Ferrellgas, Penn National, Wm. Lyons price; Gaming and Leisure awaits; Crosstex climbs on Devon news

By Paul Deckelman and Aleesia Forni

New York, Oct. 21 - The high-yield primary sphere opened the new week on Monday with a trio of small to moderate sized pricings - and with a giant multi-part transaction waiting in the wings possibly as Tuesday business.

Propane distributor Ferrellgas Partners, LP came to market with a quickly shopped $325 million issue of 8.25-year notes. That deal priced too late in the session for any kind of initial aftermarket activity, traders said.

Another latecomer was casino operator Penn National Gaming, Inc., which did a scheduled $300 million eight-year deal off the forward calendar. Those bonds were also not seen trading around immediately.

A little earlier in the session, builder William Lyon Homes brought an upsized $100 million add-on to its existing 2020 notes. These were later quoted around their issue price.

Syndicate sources heard that Gaming and Leisure Properties - being spun off from Penn National - had tightened the price talk on its $2.05 billion three-part deal, which could price during Tuesday's session.

The gaming industry was a brisk generator of news on Monday. Besides the Penn National pricing and the upcoming GLP megadeal, sources said that Golden et Inc. is expected to do a $300 million bond deal.

Away from the new-deal market, meantime, Caesars Entertainment Corp.'s bonds and shares were lower after the huge casino operator announced that one of its units was the subject of a federal money-laundering investigation and also announced its withdrawal from bidding for a license to open a planned casino in the Boston area.

But the big chatter in the secondary was a surge by Crosstex Energy Inc.'s bonds on the news of its planned merger with some assets of Devon Energy, forming a new pipeline company.

Statistical indicators of market performance turned mixed after seven straight sessions on the upside.

Ferrellgas prices tight

Ferrellgas LP and Ferrellgas Finance Corp. came to market on Monday, selling the day's largest deal.

The company priced $325 million of 6¾% senior notes (B2/B/) due Jan. 15, 2022 at par, according to a market source.

The notes priced at the tight end of talk.

Proceeds will be used to purchase the company's 9 1/8% senior notes due 2017, to partially repay amounts outstanding under the company's revolving credit facility and to pay related costs and expenses.

BofA Merrill Lynch was the left bookrunner and was joined by J.P. Morgan Securities LLC and Wells Fargo Securities LLC as the joint bookrunners.

BMO Capital Markets Corp., Capital One, Fifth Third Securities Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc. were the co-managers for the Rule 144A and Regulation S deal.

Ferrellgas is an Overland Park, Kan.-based distributor of propane and related equipment and supplies

Penn National eight-years

The session also saw a new issue from Penn National Gaming, which priced $300 million of 5 7/8% eight-year senior notes (B1/B+) at par, an informed source said.

The notes priced tight of talk, which was set in the area of 6¼%.

J.P. Morgan Securities LLC, RBS Securities Inc., Credit Agricole CIB, BofA Merrill Lynch, Fifth Third Securities Inc., Goldman Sachs & Co., Nomura Securities Co. Ltd., SunTrust Robinson Humphrey Inc., UBS Investment Bank and Wells Fargo Securities LLC were the joint bookrunners for the Rule 144A with registration rights and Regulation S deal.

Penn intends to use the proceeds, together with proceeds of other financings and cash on hand, to repay its existing senior secured credit facilities and to take out its 8¾% senior subordinated notes due 2019 and for working capital purposes.

Wyomissing, Pa.-based Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment.

William Lyon add-on

William Lyon Homes priced a $100 million add-on to its 8½% senior notes (B3/B-/) due Nov. 15, 2020 at 106.5 to with a yield to worst at 6.952% on Monday, according to a market source.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were the joint bookrunners for the Rule 144A and Regulation S with registration rights deal.

The original $325 million issue priced at par on Nov. 5, 2012.

Proceeds will be used for general corporate purposes.

William Lyon is a Newport Beach, Calif.-based homebuilder.

GLP tightens talk

In forward calendar news, Gaming and Leisure Properties tightened yield talk in its $2.05 billion three-part offering of non-callable senior notes (Ba1/BBB-) on Tuesday, according to a market source.

The deal is coming in tranches of notes with five-, seven- and 10-year maturities.

The $550 million of five-year notes are talked to come with a yield of 4½% to 4 5/8%, tightened from original guidance in the 4¾% area.

The $1 billion seven-year notes are talked to come with a yield of 5% to 5 1/8%, tightened from guidance of a yield in the 5¼% area.

And the $500 million 10-year notes are talked to come with a yield of 5½% to 5 5/8%, tightened from guidance in the 5¾% area.

The source said the deal may price on Tuesday.

BofA Merrill Lynch is the left physical bookrunner for all three tranches and will bill and deliver for all three tranches.

For the five-year and 10-year tranches, J.P. Morgan Securities and RBS Securities Inc. are also joint physical bookrunners and Credit Agricole CIB, Fifth Third Securities Inc., Goldman Sachs & Co., Nomura Securities Co. Ltd., UBS Investment Bank and Wells Fargo Securities LLC are joint bookrunners.

For the seven-year tranche, RBS and Goldman Sachs are also joint physical bookrunners and Credit Agricole, Fifth Third, JPMorgan, Nomura, UBS and Wells Fargo are joint bookrunners.

The notes in all three tranches come with make-whole calls at Treasuries plus 50 basis points and become callable at par 90 days prior to their respective maturities.

The notes in all three tranches also come with 101% poison puts.

Proceeds will be used to help finance the spinoff of Gaming and Leisure from Penn National Gaming.

The notes are in the market via GLP Capital LP and a corporate co-issuer, subsidiaries of Gaming and Leisure and a newly formed Wyomissing, Pa.-based real estate investment trust, which will own gaming assets throughout the United States.

Blackboard roadshows

A new issue from Blackboard Inc. was added to the pipeline on Monday.

The company announced plans to begin a roadshow for its $365 million offering of senior notes (Caa1/CCC+/) due 2019, according to a market source.

The company was scheduled to host an investor call and roadshow at 12:30 p.m. ET on Monday in New York before moving to New Jersey and Boston on Tuesday, the West Coast on Wednesday and the Midwest and Baltimore on Thursday.

The Rule 144A and Regulation S for life notes will come with two years of call protection.

BofA Merrill Lynch is the left bookrunner. Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC are the joint bookrunners.

Proceeds will be used to refinance the company's second-lien term loan.

Blackboard is a Washington, D.C.-based provider of enterprise software applications and related services to the education industry.

Golden et plans offering

There was also news on Monday that Golden et Inc. is planning to price $300 million of bonds, according to a market source.

The company is set to hold a bank meeting on Wednesday morning led by Jefferies LLC to launch a $550 million credit facility, and the syndication of the bonds will take place following the meeting.

Golden et is a hotel and casino operator. The company is being spun out of Landry's Inc.

Penn, Ferrellgas don't trade

A trader said that the new Ferrellgas LP 6¾% notes due 2022 and the Penn National Gaming 5 7/8% notes due 2021 priced too late in the day Monday for any kind of real aftermarket activity in either credit.

At another shop, a trader was quoting the William Lyon Homes 8½% notes due 2020 at 106½ bid, 107 offered after the homebuilder priced its upsized, quick-to-market add-on at 106.5.

Little trading in recent deals

Away from Monday's pricings, the traders saw little real activity in the new deals, which had come to market last week.

For instance, one said that "surprisingly," he did not see any activity in either tranche of Neiman Marcus Group's $1.56 billion two-part deal, which had been the darling of the junk market last week.

The Dallas-based upscale department store operator and online luxury retailer had priced $960 million of 8% cash-pay notes due 2021and $600 million of 8¾%/9½% senior PIK toggle notes due 2021 last Wednesday, both at par. Each tranche firmed solidly when they were freed to trade and had reached 102 7/8 bid, 103 1/8 offered on the cash-pay bonds and 103¼ bid, 103¾ offered for the PIK notes.

The trader quoted Calpine Corp.'s 6% senior secured notes due 2022 at 101 5/8 bid, 101 7/8 offered - around where the Houston-based power-generating company's $750 million quick-to-market deal had finished up on Friday, when it surged more than 2 points.

Calpine's deal priced at 99.193 last Thursday to yield 6 1/8%, after upsizing the transaction from an originally announced $570 million.

Crosstex notes surge

Among the non-new deal secondary names, a trader said that Crosstex Energy's7 1/8% notes "were the big pop of the day," seeing those bonds zoom by some 9¾ points, to 114 bid. He said the last previous sizable trades had taken place this past Thursday, around the 104 mark.

Monday's volume in the credit was over $12 million.

At the same time, Crosstex's Nasdaq-traded shares jumped by $6.80, or 33.42%, to end at $27.15, on volume of 6.4 million, over 20 times the norm.

The Dallas-based midstream energy company announced that it, and its affiliated Crosstex LP will combine their operations with Devon Energy's U.S. pipelines, processing, and related assets. Devon will kick in $100 million in cash.

Crosstex Energy Inc shareholders will receive one unit in the new general partner that will be formed, plus $2 per share in cash, for each of their current shares. Crosstex Energy LP's unitholders will end up with a 40% stake in the new master limited partnership.

Caesars bonds seen lower

On the downside, Caesars Entertainment's bonds lost ground on news that federal authorities are looking into possible violations of money-laundering rules at the Las Vegas-based casino giant's Caesars Palace flagship hotel and casino resort.

The company also announced that it had withdrawn from a joint effort with Suffolk Downs, a Boston-area racetrack, to win a license to build and operate a casino resort in the Boston Area, after Massachusetts gaming regulators expressed concern over the company's finances, including over $23 billion of debt.

Caesar's 8½% notes due 2020 lost 1 point to end at 91¾ bid, on volume of more than $14 million.

Its New York Stock Exchange-traded shares slid by 89 cents, or 4.76%, to $17.81. Volume of 3.4 million shares was almost three times the norm.

Market turns mixed

Statistical junk-market performance indicators were meantime seen having turned mixed on Monday for the first time after seven consecutive higher sessions.

The Markit Series 21 CDX North American High Yield index lost 7/32 of a point Monday to end at 106¾ bid, 106 7/8 offered - its first loss after three consecutive higher sessions and several unchanged sessions before that. On Friday, the index had gained 2/32 of a point.

But the KDP High Yield Daily Index notched its seventh straight improvement, rising by 8 basis points to close at 74.19. That followed Friday's 28-bp jump. Its yield declined by 5 bps to 5.78%, its seventh straight tightening. On Friday, it had come in by 10 bps.

And the widely followed Merrill Lynch High Yield Master II index firmed for an eighth consecutive session on Monday, gaining 0.189% on top of Friday's 0.27% improvement.

The latest gain lifted its year-to-date return to 5.713%, up from 5.514% at Friday's close. Monday's finish was the highest close for the index since May 9, when it hit its peak closing level for the year so far of 5.835%.

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