Garda prices two-parter; Boise, Parker Drilling, others slate; Harrah's up on CMBS extension

By Paul Deckelman and Paul A. Harris

New York, March 8 - Garda World Security Corp. started off a new week in the high-yield primary market on Monday by pricing a two-part offering of seven-year notes denominated in U.S. and Canadian dollars. It priced too late in the day for any aftermarket.

Boise Inc. announced plans for a $300 million 10-year note offering, which is expected to come to market on Tuesday. New deal announcements were also heard from Parker Drilling Co. and International Coal Group, Inc., while syndicate sources heard of additional deals brewing for Amsted Industries Inc., Merge Healthcare Inc. and for Sweden's Stena AB, with the latter being a euro-denominated issue. Besides Boise, the Amstead, International Coal, Parker and Stena deals are all expected to price sometime this week.

In the secondary market, traders saw a generally firm tone, and continued strong levels for recently priced seals such as Avis Budget Group Inc., Holly Energy Partners, LP, Zayo Group LLC/Zayo Capital, Inc. and Masco Corp.

Among credits not having any new-deal connections, Harrah's Operating Co.'s bonds were seen up multiple points, some in very active trading, after the Las Vegas-based gaming giant announced that it had gotten approval from lenders to extend the maturities on $5.5 billion of real estate loans from 2013 to 2015, buying an extra two years of time to recover from the current industry slump, and also got a green light to cut debt by repurchasing some of those commercial mortgage-backed securities at a discount.

The high-yield primary market saw the start to what is expected to be a dramatic build-up of the new issue calendar in the early part of the week, sources said.

And there is likely ample cash on the buy-side to take down a big calendar, according to syndicate bankers and a trader for a high-yield mutual fund.

Garda dollar-tranche beats talk

The week's opening session saw a single issuer price two tranches of notes.

Garda World Security Corp. priced 9¾% seven-year senior unsecured notes (B3/B) in tranches of $250 million and C$75 million, on Monday, according to an informed source.

Both tranches priced at 98.148, and yielded 10 1/8%

The dollar-denominated tranche priced 12.5 basis points below the 10¼% to 10½% price talk, and went very well, according to an informed source.

UBS Securities LLC and Macquarie Capital (USA) Inc. were joint bookrunners for the dollar-denominated tranche.

TD Securities was bookrunner for the Canadian dollar-denominated tranche.

Proceeds will be used to refinance debt and for general corporate purposes.

Boise set for Tuesday

As for the buildup of the calendar, Boise Paper Holdings, LLC and Boise Co-Issuer Co. plan to price a $300 million issue of 10-year senior unsecured notes (/BB/) on Tuesday.

Bank of America Merrill Lynch, Barclays Capital and JP Morgan are joint bookrunners.

No official price talk was available, as Prospect News went to press, Monday night.

However, the whisper on the rate Boise seeks to print is the 8¼% area, according to an informed source.

Proceeds will be used to pay down the company's term loan B.

International Coal digs up secured deal

Elsewhere on Monday, International Coal Group disclosed plans to price a $200 million offering of eight-year senior secured second-priority notes before the end of the week.

Morgan Stanley and UBS Investment Bank have the books for the notes.

Proceeds will be used to fund a tender for the company's existing senior notes, and for general corporate purposes.

Parker Drilling plans $300 million

Meanwhile, Parker Drilling plans to price a $300 million offering of eight-year senior notes (B2/B) late this week.

Bank of America Merrill Lynch and RBS Securities are joint bookrunners.

Proceeds will be used to fund a cash tender offer and consent solicitation for the Houston-based drilling services company's $225 million of 9 5/8% senior notes due 2013 and for general corporate purposes, which may include repayment borrowings under its revolver.

Amsted to price $500 million

Elsewhere, Amsted Industries will host an investor call at 10:30 a.m. ET on Tuesday for a $500 million offering of eight-year senior notes, which are expected to price on Friday.

Morgan Stanley, Bank of America Merrill Lynch and Wells Fargo Securities are joint bookrunners.

Proceeds will be used to repay all amounts outstanding under the company's term loan and to reduce borrowings under its accounts receivable securitization program.

Stena markets €150million

Sweden's Stena AB began a Europe-only roadshow on Monday for a €150 million senior unsecured fixed-rate notes due 2020 (/BB+/).

Deutsche Bank Securities and JP Morgan are joint bookrunners.

The deal, which is being transacted off the London syndicate desk, is expected to price on Thursday.

Proceeds from the non-callable notes will be used to repurchase Stena's outstanding senior notes due 2012, either through the open market or via a cash tender, and for general corporate purposes.

Stena, a Gothenburg, Sweden-based company, has operations in shipping and offshore oil and gas exploration.

A busy week

Elsewhere on Monday, Sitel, LLC and Sitel Finance Corp. started a roadshow for their $300 million notes offer via Goldman Sachs & Co., Bank of America Merrill Lynch and Credit Suisse, which was announced last week.

And Alion Science and Technology Corp. began roadshowing its $300 million deal - which was also announced last week - via Credit Suisse.

Meanwhile, one deal that was carried over from last week, Learning Care Group (US) No. 2 Inc.'s $265 million offering of five-year senior secured notes (confirmed B2/expected CCC+), via Barclays Capital Inc., Wells Fargo Securities and Morgan Stanley, remains in the market, but could be subject to structural modification, according to an informed source who characterized the deal as day-to-day.

Aside from those deals, the primary market figures to be busy this week, sources say.

A big offering from the gaming sector is expected to be announced on Tuesday or Wednesday, according to a syndicate banker.

Meanwhile, a medium-sized offering from the resources space is also expected during the same time-frame ("medium-size" is a sub-theme for the current junk market: the calendar sports a full quartet of deals sized at $300 million).

A smaller deal from the financial services sector is also expected to surface, as is a deal from an industrial name - both by Wednesday's close.

As is often the case, no issuer names were mentioned.

Much of the week's primary market news is likely to surface by Wednesday's close, sources say.

Avis drives further upward

A trader said Avis Budget Group's 9 5/8% notes due 2018 "probably did the best out of all" of the deals that priced on Friday, rising to 101 bid, 101½ offered, which he called up 2½ points from the levels at which they had priced on Friday. "There was good demand," he added. A second trader saw the bonds at 101 bid, 101¼ offered.

The Parsippany, N.J.-based vehicle-rental giant's $450 million of new bonds - upsized from the originally announced $400 million - priced Friday at 98.634 to yield 9 7/8%, and got up to about 100¾ bid, 101 in their initial secondary dealings.

Holly heads higher

Two traders saw Holly Energy Partners' new 8¼% notes due 2018 trading at 101 bid, 1011/2, up a point on the day.

The Dallas-based crude oil pipeline and transportation company's $150 million issue had priced at par on Friday to yield 8¼% and reached 100¾ bid, 101 offered later in the session.

Zayo offered above par

A trader saw Zayo Group's 10¼% first-lien senior secured notes due 2017 offered, at 1001/2, 100¼ and par, but with no bid side seen.

The Louisville, Colo.-based telecom and internet infrastructure services provider's $250 million of new bonds had priced on Friday at 98.729, to yield 10½%, although it was later seen having pushed ahead to par bid, 100 3/8 offered.

Masco moves up

A trader saw Masco Corp.'s 7 1/8% notes due 2020 as having moved up to 100¾ bid, 101 offered, versus the 99.998 level at which the Taylor, Mich.-based maker of interior cabinets and other building products had priced its $500 million offering on Friday, to yield 7 1/8%.

Although the bonds were split rated (Ba2/BBB) and priced off the investment-grade desks, a trader noted that the issue was being quoted in dollar prices and that it had "traded up from the get-go" after pricing, adding that "it was a nice trade for someone," rising around a point in the initial dealings.

"A lot [of junk accounts] played it," the first trader said, "but I think that's how it's been going for the last six months, whether it's high yield or investment-grade or crossover, I think it's drawing interest from all three sides."

DirecTV trading on spread

While the Masco deal was being quoted in dollar prices, that was not the case for DirecTV Holdings LLC, a one-time high yield name which now trades with investment-grade ratings , although it still attracts attention from some junk accounts.

The El Segundo, Calif.-based satellite TV broadcaster priced $3 billion of new bonds in three tranches -- $1.2 billion of 3.55% notes due 2015, which priced at a spread over comparable Treasuries of 120 basis points, while its $1.3 billion of 5.20% notes due 2020 priced at 150 bps over. DTV's $500 million of 6.35% bonds due 2040 priced at 167 bps over. A trader said the five-year bonds tightened by 3-5 bps to about 118 bps bid, 115 bps offered, while the 10-years also traded tighter, at 147 bps bid, 144 bps offered. As for the long bonds, he said that he hadn't seen the bonds trade - but quoted them at 163 bps bid, 160 bps offered.

Market indicators extend gains

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index gain 1/8 point on Monday to end at 99 1/8 bid, 99 5/8 offered, after having jumped by 1 1/8 points on Friday.

The KDP High Yield Daily Index meanwhile moved up by 33 basis points on Monday to finish at 71.66, after having pushed upward by 20 bps on Friday. Its yield tightened to 7.97% on Monday, coming in by 9 bps - the same amount of tightening which the index saw on Friday.

Advancing issues topped decliners for a seventh straight session on Monday, improving to an almost two-to-one margin.

Overall activity, measured by dollar-volume levels, was down 17% from Friday's pace.

A trader said that even though the overall market was firm, it was a "painful" day in terms of actually getting anything done.

"It was not such an incredibly busy day," another chimed in. "You had a few conferences last week," including the always very well attended J.P. Morgan High Yield and Leveraged Loan Conference in Miami, "and just [a few] this week. A think that a lot of the accounts that were at the ones last week are back this week, and for these smaller conferences, they're sending the other side of the firm - so there's really not a whole lot going on."

He said "the volume is light. I think the overall tone of the high yield market is firm - but I just don't think there's a whole lot offered.

"In the old days when the market was firm, people would just lift any kind of offering that was around. I don't think that's happening - but there just seems to be a plethora of bids." He estimated the secondary "with a broad brush" as probably up ¼ point to ½ point, "on the bid side at least. Just firm."

Harrah's heads higher

A trader saw Harrah's Operating Co.'s paper trading around on the news that world's largest casino operator had gotten lenders to agree to extend some $5.5 billion of commercial mortgage-backed securities loans until 2015 and to allow the company to buy back CMBS paper at a deep discount.

He saw the Harrah's 11¼% senior secured notes due 2017 trading around 107 bid, with its 10% notes due 2015 second-priority notes around "85ish," its 10% second-priority notes due 2018 and 10¾% notes due 2016 both around 80, "so that's up a couple of points, with some volume there."

He also noted that the 6½% notes due 2016 were in the upper 50s, while the 5 5/8% notes due 2015 were around 62 bid, though on only a few trades, "so they've got things from the 50s to the 90s."

Another trader said that Harrah's bonds "were up a bunch" on the CMBS news, rising 2 to 3 points. The name was "the volume leader today," he said.

A market source saw over $20 million of the company's 10% 2018 notes having traded at levels 2 or 3 points higher.

Harrah's said that under the revised terms agreed to by the lenders, Harrah's will have the option to extend the CMBS loan maturity date to 2015 as well as the ability to purchase approximately $124 million face value of CMBS loans for $37 million. The amendments to the terms of the CMBS loans will become effective upon execution of definitive documentation.

The extended CMBS loans had been due to mature in early 2013. The underlying mortgages are on four of the company's Las Vegas resorts - the Paris, Rio, Harrah's, and Flamingo -- as well as Harrah's-branded casinos in Atlantic City, N.J. and Laughlin, Nev.

Harrah's began purchasing discounted CMBS loans in the fourth quarter of 2009 and purchased approximately $950 million of face value loans for approximately $237 million. Under the terms of the agreement announced Monday, the Harrah's units that borrowed under the CMBS loans have agreed to pay the selling lenders an additional $48 million for the loans previously sold, subject to the completion of the definitive documentation

"These revised terms for the CMBS loans represent the culmination of nearly two years of transformative activities that have allowed us to improve our balance sheet substantially; reducing our debt load by more than $4 billion while improving our liquidity and maturity profile," said Gary Loveman, chairman, CEO and president of Harrah's Entertainment. "We now have even greater financial flexibility as we have extended all of our maturities until 2015 and beyond."

Paper names stay strong

A trader said that NewPage Corp. "had a little activity," seeing the Miamisburg, Ohio-based coated-paper company's 10% notes due 2012 "up a couple of points," pegging them at 66-66¼ bid, which he called up 2 points, "with some activity there."

He also saw the company's 11 3/8% secured notes due 2014 around a 99-par context, with many trades taking place around the 99 5/8 or 99 7/8 bid level, which he called up a point.

"New Page firsts [first-priority notes] are close to par," another trader declared, seeing them at 991/2-par.

He also saw sector peers Verso Paper Corp. and Appleton Paper Inc. as "firm - but they were probably only up a half [point], while New Page - whose senior bonds had traded above the par level before the paper began its long slide in mid-January on the news of its chief executive officer's sudden and-for many investors, still not adequately explained - resignation, "is almost in triple-digits again, which is pretty fascinating."

Elsewhere in the sector, the trader said that Catalyst Paper Corp. "did their exchange - but I didn't see any activity in it," keeping the 8 5/8% notes due 2011 in the upper 80s - he further noted that as a result of the just concluded exchange offer, "most of them are gone, so now it's an odd-lot." The company said holders tendered some $318 million, or just under 90%, of the outstanding notes, in exchange for new 11% secured notes due 2016.

He also saw "not much activity at all" in the company's 7 3/8% notes due 2014, with "just a couple of trades" around 68-69, which he called unchanged.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.