HCA, Digicel drive by, trade near issue; Caesars, Kinetic, Endeavour on tap; market strong

By Paul Deckelman and Paul A. Harris

New York, Feb. 7 - Hospital operator HCA Inc. brought a robust, upsized and quickly shopped 10-year megadeal-sized bond offering to the high-yield market on Tuesday.

Syndicate sources heard that Caribbean wireless provider Digicel Ltd. also did an opportunistically timed drive-by deal on Tuesday, pricing $250 million of eight-year paper.

Both deals from HCA and Digicel were seen in the aftermarket trading just a fraction above the par level at which each offering priced.

The sources, meantime, said that Wednesday's primary market is likely to be a busy one, ($1.25 billion secured paper deal from gaming giant Caesars Entertainment Corp. and sizable transactions from medical technology provider Kinetic Concepts Inc. and energy operator Endeavour International Corp. all seen likely to price during the session.

Domestic banking concern Synovus Financial Corp. and overseas borrowers MMI International Ltd., a Singapore-based precision engineering company, and Center Parcs Group, a British operator of rustic vacation villages, were also heard to be shopping bond deals around to prospective investors.

Recently priced deals from Samson Investment Co., Ineos Finance plc, ServiceMaster Co. and Limited Brands Inc. were also seen continuing to hold to the strong aftermarket levels those bonds reached when they began trading around.

The overall market was seen as strong, with statistical performance indicators mixed but mostly headed in a positive direction.

HCA massively upsizes

Two issuers raised $1.6 billion during the Tuesday primary market session.

HCA priced a massively upsized $1.35 billion issue of non-callable 10-year first-lien senior secured notes (Ba3/BB) at par to yield 5 7/8%, on top of price talk.

Goldman Sachs was the left bookrunner for the quick-to-market issue, which was upsized from $750 million.

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

The Nashville-based health care company plans to use the proceeds to fund a special cash dividend of $2.00 per share and for general corporate purposes.

Because HCA is such a well-known issuer to the high yield investment community, demand for the paper was intense, allowing the company to grow the deal by $600 million, buyside sources said.

Digicel drives by

In another Tuesday drive-by, Digicel priced a $250 million issue of eight-year senior notes (B1/B) at par to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk.

Citigroup, J.P. Morgan, Credit Suisse, Deutsche Bank and Barclays were the joint bookrunners.

The Kingston, Jamaica wireless communications company plans to use the proceeds for general corporate purposes.

Caesars deal for Wednesday

The active forward calendar continued to build.

Caesars Entertainment is set to price $1.25 billion of eight-year senior notes (B2/B/B) on Wednesday.

Although official price talk is not expected until Wednesday morning, initial guidance has the deal yielding 8½% to 8¾%.

J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley are the joint bookrunners.

Proceeds from the notes will be used to repay bank debt and for general corporate purposes.

Endeavor sets price talk

Endeavor set price talk for its $500 million offering of eight-year senior notes (expected ratings Caa1/CCC) in the 11½% area.

The books close at 2 p.m. ET on Wednesday, and the deal is set to price thereafter.

Citigroup is the bookrunner.

Dealers relaunch Kinetic

Dealers are headed back to the market with Kinetic Concepts' $750 million tranche of 12½% senior notes due Nov. 1, 2019 (Caa1/CCC+).

The deal is set to price on Wednesday following a 10 a.m. ET earnings call.

The 12½% notes were sold to the underwriters in October, at which time a $1.75 billion issue of 10½% second-lien senior secured notes due Nov. 1, 2018 was successfully syndicated.

Morgan Stanley, Bank of America Merrill Lynch, Credit Suisse and RBC are the joint bookrunners.

Although no price talk was available at the Tuesday close, the chatter has the Kinetic Concepts unsecured paper coming at a discount to yield in the area of 12¾%, according to a trader from a high-yield mutual fund.

Synovus to price this week

Synovus plans to price a $250 million offering of non-callable seven-year senior holding company notes (expected ratings B2/B/BB-) during the present week via J.P. Morgan.

The Columbus, Ga.-based financial services holding company plans to use the proceeds to fund the tender offer for its 4 7/8% notes due 2013 and for general corporate purposes.

MMI roadshow starts Monday

Singapore's MMI International will begin a roadshow in the United States on Monday for its $300 million offering of five-year senior secured notes (expected ratings Ba3/BB-/B+).

The roadshow wraps up on Feb. 18.

J.P. Morgan, Credit Suisse and UBS are the joint bookrunners.

The Singapore-based precision engineering company plans to use the proceeds to repay debt.

Center Parcs sterling deal

England-based Center Parcs Group plans to place a speculative grade offering of sterling-denominated class B secured notes (/BB+/B+) as part of a dual-tranche bond offering.

The company is also shopping an investment grade tranche of sterling-denominated class A secured notes (/BBB/BBB).

A roadshow is set to get underway in the United Kingdom on Wednesday.

That roadshow wraps up on Feb. 15, with the notes expected to price thereafter, subject to market conditions.

Royal Bank of Scotland is the global coordinator and a joint bookrunner. Barclays Capital, HSBC and Lloyds Bank are also joint bookrunners.

Center Parcs is a Newark, Nottinghamshire, England-based provider of fully self-contained forest village short-break holidays.

HCA, Digicel little changed

When the new HCA 10-year notes were freed for secondary dealings, a trader saw the Nashville-based hospital operator's upsized $1.35 billion of new bonds initially offered at 101, but later said he heard them at 1001/4, with no left side seen.

A second trader quoted the new bonds at par bid, 101 offered.

Yet another trader a bit later on said, "They were coming in a little," having tightened to 100 1/8 bid, 100¼ offered.

Digicel's eight-year notes began trading around at 99½ bid, 100¼ offered, bracketing the $250 million issue's par pricing level.

A second trader saw them in a par to 100¾ context, but later on, another trader saw them between par and 1001/4.

Friday deals hold gains

Among recently priced issues, a trader said that Samson Investment's 9¾% notes due 2020 were trading on Tuesday at 102¾ bid, 103 1/8 offered.

At another desk, a trader was quoting the bonds as having risen to 102¾ bid, 103¼ offered, although he said that activity in them was "kind of quiet," considering that it was $2.25 billion bond deal.

He said that Samson was "actually a little stronger this morning," seeing the bonds trading between 103 and 1031/2.

"Then they softened up from the morning - but were still up from [Monday]."

On Friday, the Tulsa, Okla.-based oil and gas exploration and production company priced its giant-sized offering at par, after restructuring it to just one big eight-year tranche by dropping an originally planned 10-year piece.

Those bonds appeared too late in the session Friday for any kind of an aftermarket, but on Monday, they were seen to have firmed smartly to levels as good as 102¼ bid, 102½ offered.

A trader on Tuesday saw Ineos Finance's 8 3/8% senior secured notes due 2019 having pushed to 103½ bid, 104 offered.

The British chemical manufacturer priced its $1 billion offering on Friday at par as part of an overall two-part transaction that also included €500 million of seven-year floating-rate notes. After they priced, the bonds shot up to levels above 103 bid in initial aftermarket action late Friday and improved on that a little in Monday's session, firming to the 103½ bid region.

ServiceMaster, Limited strong

Going back just a little further, a trader said that Memphis-based lawn care and pest-control services provider ServiceMaster's 8% notes due 2020 "were pretty strong again," seeing them at 103¼ bid, 104 offered.

He said that the bonds traded on Monday at bid levels between 102¼ and 1031/4.

A second trader, though, said he had not seen any trading in the deal Tuesday and, in fact, he hadn't seen them since last week.

That $500 million deal, upsized from the original $400 million, priced at par on Thursday, but came too late in the day to trade. On Friday, the bonds rose to 102¾ bid, 103 offered and maneuvered above 103 on Monday.

Limited Brands' $1 billion of 5 5/8% notes due 2022 were seen by a trader Tuesday at 102¼ bid, 102¾ offered.

The Columbus, Ohio-based apparel and personal care products retailer had priced its quickly shopped deal at par late Thursday, after upsizing it from an originally announced $750 million.

The bonds had initially traded between 102 and 102½ when they were freed for secondary activity on Friday, and on Monday hung in within a 102 3/8 to 102 7/8 context.

The best-performing new deal from last week, from German automotive components manufacturer Schaeffler Finance BV, was a no-show on Tuesday, several traders said.

The deal priced $500 million of 8½%senior secured notes due 2019 at par on Thursday. The new bonds initially jumped to 104 bid and then continued to push higher on Friday, ending at 104¾ bid, 105 offered, but were not seen either Monday or Tuesday.

The company's the $600 million of new 7¾% senior secured notes due 2017 priced at 98.981 on Thursday to yield 8% and then pushed up to around the 103 bid level in the aftermarket, but then disappeared from Friday onward.

The dollar bonds came to market as part of an €2.04 billion equivalent four-part transaction that also included two tranches of euro-denominated notes.

Market still new-deal centric

A trader said that there was not much going on in the secondary market because "everyone is just waiting for this plethora of new issuance to occur," with several big deals expected to priced on Wednesday, notably the $1.25 billion secured issue from Las Vegas-based Caesars Entertainment, the gaming company formerly - and still informally - known as Harrah's.

He said that new deals aside, "you had your Super Bowl 'travel day' [on Monday], with many people who had partied all weekend absent, and your Super Bowl parade this morning" through the streets of the financial district in Lower Manhattan, "so there's just one good reason after another not to trade high-yield bonds."

Another trader said there had been some things trading around in a mostly firm secondary, but he said that these "traded up with the market."

Gap goes up

For instance, he saw Gap Inc.'s 5.95% notes due 2021 trading at 98 bid, 98½ offered.

He noted that was up from 97 bid, 97¾ offered on Monday and well up from Friday's lows at 96¾ bid, "so it was moving up nicely, along with the whole market."

Volume was heavy, at over $36 million, making it the top mover on the Junkbondland most-actives list, although the trader pointed out that at least some of that activity probably came from high-grade crossover investors, since the credit has a Baa3/BB+/BBB- split rating. However, he said that there was also some junk investor activity in the bonds.

There was no fresh news out on the San Francisco-based apparel retailer, which operates the eponymous Gap store chain, as well as Old Navy and Banana Republic.

In fact, the most recent news was largely unfavorable; the company reported last week that net sales for January decreased 1% percent compared with last year, to $833 million from $843 million for the four-week period a year ago. The company's comparable or same-store sales for January were down 4%, compared to a 3% increase for January 2011.

Net sales and same-store sales for the fiscal fourth quarter ended Jan. 28 were also down, by 2% and 4%, respectively, from last year's levels.

Comstock climbs

But while some bonds seemed to rise for no good reason, others traded up for legitimate company-specific reasons.

For instance, the trader saw "a lot" of Comstock Resources Inc.'s 8 3/8% notes due 2017 after the Frisco, Texas-based energy exploration and production company turned in a favorable quarterly earnings report on Monday.

He saw those bonds open at 94 bid, which he said was "about where they had been."

But late in the day, he said that the bonds had been as good as 96 bid.

Comstock on Monday reported that fourth-quarter revenues jumped 58% year over year, to $119.4 million from $79.7 million, and exceeded Wall Street's expectations of sales in the $115 million to $116 million neighborhood.

Non-GAAP earnings per share also beat analyst's predictions, the penny-per-share loss being well under the 8 or 9 cents per share of red ink that was forecast.

Sprint earnings up next

Also on the earnings front, investors were gearing up for Sprint Nextel Corp.'s earnings release on Wednesday, so the bonds were trading steady to a touch weaker on Tuesday.

A trader called the 6% notes due 2016 down half a point at 88 7/8. However, he said he "didn't see much change" in the 6.9% notes due 2019, the 8 3/8% notes due 2017 or the 6 7/8% notes due 2028.

The 6.9% notes closed at 86, the 8 3/8% notes at 95 and the 6 7/8% notes at 75.

The Overland Park, Kan.-based telecommunications provider is scheduled to report fourth-quarter earnings on Wednesday, with analysts predicting a loss of 35 to 37 cents per share, almost four times its third-quarter red ink of 10 cents per share, and greater than the 29 cents per share loss seen a year ago.

But Sprint's Nasdaq-traded shares have been firming over the past few sessions and were up another 6% on Monday on nearly twice their normal volume.

The stock weakened a tad on Tuesday, but volume was again over twice the normal daily volume.

Market indicators stay mixed

Statistical measures of junk market performance were mixed for a second day in a row on Tuesday, after having been up for two consecutive sessions on Thursday and Friday.

A trader saw the CDX North American Series 17 High Yield index down by 1/8 point on Tuesday to finish at 98¼ bid, 98½ offered, on top of the 5/16 point loss seen on Monday.

The KDP High Yield Daily Index, though, rose by 13 basis points on Tuesday to close at 74.31, after having gained 5 bps on Monday. Its yield came in by 5 bps, to 6.65%, after having been unchanged on Monday.

And the widely followed Merrill Lynch High Yield Master II Index saw its sixth consecutive gain on Tuesday, when it was up 0.113%. That followed Monday's 0.164% gain.

The boost brought the index's year-to-date return to 3.662% on Tuesday, a new peak level for the year so far, from Monday's 3.545%, the previous high-water mark for the year.

Stephanie N. Rotondo contributed to this report

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