off deal here and there - that guys are sitting on their hands, waiting for something to do, looking for something to buy," he said.

A second trader called the market "very subdued, very quiet. There was nothing exciting going on the first Monday of the new month."

"At least everyone was well-rested," he quipped, "since they got to sleep in for an extra hour" with the end of daylight savings over the weekend in parts of the United States.

Lucent up on debt plan

Among specific issues, Alcatel-Lucent's bonds firmed on news that the French-American telecommunications network equipment maker plans to raise some $2.7 billion via the sale of new stock and debt and use some of the proceeds for that capital-raising to take out existing debt.

The Paris-based company's Lucent Technologies Inc. 6.45% notes due 2029 got as high as 90 bid during the session before finally finishing at 89¼ bid, still up 1¼ points from last week's round-lot levels.

Volume was about $10 million.

The bonds firmed on news reports that Alcatel-Lucent plans to raise €955 million, or some $1.29 billion, by selling new shares and will issue bonds worth $750 million. Alcatel-Lucent said it has also secured a commitment for a new €500 million loan.

The company's chief financial officer, Jean Raby, said on Monday that once the share sale and bond deal are carried out, the company intends to repay its 2014 and 2015 debt issuances.

Market signs stay mixed

Overall, statistical junk-market performance indicators were mixed for a fourth consecutive session on Monday, the fifth such mixed day in the last six sessions.

The Markit Series 21 CDX North American High Yield index gained 1/16 of a point on Monday to end at 106 7/16 bid, 106½ offered, after having dropped by 3/16 point on Friday.

But the KDP High Yield Daily index suffered its third straight loss, easing by 2 basis points to close at 74.58, after having fallen 1 bp on Friday. Its yield rose by 1 bp to 5.66% after having been unchanged on Friday.

However, the widely followed Merrill Lynch High Yield Master II index was on the upside for an amazing 18th consecutive session on Monday with a 0.012% gain, which followed the 0.008% advance seen on Friday.

The latest gain lifted its year-to-date return to 6.36%, its 10th straight new high point for 2013 so far. On Friday, it had firmed to 6.347%, the previous peak level for 2013.

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