Media General, Hovnanian, Evraz price to cap $6.8 billion week; new Media General tops actives

By Paul Deckelman

New York, Oct. 31 – The high-yield primary sphere closed out the month of October on a high note on Friday.

While it may have been Halloween, would-be bond issuers were certainly not spooked, bringing a total of $1 billion to market in three tranches, in contrast to Thursday’s session, when syndicate sources indicated that no new dollar-denominated, fully junk-rated deals from domestic or industrialized-country issuers had gotten done.

Television station group owner Media General, Inc. brought an upsized $400 million of eight-year senior notes to market; that deal had originally been expected to price on Thursday but was pushed off until Friday to allow some tinkering with the bank debt component of the company’s financing initiative.

Secondary market traders said the new Media General notes were the most actively traded name in Junkbondland on Friday, moving up solidly from their issue price.

Also coming to market was familiar junk issuer Hovnanian Enterprises, Inc.; a subsidiary of the homebuilder priced an upsized $250 million of five-year bullet notes. Those bonds also saw some brisk aftermarket dealings and rose from their issue price.

Canadian steel producer Evraz Inc. NA Canada did a downsized $350 million of five-year secured notes. The new bonds were not seen immediately trading around.

The day’s deals brought the week’s new issuance total to $6.8 billion in nine tranches, up from the slightly over $6 billion that had come to market in 13 tranches during the previous week, ended Oct. 24, according to data compiled by Prospect News.

The week’s activity, in turn, lifted the year-to-date new issuance total to $278.12 billion in 516 tranches, according to the data, running 1.6% ahead of the pace seen last year, when $273.8 billion had priced in 573 tranches by this point on the calendar.

In the European junk bond market, financial firm Arrow Global Group, plc. was heard to have priced a €225 million offering of seven-year secured floating-rate notes.

Back in the domestic market, apart from the names that actually priced, primaryside players said that MSCI Inc., a provider of investment decision support tools to the financial services industry, was getting ready to go on the road next week to pitch an $800 million 10-year notes deal to potential investors.

Charter Communications, Inc.’s huge new two-part bond issue – which had rolled up huge trading-volume figures on Thursday as the cable operator’s new bonds firmed smartly from their issue price – saw considerably more sedate trading Friday, with the new notes off their Thursday highs,

Statistical market performance indicators were trending higher on the session, after having been mostly lower on Thursday, and were mixed versus where they had closed out the previous week.

Delayed Media General upsizes

The day’s biggest deal came from Richmond, Va.-based television broadcasting and digital media company Media General, which upsized its offering of eight-year senior notes (B3/B+) to $400 million from the originally announced $300 million, pricing it at a discount to par to yield 5.954%.

The bonds priced at 99.5 with a coupon of 5 7/8% in order to reach that yield.

That was inside of the price talk that circulated on Thursday, envisioning a yield in the 6% to 6¼% region.

The deal had been originally expected to price as a quick-to-market transaction on Thursday, but never did come that session; it was pushed off until Friday, and priced shortly after the order books had closed at mid-morning.

The Rule 144A and Regulation S offering was brought to market via left book-running manager RBC Capital Markets Corp., along with joint bookrunners Capital One Securities, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc., and U.S. Bancorp Investments.

Media General is selling the notes as part of the financing for its pending merger with sector peer LIN Media LLC, an Austin, Texas-based TV broadcasting and multimedia company.

The funding also will include a new credit facility that was launched last Friday via joint lead arrangers RBC, Deutsche Bank, SunTrust Robinson Humphrey, U.S. Bank and Capital One.

Besides the upsizing of the bond deal, the syndicate sources said Friday that some changes were made to the tranches in the credit facility portion of the financing, which was originally planned to total $1.015 billion.

Hovnanian hits the market

Familiar junk market issuer Hovnanian Enterprises did a quickly shopped and upsized $250 million issue of five-year senior notes (expected ratings Caa1/CCC/CCC) on Friday.

High-yield syndicate sources said that issue priced at par, in line with the price talk.

The transaction, done through the company’s K. Hovnanian Enterprises, Inc. subsidiary, was increased from the originally announced $200 million.

The bonds were brought to market via underwriters J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC.

The quickly shopped deal was marketed to potential investors via a late-morning conference call and priced during the afternoon.

Hovnanian, a Red Bank, N.J.-based homebuilder, plans to use the proceeds from the bond deal for general corporate purposes, including land acquisition and development.

Evraz downsizes deal

Evraz Inc. NA Canada was heard to have priced a reduced $350 million offering of five-year senior secured notes (Ba3/BB) at par on Friday to yield 7½%.

High yield syndicate sources said that the pricing was in line with price talk that had circulated earlier in the session.

The issue was cut in size from an originally planned $500 million.

The deal was brought to market via joint bookrunner Citigroup, which will bill and deliver. Goldman Sachs & Co. is also a joint bookrunner.

The deal was marketed to potential investors this week via a roadshow that began on Monday in New York and New Jersey, and wrapped up on Friday on the U.S. West Coast.

The Regina, Sask.,-based steel producer plans to use the proceeds to repay a portion of its subordinated related party loan from an affiliate of Evraz Group SA.

MSCI on the road

MSCI heard by high yield syndicate sources Friday to be preparing to begin a roadshow for its announced $800 million offering of senior notes due 2024 (Ba1/BB+).

The short roadshow will begin this coming Monday and will run through Wednesday, with pricing expected sometime thereafter.

The Rule 144A/Regulation S offering will be brought to market via J.P. Morgan, the sources said.

MSCI, a New York-based provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds, plans to use the proceeds from the note offering, together with cash on hand, to repay in full its $794.8 million of outstanding senior secured term loan debt.

The company said that concurrently with the note offering, it plans to enter into a new five-year, $200 million unsecured revolving credit facility.

Arrow Globe brings euro deal

In the non-dollar junk market, England’s Arrow Global Finance priced a €225 million offering of senior secured floating-rate notes.

The company said in a press release that the pricing took place on Thursday at an issue price of 97.5.

The interest rate on the new notes will be Euribor plus 525 basis points.

European high yield syndicate sources said that the Rule 144A/Regulation S offering was brought to market via sole bookrunner Goldman Sachs International.

The notes were marketed to potential investors through a roadshow that began on Tuesday and ran through Thursday.

Arrow Global Finance, a wholly-owned indirect subsidiary of Arrow Global Group plc, a Manchester, England-based purchaser of consumer debt and provider of receivables management solutions, plans to use the proceeds from the note offering, along with cash on hand, to fund Arrow Global’s pending £158 million acquisition of the Capquest group, which was announced on Sept. 24, and to repay a portion of amounts drawn under Arrow Global’s revolving credit facility.

Media General is market mover

In the secondary sphere, a trader said that the new Media General 5 7/8% notes due 2022 were the day’s big story.

He saw the TV broadcaster’s new paper “pretty much” trading between a 100¾ and 101 bid context.

He said that with over $70 million of those notes having changed hands, the issue was clearly the most active junk credit of the day.

He pointed out that the deal – originally supposed to price on Thursday, but then held over till Friday – priced fairly early in the day, around midday ET, “so they had more time to trade that one than the other new deals that came later on.”

A second trader noted that the deal, which he saw trading between 100¾ and 101¼, “had priced at 99.5, or 381 basis points over Treasuries – so it came in by a couple of beeps on a spread basis after pricing.”

A third trader said the bonds had gotten as good as 100 7/8 bid, 101 3/8 offered.

Hovnanian heads higher

K. Hovnanian’s 8% notes due 2019 saw some relatively busy trading – although its volume levels paled in comparison with the Media General deal.

A trader said that more than $17 million of the bonds had moved around, enough to get the credit onto the day’s Most Actives list.

He saw the notes having firmed solidly to about a 101 to 101 3/8 context from their par pricing level.

A second trader pegged them at 101 1/8 to 101 3/8 bid.

New Charters come in

A trader saw Charter Communications’ new two-part issue trading around the 101 to 101½ level, calling that “not a bad performance on those” bonds that had priced at par.

Later on, though, another trader noted that the Charter paper was down by around ¼ point from where it had finished on Thursday.

He saw its 5½% notes due 2022 at 100 5/8 bid and its 5¾% notes due 2024 at 100¾ bid – both off from late Thursday’s levels.

And while volume was respectable enough at $25 million and $27 million respectively, he said, it was well down from the more than $200 million of the 5¾s and more than $180 million of the 5½s that had traded on Thursday, when those late-Wednesday bonds were freed for aftermarket dealings.

Indicators are better

Statistical indicators of junk market performance were trending better on Friday, after having been lower across the board on Thursday and mixed for two straight sessions before that.

The KDP High Yield Daily Index rose by 5 bps Friday to 72.48, after having lost 3 bps on Thursday and having been unchanged on Wednesday.

Its yield came in for a fourth consecutive session, easing by 1 bp to 5.28%. It had declined by 2 bps on Thursday.

Those levels compared with the 72.52 index reading and the 5.32% yield seen at the end of last week, on Oct. 24.

The Markit CDX North American High Yield Series 23 index gained 13/32 point on Friday to end at 106 31/32 bid, 107 1/32 offered, after having fallen for the previous two sessions, including Thursday’s 1/16 point setback.

The index was up from the previous Friday’s 106 29/32 bid, 106 15/16 offered.

According to the FINRA-Bloomberg Active US High Yield Bond Index, Friday’s junk market volume fell to $2.592 billion from $3.014 billion on Thursday.

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