Cablevision easier as Rainbow spin-off delayed; several deals slate

By Paul Deckelman and Paul A. Harris

New York, Dec. 6 - Cablevision Systems Corp.'s bonds were seen easier in line with a decline in the Bethpage, N.Y.-based cable TV company's shares, in apparent investor reaction to the news that Cablevision's long-awaited spin-off of its Rainbow Media Enterprises division is not going to happen any time the remainder of this year, as originally planned.

Although the new issue calendar took aboard more names during the opening session of the Dec. 6 week - both drive-by business and bonds that will be marketed via roadshows - sources characterized Monday's primary market session as a "quiet" one.

No issues priced.

And although the Prospect News High Yield Daily forward calendar for the present week contains over $5.5 billion of potential dollar-denominated issuance from 13 issuers (add two more issuers if you are counting euro- and sterling-denominated deals) there was a paucity of news on those issues.

Market "kind of quiet"

A buy-side source, speaking Monday afternoon on background, told Prospect News that the session had been kind of quiet.

And relative to the demand for high-yielding paper, the investor added, the new issue calendar isn't exactly setting bells ringing on the buy-side.

"I don't get the sense that the calendar is built up that much," the investor said. "I think it's what the market has been led to expect.

"You're probably going to see more build up between now and Christmas because there is still cash out there. You've had a slowdown of inflows. But given the price environment it makes sense for companies to issue."

No new issues but four for the road

Four companies appeared during the Monday session with bond deals that will be marketed via roadshows of varying lengths

A Dec. 7 through Dec. 16 roadshow is set to run for a three-part $750 million offering of notes from Magnachip Semiconductor, Ltd., a Chungbuk, South Korea-based chip-maker.

One informed source said that although the prospective issuer is Asian the deal will be principally shopped to investors in the United States.

The company plans to sell $500 million split between a tranche of seven-year non-call-one floating-rate second priority senior secured notes and a tranche of seven-year non-call-four fixed-rate second priority senior secured notes.

Magnachip also plans to sell $250 million of 10-year non-call-five senior subordinated fixed-rate notes.

UBS Investment Bank, Citigroup, Goldman Sachs & Co. and JP Morgan will books for the debt refinancing and share repurchasing deal.

Meanwhile the roadshow began Monday for Cooper-Standard Automotive, Inc.'s two-part $550 million offering of high-yield bonds, a deal known to have been in the market for the past two weeks or more.

Pricing is expected toward the middle of next week.

The company plans to sell $200 million of eight-year non-call-four senior notes (B2/B) and $350 million of 10-year non-call-five subordinated notes (B3/B).

Deutsche Bank, Lehman Brothers, Goldman Sachs & Co. and UBS Investment Bank will run the books for the acquisition financing.

A brief roadshow got underway on Monday for Community Health Systems, Inc.'s $250 million offering of eight-year non-call-four senior subordinated notes (B3/B/B+), which are expected to price during the middle of this week. JP Morgan is on the left of the underwriting team.

The Brentwood, Tenn.-based general acute care hospital operator will use the money to refinance debt.

Finally, Venoco, Inc. will begin a roadshow Tuesday of its $150 million offering of seven-year senior notes (CCC+), with pricing expected toward the middle of next week, via Lehman Brothers and Harris Nesbitt.

The Carpinteria, Calif.-based independent energy company will use the proceeds to repay debt, as well as to fund a dividend and an acquisition.

Drive-by discount note-deals

In addition to the above-described quartet of companies that are hitting the high-yield road, two other prospective issuers appeared Monday with discount note offerings that will be marketed via investor conference calls on Tuesday morning, with terms expected later in the day.

CDRV Investors Inc., a holding company for VWR International Inc., plans to price $300 million proceeds of 10-year senior discount notes late Tuesday afternoon via Deutsche Bank Securities, Citigroup and Banc of America Securities.

The West Chester, Pa.-based company is a distributor of laboratory supplies and will use the proceeds to pay a dividend to sponsor Clayton, Dubilier & Rice. An investor conference call is set for 10 a.m. ET Tuesday.

And H-Lines Finance Holding Corp., parent of Horizon Lines, plans to price $110 million of senior discount notes due April 1, 2013 (Caa2/CCC+).

The Charlotte, N.C.-based container shipping and logistics company will host an investor conference call, also at 10 a.m. ET Tuesday.

Goldman Sachs & Co. and UBS Investment Bank are joint bookrunners debt refinancing/dividend funding deal from the Charlotte, N.C.-based container shipping and logistics company.

Top of the market?

News of the two discount note offerings materialized just prior to Prospect News' conversation with the above-quoted buy-sider. The source commented that in the present market conditions such deals certainly make sense from an issuer perspective.

However from an investor perspective...well that's another matter.

"This is adding leverage to what is already out there," said the investor. "If you bought the first Horizon Lines deal like we did, six months ago, now they are going to lever it up even more. You haven't even had a chance to see the story run its course and now they are going to lever it up again.

"It's not strengthening the market, per se. But people are chasing yield. And [Horizon Lines] can get this done.

"We're not big fans of this," the buy-sider added. "But it is what the market is becoming.

"Anyone who had refinancing to do has done it. Everyone who wanted to make an acquisition has done it.

"So what's left? Dividend deals."

Prospect News followed by asking this investor if VWR and Horizon Lines were "hot market deals," representing the top of the present bull market in high yield.

"As long as the economic news is good and the Fed doesn't tighten too much, it can keep on going," the investor responded.

"If Treasuries start getting beat up too bad or the economy starts to slow down, people will start questioning risk-taking, which will hurt the high-yield market.

"Right now companies' numbers are pretty good. So why worry?"

The investor, who also plays in emerging markets names, went on to say that the very trouble signs that U.S. junk investors could presently be fretting about - rising interest rates, high oil prices and a declining dollar - are not necessarily bad news for the emerging markets.

Then the buy-sider drew an interesting comparison between the two asset classes.

"You are getting paid more right now to be in the emerging markets," the investor commented.

"Right now your average EM credit is higher rated than your average high yield credit: the Merrill Lynch Emerging Markets Index Plus has a mean credit rating of Ba3. And the Merrill Lynch U.S. High Yield Master II has a B1 rating.

"In emerging markets you have seen more upgrades, so it makes sense.

"The weak dollar and high energy prices are actually good for emerging markets, because countries like Russia, Venezuela and Ecuador are all big exporters of oil.

"And for the same reason that a weak dollar can help the U.S. as long as it doesn't trigger inflation, any country that is pegged to the dollar gets the same benefits.

"So the economic news is relatively positive out of these countries and the weak dollar is not going to undermine that."

Talk on Ryerson Tull

Meanwhile, with regard to the 15 issues that are expected to price during the four remaining sessions of the present week, news in the form of price talk emerged on only one during Monday's session.

Price talk is 8¼% area on Ryerson Tull Inc.'s $150 million of seven-year non-call-four senior notes (B2/B), which are expected to price on Wednesday via JP Morgan and UBS Investment Bank.

Cablevision lower

Back on the secondary side, traders saw little or no activity in any of the issues which had priced last week, including Friday deals Huntsman International LLC, Fairfax Financial Holdings Ltd. or Chesapeake Corp.

Among the well-established issues, Cablevision unit CSC Holdings' bonds were seen at generally lower levels in the wake of late Friday's news about Rainbow.

A trader saw the company's 8% notes due 2012 at 106, down more than a point on the session, while its 8 1/8% notes due 2009 were at 109, down half a point.

However, at another desk a market source saw the 8% notes up half a point at 106.5 bid, 107 offered, while its 7 5/8% notes due 2011 got as good as 107, up about a quarter point.

Cablevision's New York Stock Exchange-traded shares closed down 0.7% at $21.55.

Cablevision said Friday that the spin-off of Rainbow Media, its cable unit, would not take place before the end of the year. When it will take place seems to be anybody's guess, because the Cablevision announcement did not say when the spin-off will occur. It also did not give any explanation for the delay in its Securities and Exchange Commission filing.

Cablevision said last month it had raised $1.75 billion to finance the spin-off of Rainbow's Voom satellite TV operations and cable networks, which include AMC and The Independent Film Channel.

Voom has been losing customers and is but a small player in a satellite game dominated by much larger operators such as EchoStar DBS and DirecTV. Analysts have called it a drag on Cablevision's finances and on its share price, saying it detracts from the value of the company's basic cable product - which serves nearly two million homes in the New York metropolitan area - and its lucrative Knicks and Rangers professional sports franchises, which play at the Cablevision-owned Madison Square Garden.

A trader saw Young Broadcasting Inc.'s 10% notes due 2011 firm solidly to 106.75 from 104.625 previously. But he said he had seen no fresh news about the New York-based television station group owner that might explain the gain.

"It was pretty quiet for the most part," another trader said, "very quiet as far as new issues trading in secondary goes." Then he expanded that description to include a general lack of activity in secondary issues, period.

MCI gains again

One of the few features he did see was MCI Corp.

"MCI continues to tighten." he said. "They're getting close to getting their rating [from the debt ratings agencies.]" When the ratings are finally given for the $5 billion of bond debt with which MCI emerged after the former WorldCom reorganized itself, there has been talk in the market that it will be graded somewhere around a single-B level, seen as not bad for a company that not so long ago was mired in bankruptcy, bedeviled by allegations of accounting chicanery.

MCI's 10-year notes were quoted at 104 bid, 104.25 offered, while its five-year bonds, the trader said, were "well bid for" at 101.625 bid, 101.875. The Ashburn, Va.-based telecom giant's three-year bonds held those same levels.

Amkor up again

Amkor Technologies Inc. - whose bonds had firmed Friday on news of a favorable ruling in a court case in which the West Chester, Pa.-based semiconductor packaging and test services provider had been a defendant - were seen continuing the firming trend on Monday.

Its 7¾% notes due 2013 were seen having risen to the 94 level, up about a point from Friday's close.

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