Morning Commentary: Gray Television to price drive-by; Dubai Aerospace offering eyed

By Abigail W. Adams

Portland, Me., Nov. 1 – With market conditions firming, the domestic high-yield primary market saw an uptick in activity with one prospective issuer jumping into the ring with a drive-by. However, little new deal activity is expected for the remainder of the week, a market source said.

Gray Television Inc. plans to sell $500 million of long eight-year senior notes (B3/B-/BB-) in a quick-to-market Thursday trade with initial guidance in the low 7% area, according to market sources.

Wells Fargo Securities LLC is left lead for the Rule 144A and Regulation S for life offering.

BofA Merrill Lynch, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBC Capital Markets LLC are joint bookrunners.

The Atlanta-based television broadcasting company plans to use proceeds to fund the acquisition of Raycom Media Inc. and refinance debt.

HC2 Holdings, Inc. remains in the market with its $535 million offering of senior secured notes, albeit with a revised structure and widened price talk.

The deal is now whispered to come with a coupon of 10% and a discounted offering price for a yield of 12˝% to 13%.

Initial guidance had the deal coming with a yield in the low-to-mid 9% area, a source said.

The maturity was also shortened to three years from five years with the notes callable after 1.5 years.

High-yield market players were eyeing Dubai Aerospace Enterprise Funding LLC’s two-tranche $1.25 billion offering of senior notes, which is expected to price on Thursday following an investor conference call.

While market players were eyeing the deal, it is a toss-up between emerging market and high-yield desks, a market source said.

Victoria plc remains in the market with its €450 million offering of five-year senior secured notes (BB-/BB) with pricing expected on Friday, according to a market source.

The London-based flooring maker’s stock plunged on the London Stock Exchange in response to the bond offering announcement, prompting the company to issue a press release on Oct. 31.

The company sought to “address misleading rumor and speculation,” about its capital structure following the bond announcement, it said in a press release.

Proceeds from the bond offering would solely be used to refinance its two-year credit facilities, the company said in the release.

Margins were expected to be 1 point to 1.5 points lower than consensus estimates. However, margins would still exceed the prior year, the company said in the release.

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