New issue calendar ramps up; Clear Channel pushes up; Royal Caribbean deal fades in secondary

By Stephanie N. Rotondo and Paul A. Harris

Phoenix, Nov. 5 - The election was on everyone's mind on Monday, but that didn't stop the new high-yield issue calendar from filling up.

The secondary also saw at least typical volume, despite the previous week's chaos linked to Hurricane Sandy and the current week's upcoming election.

One trader noted that volume in the entire high-yield space was around $1 billion, though he said he didn't think it seemed that active.

"Everyone is so focused on the election, so there's not a tremendous amount of stuff going on," another trader said.

Clear Channel Communications Inc. was preparing a new issue via Clear Channel Outdoor Holdings on Monday. The proceeds will be used to tender other outstanding issues.

Clear Channel Outdoor's subordinated paper was moving higher in anticipation of pricing, but other Clear Channel paper was subdued, according to a trader.

But it was Royal Caribbean Cruises Ltd.'s recent new deal that was getting all the play, a trader reported. But despite its activity, the paper was trading soft.

Meanwhile, Supervalu Inc. paper remained on the busy side, though without fresh news. Additionally, the bonds were better in line with the broader market.

Market starts strong

The high-yield bond market was on the firm side on Monday as more desks were filled following the previous week's storm disaster.

"We're back," said one trader. "We've got power and we're back."

The KDP High Yield Index pushed up to 74.38, as its yield narrowed to 6.06%. On Friday, the index reading was 74.31, with a 6.08% yield.

But the CDX North American Series 19 High Yield Index was holding in at 99 15/32 bid, 99 9/16 offered.

William Lyon upsizes

The primary market news volume intensified on Monday, as the high yield continues to regain its legs amid the massive post-hurricane recovery efforts under way in New Jersey and New York.

Two issuers, each bringing a single upsized tranche of notes, raised $625 million.

William Lyon Homes, Inc. priced an upsized $325 million issue of eight-year senior notes (Caa2/B-) at par to yield 8½%, on top of yield talk.

Credit Suisse was the bookrunner for the debt refinancing issue, which was upsized from $300 million.

Avis Budget drives by

In drive-by action, Avis Budget Car Rental, LLC and Avis Budget Finance, Inc. priced an upsized $300 million issue of five-year senior notes (B2/B) at par to yield 4 7/8%, also on top of the yield talk.

Bank of America Merrill Lynch, Barclays, Credit Agricole, Deutsche Bank and RBS were the joint bookrunners for the debt refinancing deal, which was upsized from $250 million.

Service Corp. at tight end

Service Corp. International priced a $200 million issue of eight-year senior notes (Ba3/BB-) at par to yield 4½%, at the tight end of the 4½% to 4¾% yield talk.

J.P. Morgan, Bank of America Merrill Lynch and Wells Fargo were the joint bookrunners for the quick-to-market debt refinancing deal.

E*Trade two-part deal

There was also news of deals that will be in the market at least overnight.

E*Trade Financial Corp. expects to price $1,305,000,000 of senior notes (existing ratings B2/B-) in two tranches on Tuesday.

The deal is comprised of five-year notes, which come with two years of call protection, and seven-year notes, which come with three years of call protection.

Bank of America Merrill Lynch is the left bookrunner for the debt refinancing deal. Goldman Sachs and Morgan Stanley are the joint bookrunners.

Land O'Lakes split-rated notes

Land O'Lakes Inc. is planning to price a $250 million offering of 10-year senior notes (expected ratings Ba2/BBB-) in the middle of the week.

Bank of America Merrill Lynch is the bookrunner for the debt refinancing deal from the Arden Hills, Minn.-based branded food and agriculture supply cooperative.

Talking the deals

Price talk surfaced on a pair of deals that were announced last week, and are expected to price on Tuesday.

Clear Channel talked $2.725 billion of 10-year senior notes (confirmed B1/expected B) to yield 6¼% to 6½%.

The deal features $735,750,000 of series A notes and $1,989,250,000 of series B notes.

Goldman Sachs, Citigroup, Morgan Stanley, Credit Suisse, Deutsche Bank and Wells Fargo are the underwriters.

Also One LP and One Financial Corp., subsidiaries of Cincinnati Bell, talked their $500 million offering of 10-year senior notes (B2/B+/) to yield 6½% to 6¾%.

Barclays, Citigroup, RBS and UBS are the joint bookrunners.

Rottapharm's €400 million

High-yield issuers from outside the United States also turned up in the primary market on Monday.

Italy's Rottapharm Ltd. began a roadshow in London for a €400 million offering of seven-year senior notes (expected ratings Ba3/BB-).

The roadshow continues in London on Tuesday, then moves to Frankfurt and Paris on Wednesday and to Amsterdam and Milan on Thursday.

JP Morgan is the global coordinator. Banca IMI and Mediobanca are the joint bookrunners.

The Monza, Italy-based pharmaceutical company plans to use the proceeds to refinance debt and for general corporate purposes.

Athabasca plans secured deal

In the Canadian high-yield primary market, Athabasca Oil Corp. (DBRS: B) announced on Monday that it plans to sell up to C$600 million of five-year senior secured second lien notes.

The company started a roadshow on Monday for the notes, and pricing is expected later in the week.

TD and GMP are the leads, a market source said.

Proceeds will be used for general corporate purposes, including the advancement of the company's thermal oil projects and develop its light oil assets.

Clear Channel firms

San Antonio-based multimedia company Clear Channel was preparing a new $2.73 billion two-tranche issue of 10-year notes on Monday.

The proceeds will be used to fund a tender for the 9¼% series A senior notes due 2017 and its 9¼% series B senior notes due 2017.

On the back of that, Clear Channel's 7 5/8% notes due 2020 were on the rise, according to traders.

A trader said the issue earned a fraction of a point, ending at 971/2. Another trader called the debt up half a point, also at 971/2.

"All the other issues were on the quiet side," the second trader said.

Royal Caribbean fades

Royal Caribbean's new 5¼% notes due 2022 - a $650 million deal that priced on Friday - saw "loads of trades" on Monday, according to a trader.

He said at least $43 million of the notes changed hands, but fell nearly a point to 1011/2.

The 7½% notes due 2027, however, put on 5 points to end around 1111/2.

Proceeds from the new issue will be used to pay down the Miami-based cruise company's unsecured debt facilities.

Supervalu active, higher

Supervalu's 8% notes due 2016 continued to be actively traded on Monday as investors await word on a potential sale of assets.

One trader said the bonds got as good as 97½ before falling back to 961/2, still up half a point on the day.

Another trader also saw the issue rising to the 97 area before coming back to end in a 96-97 context. He deemed that up half a point to a full point.

A third market source pegged the notes at 96¾ bid, up nearly a point.

The Eden Prairie, Minn.-based grocery store operator is currently fielding offers from such potential investors as Cerberus Capital Management and KKR. There has been no fresh word on the potential sale, nor any confirmation as to whether or not bidders are seeking the whole company, or just parts.

However, Cerberus has been rumored to be interested in the whole, and it has been reported that the firm has already been lining up financing for a deal that could be valued as high as $5 billion.

E*Trade unfazed by issue plans

E*Trade held an investor call on Monday, ahead of a planned Tuesday new issue launch.

The company will use proceeds from the expected issue to redeem its 7 7/8% notes due 2015 and 12½% notes due 2017.

However, "it doesn't seem like the market had much reaction to it," a trader said.

Another trader said he saw "one wide market" for the 6¾% notes due 2016 early in the session at 106¼ bid, 108¼ offered. He said one trade occurred at 1061/2.

"That's kind of unchanged," he said.

E*Trade is a new York-based provider of financial services.

Energy rises modestly

In the energy space, Energy Future Holdings Corp.'s 5.55% notes due 2014 were pegged around 55, up 5 points.

Petróleos de Venezuela SA's 9¾% notes due 2035 ended at 831/4, up a touch on the day.

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