HCA drive-by megadeal prices, firms; upsized McClatchy comes as year-end rush starts to build

By Paul Deckelman and Paul A. Harris

New York, Dec. 3 - The high-yield primary market headed into the home stretch for the year on Monday, starting off the final month of 2012 with a big deal from hospitals giant HCA Holdings Inc., which priced a quickly shopped $1 billion offering of 8.25-year notes. Traders saw the new deal as having firmed when it was freed for secondary dealings.

Newspaper publisher McClatchy Co. priced an upsized $910 million offering of 100-year secured notes off the forward calendar, but that issue came too late in the session for much of an aftermarket presence.

Kennedy-Wilson, Inc. did an upsized quick-to-market add-on to its existing issue of 2019 bonds, but the real estate company's $100 million deal was not seen trading around.

Traders saw Friday's add-on deal from U.S. Foodservice, Inc. having firmed a little from its issue price, while the big new dollar-denominated tranche from German cable operator Unitymedia Hessen GmbH & Co. KG continued to trade at a premium.

Away from the deals already priced, syndicate sources heard new issues being shopped by Cleaver-Brooks Inc., Kenan Advantage Group, Alliant Holding I LLC and FAGE International SA, the first of which is expected to be a cascade of issues borrowers hope to be able to price before Junkbondland winds down for its traditional year-end hiatus.

Among deals heard to already be in the market, talk emerged on ERA Group, Inc.'s $200 million offering of 10-year notes, with pricing anticipated on Tuesday.

Away from the new deals, Dean Foods Co.'s bonds rose on news of an agreement to sell its Morningstar dairy subsidiary. And SuperValu Inc.'s bonds continued to rebound from the lows they hit last week.

Statistical market performance indicators turned mixed.

HCA at the tight end

The primary market continued to generate a high volume of news on Monday as three issuers, each one bringing a single dollar-denominated tranche, raised $2 billion.

HCA Holdings priced a $1 billion issue of non-callable senior notes due Feb. 15, 2021 (B3/B-) at par to yield 6¼%.

The yield printed at the tight end of yield talk set in the 6 3/8% area.

Shortly after price talk surfaced, a trader forecast the tight execution and said that the deal was going well and was half spoken for by dint of reverse inquiry.

HCA apparently had not contemplated an upsizing, the trader added.

Citigroup was the left bookrunner for the quick-to-market deal.

Credit Suisse, Deutsche Bank, Morgan Stanley, Wells Fargo, Merrill Lynch, Barclays, J.P. Morgan and SunTrust were the joint bookrunners.

The Nashville-based health care company plans to use the proceeds to fund a $2 per share special cash dividend to shareholders and options holders, which was also announced on Monday.

McClatchy upsizes

McClatchy priced an upsized $910 million issue of 10-year senior secured first-lien notes (B1/B) at par to yield 9%, also at the tight end of the 9% to 9¼% yield talk.

J.P. Morgan, Merrill Lynch and Credit Suisse were joint bookrunners for the issue which was upsized from $750 million.

Proceeds, including proceeds from the upsized notes issue, along with funds available under an amended credit facility and cash on hand, will be used to take out any and all of the company's 11½% senior secured notes due 2017. Prior to the upsize the company was contemplating a tender offer for $700 million of those notes.

Kennedy-Wilson's 8¾% notes

Kennedy-Wilson priced an upsized $100 million add-on to its 8¾% senior notes due April 1, 2019 (B2/BB-) at 105.25.

The reoffer price, which came in the middle of the 105 to 105.50 price talk, rendered a 7.306% yield to worst.

Merrill Lynch and Morgan Stanley were the joint bookrunners for the quick-to-market deal, which was upsized from $75 million.

Proceeds will be used for working capital and general corporate purposes including future acquisitions and co-investments.

ERA talks $200 million

ERA Group talked its $200 million offering of 10-year senior notes (B2/B) with a yield in the 7¾% area.

The deal is set to price on Tuesday.

Joint bookrunners Deutsche Bank and Wells Fargo will bill and deliver. J.P. Morgan and Goldman Sachs are also joint bookrunners.

Alliant sets Wednesday call

The active forward calendar underwent significant growth on Monday.

Alliant will take part in an investor call on Wednesday to discuss its $475 million offering of eight-year senior notes (expected ratings Caa2/CCC).

The deal is set to price late this week.

J.P. Morgan, Merrill Lynch, Morgan Stanley, RBC, UBS and Macquarie are the joint bookrunners for the acquisition deal.

Clever-Brooks starts Tuesday

Cleaver-Brooks plans to start a roadshow on Tuesday for its $285 million offering of seven-year senior secured notes (expected ratings B2/B).

The deal is set to price during the Dec. 10 week.

RBC is the left bookrunner. UBS and SunTrust are the joint bookrunners.

Proceeds will be used to partially fund the acquisition of Cleaver-Brooks by Harbour Group and to refinance debt.

Prince Mineral first-lien deal

Prince Mineral Holding Corp. is marketing a $260 million offering of seven-year first lien senior secured notes on an investor roadshow set to run during the present week.

Credit Suisse and BMO are the joint bookrunners.

Proceeds will be used to fund an acquisition and repay debt.

FAGE to tap 9 7/8% notes

Greek dairy company FAGE International and FAGE USA Dairy Industry Inc. started a roadshow on Monday in Frankfurt and London for a $250 million add-on to their 9 7/8% senior notes due 2020 (current ratings B3/B).

An investor call is set for Tuesday.

A roadshow is scheduled to take place in the United States. It is expected to include stops in New York, New Jersey, Boston and on the West Coast.

The deal is set to price by the end of the Dec. 10 week.

Citigroup is the bookrunner.

The Athens-based company plans to use the proceeds to refinance its existing senior notes due 2015, refinance other debt facilities, fund capital expenditures and for general corporate purposes.

The original $150 million issue priced at 93.278 to yield 11% in January 2010.

Kenan starts roadshow

Kenan Advantage Group began a roadshow on Monday for its $200 million offering of six-year senior notes (expected B3/confirmed B-).

The deal, which is being led by Goldman Sachs, Merrill Lynch and KeyBanc, is expected to price on Thursday.

Proceeds will be used to pay a $175 million dividend to sponsors Goldman Sachs Capital Partners and Centerbridge Partners and to partially repay term loan debt.

HCA trades higher

When HCA's new deal was freed for secondary market activity, a trader saw those bonds at 101½ bid, 101¾ offered. A second trader quoted the issue in a 1011/2-to-101 5/8 bid context, adding that the bonds have "traded at both prices. But there's very little trading so far."

Two other traders later quoted the new issue within that 1011/2-to-101¾ range.

There was no aftermarket seen in either the new McClatchy issue or in the Kennedy-Wilson add-on.

McClatchy's 11½% notes due 2017 gained 1/8 point on Monday, firming to juast above 110½ bid, on volume of over $4 million.

Friday deals hold their own

A trader said that U.S. Foodservice's 8½% notes due 2019 were trading at 102 bid, 102½ offered on Monday.

That was up from the 101½ mark where the Columbia, Md.-based broadline foodservice company's quickly shopped $400 million add-on to its existing bonds had priced on Friday to yield 8.198%. It was upsized from an originally planned $350 million.

He also saw Unitymedia's 5½% senior secured notes due in January 2023 continuing to trade in a 1011/2-to102 bid context.

That was where the German cable operator's new bonds had traded on Friday, after the $1 billion quick-to-market offering had priced at par when it was upsized from $845 million originally.

A second trader saw them up a quarter-point on the session, at 101¾ bid, 102¼ offered.

Those bonds were part of a larger two-part issue that also included a euro-denominated tranche.

Two other traders, however, had not seen any trace of those bonds.

One of them did see Gulfmark Offshore, Inc.'s 6 3/8% notes due 2022 trading at 103 bid, 103¼ offered.

The Houston-based provider of maritime services and transportation to offshore energy drilling companies had priced a quickly shopped $200 million fungible add-on to its existing$300 million of the notes on Friday at 1001/2, yielding 6.286%. The bonds were quoted having pushed up to around 102¾ bid in their initial aftermarket trading late Friday.

Last week's deals mixed

Going back a little further last week, a trader quoted Inergy Midstream LP and Inergy Midstream Financial Corp.'s 6% notes due 2020 at 101 5/8 bid, 102 1/8 offered.

The Kansas City, Mo.-based natural gas transportation and storage company priced $500 million of those bonds at par in a scheduled forward calendar deal last Thursday, after upsizing the deal from an originally announced $400 million.

He saw Ally Financial Inc.'s 3 1/8% notes due 2015 down a quarter-point at par bid, 100½ offered.

The Detroit-based automotive and residential lender and online banking company had priced $500 million of those bonds at 99.445 to yield 3.3125% in a quick-to-market deal last Wednesday.

And he saw Aircastle Ltd.'s 6¼% notes due 2019 up 1/8 point at 102 bid, 103 offered.

The Stamford, Conn.-based commercial aircraft leasing company had priced $500 million of the notes at par in a quickly shopped offering last Tuesday, after upsizing it from an originally announced $400 million.

Recent deals disappear

Another trader, on the other hand, did not see much activity in those older new bonds.

He said that trading in the recently priced deals was "pretty quiet. They kind of trade a little bit when they first come. Everyone is pretty much hanging onto whatever little allotment they got, and they get put away.

"Meanwhile, we're just slowly driving towards the fiscal cliff," the trader added.

Conference stifles activity

Away from the new deals, a trader said that "it was kind of a tough day today."

He noted that "a lot of guys" were at the Bank of America Merrill Lynch leveraged finance conference going on in Boca Raton, Fla.

In the meantime, "everybody is waiting for all of the [forward calendar] stuff to come."

Most of the focus was on the HCA deal, and even that saw "not a lot of volume."

"There's a lot of anticipation, a lot of stuff on the calendar yet to come, and a lot of guys out of pocket."

Indicators turn mixed

Statistical junk market performance indicators turned mixed on Monday after three consecutive sessions of having been higher across the board.

The Markit Series 19 CDX North American High Yield index lost¼ point on Monday to end at 99 5/8 bid, 99 7/8 offered - its first loss after three straight gains. On Friday, the index had moved marginally higher.

However, the KDP High Yield Daily index notched its tenth consecutive gain on Monday, as it rose by 10 basis points to end at 74.43. On Friday, it had advanced by 18 bps. The index's yield came in by 3 bps Monday, to 6.04%, its 10th straight narrowing, after having declined Friday by 6 bps.

And the widely followed Merrill Lynch High Yield Master II index rose by 0.168% on Monday, its 11th consecutive advance. That followed Friday's 0.156% rise.

The latest gain lifted its year-to-date return to 13.97%, up from Friday's 13.779%. Monday's reading set its third consecutive new peak level for 2012, surpassing the old mark, which had just been set on Friday.

Dean climbs on dairy deal

Among specific non-new deal names, a trader said that Dean Foods' bonds were up at least 2 or 3 points on the session on the news that the Dallas-based food products company had agreed to sell its Morningstar Foods division to Saputo Inc. for $1.45 billion. Morningstar Foods is a leading manufacturer of dairy and non-dairy extended shelf-life and cultured products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, sour cream and cottage cheese.

Dean's 7% notes due 2016 jumped to 110 bid going home from Friday's levels around the 107 area, and its most recent prior round-lot level of 1063/4, recorded last week. Monday's round-lot volume was over $13 million, putting Dean near the top of the Junkbondland most-actives list

There was relatively little trading in the company's other two issues: its 6.90% notes due 2017 and its 9¾% notes due 2018.

SuperValu continues rebound

SuperValu's bonds were up for a second straight session, continuing to come off the lows they hit last week on news reports that the underperforming Eden Prairie, Minn.-based supermarket operator's talks with potential would-be buyer Cerberus Capital Management LP had hit some hurdles.

The company's 7 ¾% notes due 2026 - originally issued by its Albertsons unit before SuperValu bought Albertsons several years ago - gained 3½ points to end at 58½ bid.

The parent company's own 8% notes due 2016 gained nearly 3 points on the day to close 943/4, almost back to where they were last week before falling on the Cerberus news.

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