Clearwire prices upsized add-on, CEDC, San Pasquale price also; Catalyst climbs on exchange

By Paul Deckelman and Paul A. Harris

New York, Nov. 24 - Less than a week after having priced a mega-deal sized junk bond offer, Clearwire Communications LLC returned to the high yield primary arena on Tuesday with another big deal - an upsized add-on offering of the same kind of notes which it priced last Wednesday.

Earlier in the session, Polish alcoholic beverage company Central European Distribution Corp. priced a dollar- and euro-denominated offering of six-year senior secured notes, also upsized.

And San Pasquale Casino Development Group Inc., operator of a Native American gaming resort in San Diego, priced a smallish, quickly shopped add-on to its existing 8% notes due 2013, which had priced in September 2005.

Traders said that the new Advanced Micro Devices Inc. bonds priced Monday stabilized at the sharply higher levels to which the Sunnyvale, Calif.-based computer chip maker's new issue had jumped later in that session after the pricing.

Also seen higher was Salem Communications Corp.'s senior secured notes, which priced Monday.

But yet another Monday offering - Digicel Group Ltd. - struggled in the secondary on Tuesday.

Apart from the new-deal sphere, Catalyst Paper Corp.'s bonds were better after the Richmond, B.C. - based paper producer offered to give holders of its 8 5/8% senior notes due 2011 new senior secured notes maturing in 2016 and carrying a higher coupon, plus stock.

Traders meantime were expecting a very slow day on Wednesday ahead of Thursday's Thanksgiving Day holiday - even though the Wednesday session is supposedly a "regular day" in Junkbondland, schedule-wise.

Poland's Central European upsizes

Three issuers, bringing a combined four tranches, raised just over $1.9 billion equivalent on Tuesday.

Central European Distribution Corp., issuing via CEDC Finance Corp. International Inc., priced an upsized $948.898 million equivalent two-part seven-year senior secured notes transaction (B1/B+) on Tuesday.

The Poland-based alcoholic beverage producer and distributor priced $380 million of 9 1/8% notes at 99.366 to yield 9¼%. The dollar-denominated notes priced on top of price talk.

In addition CEDC priced €380 million of 8 7/8% notes at 99.361 to yield 9%, also on top of price talk.

Goldman Sachs & Co. was the left lead bookrunner for the transaction, the overall face amount of which was upsized from $870 million equivalent.

Citigroup and Deutsche Bank Securities were joint bookrunners.

Proceeds will be used to help fund the purchase of Lion Capital's remaining stake in Russian Alcohol Group and to repay debt, including Central European Distribution's outstanding secured notes due 2012. The additional proceeds will be used to repay short-term debt.

The issuer is a financing unit of Central European Distribution, an alcoholic beverage producer and distributor with corporate offices in Warsaw, Poland, and Bala Cynwyd, Pa.

CEDC marketed to U.S. junk buyers

Despite the fact that it was perceived as a Poland-based food and beverage play, and thereby ostensibly an emerging markets deal, CEDC's dollar tranche was marketed extensively to U.S. high-yield accounts, according to a buy-side source who played the deal.

As to the demand for the new 9 1/8% senior secured notes due in 2016, the buy-sider said that it had to have been heavy, and therefore expected that allocations would be cut back.

Clearwire returns with $920 million

Elsewhere Clearwire Communications LLC priced a massively upsized $920 million add-on to its 12% senior secured notes due Dec. 1, 2015 (Caa1/B-) at 97.945 to yield 12½%.

The quick-to-market deal priced slightly cheap to the 98.00 price talk. It was increased from $540 million.

The add-on came less than one week after the Kirkland, Wash.-based wireless broadband services provider priced the $1.6 billion original issue, which priced at 97.921 to yield 12½% on Nov. 18.

JP Morgan ran the books for the Tuesday add-on.

Proceeds will be used for general corporate purposes.

A high-yield mutual fund manager reacted negatively to the company returning so soon, and ratcheting up leverage through the secured notes.

Nevertheless, the source said, the order book for the original $540 million amount was no doubt filled by the time the deal was announced on Tuesday.

San Pasqual sells $35 million add-on

Finally, San Pasqual Casino Development Group priced a $35 million add-on to its 8% senior notes due Sept. 15, 2013 (B2/BB-) at 91.50 on Tuesday to yield 10.757%.

Citadel Securities ran the books.

Proceeds will be used to fund capital expenditures, and for general corporate purposes.

The issuer is an Indian gaming facility near San Diego.

Market watchers will recall that Citadel surfaced last week as a right bookrunner on the Advanced Micro Devices, Inc. $500 million issue of 8 1/8% senior unsecured notes due 2017 (B2/B).

That deal priced at 89.796 to yield 10%.

JP Morgan was on the left for the AMD trade.

Clearwire comes too late for aftermarket

The new Clearwire 12% senior secured notes due 205 priced too late in the session for any immediate aftermarket activity, traders said.

Meantime, its existing $1.45 billion of the bonds, which had priced last Wednesday at 97.921 to yield 12½%, were seen trading Tuesday in a 981/2-99¼ context, a trader said.

However, a second pointed out that those bonds had traded even higher earlier in the day, at 99 bid, 99½ offered, but "then they must have softened up on the price talk" for the new issue, which had envisioned a price of 98.

Central European dollar bonds firm a little

A trader said that Central European Distribution's new 9 1/8% dollar-denominated senior secured notes due 2016 were seen trading late in the day at 100 1/8 bid, 100 5/8 offered - having risen to that level from the 99.366 at which the issue had priced.

He also saw the euro-denominated 8 7/8% senior secured notes due 2016 at 99 3/8 bid, 99 7/8 offered, little changed from that tranche's 99.361 issue price.

Several traders meantime said they had seen no dealings in the $35 million add-on 8% notes due 2013 which San Pasqual Casino Development Group priced.

Digicel doing badly

Among the issues which priced on Monday, a trader said that Digicel Group's new issue "can't get out of its own way."

He saw the Kingston, Jamaica-based cellphone service provider's 8¼% notes due 2017 late in the session on Monday having gotten as good as 98¾ bid, 99¼ offered, up from the 98.625 at which the $500 million drive-by issue had priced earlier to yield 8½% -- but said that was "the last time I saw a good bid" on them.

In Tuesday's dealings, he said, the bonds traded early in the session at 971/2, and then "just died," estimating the last two pictures in the credit at 96½ -981/2. "It just died after that 97½ trade."

He expressed some bafflement as to why the issue should be "under water" like that, since it's a major player in the burgeoning but still underserved Caribbean and Central American cellphone market, and "it's not very levered."

Another trader quoted the notes going out at 97½ bid, 98 offered - and said that Digicel seemed to be the exception to the recent general trend which has seen "new issues shooting up, some up 4 or 5 points over the first week."

Salem does super

On the other hand, traders saw Salem Communications' new 9 5/8% senior secured notes due 2016 having jumped several points from the 99.365 level at which the Camarillo, Calif.-based religious broadcaster's $300 million issue had priced Monday to yield 9¾%.

"That did really well," one said, quoting the bonds being left at 102 bid, 102½ offered.

A second trader saw a slightly wider level, at 101½ -1021/2.

AMD holds its gains

Traders said that Advanced Micro Devices' new 8 1/8% notes due 2017 managed to hang on to the better than 4 point gain those bonds notched in the aftermarket on Monday, when the $500 million issue had priced at 89.796 to yield 10%.

One quoted them on Tuesday at 94½ bid, 95 offered, which he said was "not bad at all," while a second agreed that the bonds "did well," seeing them at 94½ bid, 94¾ offered.

Market indicators turn mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ¼ point on Tuesday at 93¼ bid, 93¾ offered, after having been up ¼ point on Monday.

The KDP High Yield Daily Index was meantime up 8 basis points on Tuesday to 69.70, after having risen by 6 bps on Monday. Its yield narrowed by 3 bps, to 8.53%, after having tightened by 1 bp the previous session.

In the broader market, advancing issues led decliners for a ninth consecutive session on Tuesday, although their previous 8-to-7 advantage had dwindled to just a handful of issues out of the more than 1,600 tracked.

Overall market activity, as measured by dollar volume, rose 19% from Monday's pace.

"It seemed like there were some things going on this morning, and this afternoon," a trader said, while adding that most market participants "were all waiting" for the Clearwire add-on to price.

A quiet session - and sure to get quieter

He added that he "didn't know if it was a case of people getting ready for the holiday" - but he said he had seen the last trades of the day in many issues by about 1:30 p.m. ET.

If that was the case Tuesday, a trader said, watch out on Wednesday, when he expects "everything to be shut down by around 2 o'clock ahead of Thursday's holiday," notwithstanding that Wednesday is ostensibly a regular full session, at least according to the calendar put out by the Securities Industry and Financial Markets Association.

Regardless of what schedule any regulatory body might set, a trader opined that "the hours are what the industry decides to do, or what the people that comprise the industry do."

Exchange offer prompts Catalyst trading

Among specific established issues, a trader said that Catalyst Paper's bonds "had a nice run today," on the news of its exchange offer plan.

He saw its 7 3/8% notes due 2014 ending around a 60-60½ level on "decent volume." He called that a 6 point gain on the session.

He also saw its 8 5/8% notes due 2011 generate "more activity [than the 2014 bonds] - very heavy volume." He said the bonds ended around 741/2-75, which he called also up 6 points.

Catalyst is offering to give holders of its $400 million of outstanding 8 5/8% notes new 10% senior secured notes due 2016 and shares of common stock. Holders tendering their bonds and giving their consent to proposed indenture changes by the Dec. 9 early tender deadline stand to receive total consideration of $725 of new bonds per $1,000 principal amount of the existing notes, plus 269 shares of the company's stock. Catalyst's largest shareholder, Third Avenue International Value Fund, has agreed to participate in the offering and to oversubscribe in an amount to be determined.

Clear Channel climbs

A trader said that Clear Channel Communications Inc.'s 11% notes due 2016 ended at 50 bid, up 4 points on the day, on "good volume - it was a pretty active day for those today," although he did not know what was behind the activity increase. The bonds were among the most actively traded in the high yield universe on Tuesday, with nearly $20 million of turnover seen at mid-afternoon.

He meantime said the San Antonio, Tex.-based broadcasting and outdoor advertising company's 6¼% notes due 2011 "didn't move as much" as the 2016s, but still rose about 3 points to a 78-79 area.

At another desk, a trader estimated the company's 6 7/8% notes due 2018 as having shot up nearly 5 points on the day, quoting them at 43 bid.

Clear Channel, yet another trader said, "had a busy day today," calling the 11% notes up over 4 points to the 50 mark, but he said he did not know what was powering that rise in active trading.

Brunswick bonds steady after rise

Traders professed puzzlement as to the reason for the 3 point gain which Brunswick Corp.'s 9¾% notes due 2013 saw during Monday's session on robust volume of more than $20 million, almost all of it in large round-lot trades.

"Someone is liking the big coupon." offered one trader, who noted that the Lake Forest, Ill.-based recreational product maker's issue has a step-up provision boosting the coupon.

In contrast to Monday, when the credit was among the most actively traded, he said that Tuesday saw just two trades all day, at that same 114 level at which the bonds had finished on Monday.

He meantime saw the company's 11¼% notes due 2016 also garnering some investor interest, offered at 1161/4, although he said later in the session they had come off that peak to 111 bid, 114 offered.

A flurry in financials

A trader noted that the Trace system "seems dominated by the financial names - they're at least 25%" of the more active issues, including such names as SLM Corp. - nominally a high-grade issue which often trades actively in the junk market as well - CIT Group Inc. and even the busted bonds of the old Lehman Brothers Holdings Inc.

For instance, more than $35 million of the Sallie Mae 5.40% notes due 2011 were seen having changed hands by mid-afternoon, at levels around 96, although a market source added the caveat that some of that volume came from high grade accounts playing in the Ba1/BBB-/BBB- credit.

CIT's bonds were mostly trading in the low 70s - a trader pegged them in a 70-72 range, but said that while there had been "some trading, I don't see those as very active. They're quoted in the low 70s, but I don't see much activity."

However, a market source saw some solid activity in the CIT Group Funding Corp. of Canada 4.65% notes due 2010, which were being quoted around 98¾ bid. Volume at mid-afternoon was around $12 million, making it one of the busier junk bonds on the day."

The source meantime saw the parent company's 4¼% notes due 2010 having risen more than 3 points on the day to just under a 72 bid close.

A trader saw bonds of the former Lehman Brothers "holding their own," right around 191/2-20, in pretty active trading. "It's moved up and is better on the day, he said, noting that Lehman bonds like the 6 7/8% notes due 2018 and the 5 5/8% notes due 2013 had been around 19 on Monday. "It was in that same range," he said, "but it's just active trading [Tuesday] and it's held up."

More than $10 million of the 6 7/8s changed hands, a market source said, around the 20 level. Another active issue was the 5¼% notes due 2012, seen up about 3/8 point at just over 19, in brisk trading.

Momentive, Lyondell surges subside

Elsewhere, a trader said Momentive Performance Materials Inc.'s 9¾% notes due 2014 - which had risen about a point on Monday on brisk trading, on the news that the company plans to issue $500 million of senior secured notes due 2017, pending approval from its bank lenders - were pretty much unchanged at 95-96, on "not much volume." He also saw no activity in the Albany, N.Y-based industrial silicone company's 10 1/8% notes due 2014.

Lyondell Chemical Worldwide Inc.'s bonds "sort of stopped," after Monday's big 10 to 11 point gain on the news of a possible suitor for the bankrupt chemical maker, a trader said. "I don't think they kept going. "

He said the company's 8.10% notes were at 84-86, while its 10¼% notes due 2010 were at 83-85.

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