Landry's, Ameristar drive-by add-on price, gain; busy Friday expected; funds gain $637 million

By Paul Deckelman and Paul A. Harris

New York, April 19 - The high-yield primary and secondary spheres rolled out the welcome mat on Thursday for a pair of deals coming from the hospitality industry.

Restaurant and gaming operator Landry's, Inc. priced an upsized $425 million of eight-year notes off the forward calendar, high-yield syndicate sources said.

The sources also heard that gaming company Ameristar Casinos Inc. tapped the junk market for a quickly shopped $240 million add-on tranche to its 2021 notes originally sold last year.

Secondaryside traders heard that both new deals moved up after pricing.

Apart from the deals that actually priced, new-dealers heard price talk emerge on a number of other transactions that are expected to price during Friday's session: Carmike Cinemas, Inc., ACCO Brands Corp., Milacron LLC, Resolute Energy Corp. and Agrokor dd. They also heard that the latter company scrubbed its planned tranche of dollar-denominated benchmark notes in favor of just a single euro-denominated piece of debt.

In the non-primary world, Chesapeake Energy Corp.'s bonds were heavily traded at lower levels for a second consecutive session.

Statistical measures of market performance were seen mixed.

And high-yield mutual funds - considered a good indicator for overall market liquidity trends - got back in the black Thursday after having suffered losses of over $1 billion the week before.

AMG posts $637 million inflow

As things were winding down on Thursday, market participants familiar with the weekly AMG high-yield mutual fund flow statistics said that in the week ended Wednesday, $637 million more came into those weekly reporting funds than left them.

It was a solid rebound from the week before, which ended April 11, when the numbers from Arcata, Calif.-based AMG - a unit of Thomson Reuters' Lipper/FMI division - had shown a yawning outflow of $1.29 billion. That was the first such cash bleed this year after 14 consecutive gains since the start of the year totaling about $16.53 billion according to a Prospect News analysis of the numbers.

The previous week's outflow had also snapped an amazing string of 18 straight weeks of inflows totaling $18.64 billion, which dated back to the week ended Dec. 7, according to the Prospect News analysis.

The latest week's inflow brought the year-to-date net inflow figure up to an estimated $15.87 billion, although it was still below its peak level for the year of $16.53 billion, which was seen in the week ended April 4, according to the analysis.

Inflows have now been seen in 15 weeks of 2012 so far, against last week's solitary outflow.

EPFR sees $649 million

Things were also looking up in the data compiled by another fund-tracking service, Cambridge, Mass.-based EPFR Global, whose methodology differs from AMG.

That company also reported an inflow - $649 million - in contrast to the previous week's gigantic $1.17 billion outflow.

As was the case with the AMG number, the previous week's cash hemorrhage was the first such outflow seen this year after 14 straight inflows, and it broke a larger 18-week winning streak that had dated back to the beginning of December.

On a year-to-date basis, the cumulative inflow figure moved back up over the $32 billion figure, the Prospect News analysis indicated.

EPFR's figures and those of AMG generally point in the same direction, although their actual numbers usually differ since they calculate their respective fund-flow totals very differently. EPFR, for instance, includes results from non-U.S. domiciled funds excluded from the more narrowly focused AMG tally as well as domestic junk mutual funds and exchange-traded funds.

Cumulative fund-flow estimates, whether of the AMG numbers from Lipper/FMI or those from EPFR, may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

Analysts say the continued flow of fresh cash into junk - and the mutual funds represent but a small, though observable and quantifiable percentage of the total amount of money coming in - fueled the record new-deal borrowing binges seen in both 2009 and then in 2010, as well as the robust secondary market seen both years, and continued to be the driver behind 2011's near-record issuance.

Those fund flows are also seen as the key element behind the high-yield secondary market's fairly strong performance so far this year and its active new-deal pace, with issuance volume continuing to run ahead of last year.

Landry's prices through talk

The primary market continued to crank out notable volume on Thursday despite weakness in the stock indexes in Europe and the United States.

The reason: Technicals are trumping volatility, according to a debt capital markets banker in London who added that the accounts are running considerable cash balances.

Although volatility has sent the CDS indexes wider, cash bonds are not moving and are generally not for sale, the banker said.

"No one wants to dump paper and risk being caught in a short squeeze," the banker explained.

In the Thursday new issue market, two companies priced single-tranche deals, raising a combined total of $672 million.

Landry's priced an upsized, restructured $425 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 9 3/8%.

The yield printed 12.5 basis points beneath the 9½% to 9¾% yield talk.

Call protection was decreased to three years from four years. The notes become callable on May 1, 2015 at par plus 75% of the coupon: 107.031.

Jefferies & Co. Inc. was the left bookrunner for the deal, which was upsized from $400 million. Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were the joint bookrunners.

The Houston-based full-service restaurant, hospitality and entertainment company plans to use the proceeds to refinance debt and to fund a distribution to its parent.

Ameristar taps 7½% notes

Ameristar Casinos priced a $240 million add-on to its 7½% senior notes due April 15, 2021 (B3/B+) at 103 to yield 6.879%.

The reoffer price came on top of price talk.

Wells Fargo Securities LLC was the left bookrunner for the quick-to-market add-on.

Deutsche Bank, Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Credit Agricole Securities (USA) Inc. were the joint bookrunners.

The Las Vegas-based gaming and entertainment company plans to use the proceeds to repay revolver debt.

The original $800 million issue priced at 99.125 to yield 7 5/8% in March 2011. Hence Landry's realized 75 bps of interest savings with the Thursday tap versus the print on the original issue.

Talking the deals

Dealers set the stage for a busy Friday session.

ACCO Brands talked its $500 million offering of eight-year senior notes (confirmed B1/expected B) to yield 6¾% to 7%.

The Lincolnshire, Ill.-based office supplies manufacturer also moved up timing on the deal.

The books close at noon ET on Friday except for accounts seeing the company, and the deal is set to price thereafter.

When the deal was announced, the roadshow schedule carried into the week ahead, with stops on the West Coast of the United States. The company will continue to visit accounts during the April 23 week as planned in the original roadshow.

Barclays Capital Inc. is the left lead bookrunner. Bank of America Merrill Lynch, BMO Capital Markets Corp. and SunTrust Robinson Humphrey are the joint bookrunners.

Elsewhere, Milacron talked its $265 million offering off seven-year senior secured notes (B1/B+) with a yield in the 8 5/8% area.

Bank of America Merrill Lynch, RBC Capital Markets and Barclays are the joint bookrunners.

Resolute Energy talked its $250 million offering of eight-year senior notes (B3/B-) to yield 8½% to 8¾%.

Citigroup, BMO and Wells Fargo are the joint bookrunners.

And Carmike Cinemas talked its $210 million offering of seven-year senior secured notes (B2/B) to yield 7¼% to 7½%.

Macquarie Capital (USA) Inc. is the bookrunner.

Agrokor drops dollar piece

In the high-yield emerging markets space, Croatia's Agrokor withdrew a planned dollar-denominated tranche and cut short its roadshow, electing to attempt to place its benchmark offering of seven-year notes (B2/B) in euros only.

The deal is talked with a yield in the 10% area.

Terms were expected as early as Thursday's close in Europe. However, late in the session no terms were available, according to a London sellside source who added that the deal will likely be priced on Friday.

A roadshow for the withdrawn dollar tranche was scheduled to get underway in the United States on Friday and run through Tuesday.

BNP Paribas, UniCredit SpA and JPMorgan are the joint bookrunners. Erste Group, Banka Intesa, Raiffeisen Bank International and SG CIB are the co-managers.

Also in the high-yield emerging markets space, China Shanshui Cement Group Ltd.'s proposed dollar-denominated offering of five-year senior notes (/BB-/BB-), which was expected to price Thursday, is awaiting documentation, sources said.

On Wednesday, the Chinese company tightened the price talk on the deal to the 10½% area from previous talk of 10½% to 10¾%.

Although the company has not yet come out with a deal size, it is believed to be looking at a $400 million maximum amount.

Credit Suisse, Deutsche Bank, HSBC and JPMorgan are the joint bookrunners.

Landry's is well liked

When the new Landry's eight-year notes were freed for secondary market dealings, a trader said that they traded as high as 102 bid before dropping back to 101¼ bid, 101¾ offered.

That offering, priced off the forward calendar, came to market at par after being enlarged from an originally planned $400 million.

A second trader quoted the bonds "wrapped around" 101½ bid. A third pegged them at 101 3/8 bid, 101 7/8 offered.

Ameristar add-on gains

The day's other deal - from Las Vegas-based casino operator Ameristar - was also seen to have moved up in the aftermarket.

A trader saw the quickly shopped $240 million add-on offered at 1041/2, though with no bid, after it priced at 103 earlier on.

A second trader, conversely, quoted the bonds bid at 104 but with no offer.

However, yet another trader finally did see a two-sided market, quoting the new deal at 104 bid, 104¾ offered.

Wednesday deals hang in there

Among the deals that came to market on Wednesday, a trader said that National CineMedia LLC's 6% senior secured notes due 2022 were trading around 100¾ bid, 101¼ offered.

That was little changed from the aftermarket levels seen on Wednesday after the Centennial, Colo.-based integrated media company priced its quickly shopped $400 million offering at par. That deal was upsized from an original $315 million.

Wednesday's other $400 million drive-by deal - from Chaparral Energy Inc. - was meantime seen on Thursday at a wide 100¼ bid, 101¼ offered.

That too was not very far from the aftermarket levels where the Oklahoma City-based oil and gas exploration and production company's 7 5/8% notes due 2022 had traded after pricing at par.

Traders said that the bonds had bounced around a little on Wednesday before coming to rest somewhere in a 100 3/8-to-100 5/8 context, although one trader said that they had grazed the 100¾ mark.

That deal was upsized to $400 million from $350 million originally.

A trader on Thursday said he heard that Physiotherapy Associates' 11 7/8% notes due 2019 were being quoted at 102 bid, although he himself had seen no trades in the issue.

Two other traders, though, said that they had seen no signs of the smallish deal.

The Exton, Pa.-based provider of outpatient services priced its $210 million forward calendar offering on Wednesday at 98.841 to yield 12 1/8%.

Chesapeake churns on

Away from the new-deal world, traders noted that Chesapeake Energy's bonds continued to trade down on high volume for a second consecutive session following news media revelations that its chief executive officer, Aubrey McClendon, has taken out $1.1 billion of personal loans secured by the 2.5% stake in the company's oil wells granted to him under his contract.

Those bonds lost between 2 and 3 points on Wednesday in tandem with a sharp slide in the company's equity following the news and various negative comments from parts of the investment community.

The carnage continued on Thursday. A trader declaring that the Oklahoma City-based natural gas company "was weak again today, probably by 1 or 2 points on top of [Wednesday's] losses."

A second trader said that Chesapeake's most actively traded issue, its 6.775% notes due 2019, got as low as a 95-96 context on Thursday, down from closing levels around 97 on Wednesday and pre-news levels around 99 earlier in the week.

A market source said that those bonds remained the busiest in Junkbondland. More than $75 million changed hands by mid-afternoon, and considerably more likely traded after that.

Chesapeake's 6 5/8% notes due 2020 lost 1¼ points Thursday on top of Wednesday's two-points-plus loss, going out at 96 bid, 96¾ offered. More than $50 million of those notes traded.

Market measures mixed

Statistical measures of junk market performance meanwhile were mixed for a second straight session on Thursday.

A trader saw the Markit Group CDX North American Series 18 High Yield index down 3/16 point on the session to end at 94 5/8 bid, 94 7/8 offered. It had been down by 3/8 point on Wednesday.

The KDP High Yield Daily index gained 6 bps on Thursday to close at 73.59 after having eased by 3 bps Tuesday. Its yield came in by 2 bps to 6.69% after having been unchanged Wednesday.

And the widely followed Merrill Lynch High Yield Master II index made it six straight sessions on the upside Thursday, rising 0.049% on top of Wednesday's 0.04% gain.

That lifted the index's year-to-date return to 5.281% from Wednesday's 5.23%, although it remains below its peak 2012 level of 5.361% recorded on March 2.

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