Charter megadeal, WIND price to cap $5.5 billion week, new WIND, SoftBank issues gain

By Paul Deckelman and Paul A. Harris

New York, April 19 - Charter Communications, Inc. priced a quick-to-market $1 billion offering of 10.75-year notes on Friday, high yield syndicate sources said. But the new bonds came too late in the session for any kind of immediate secondary dealings, according to traders.

The traders also did not see much real movement in the cable television system operator's existing bonds.

Another communications company - Italian phone and broadband provider WIND Telecomunicazioni SpA - also did a quickly shopped deal on Friday, pricing an upsized $550 million of seven-year notes. The latter issue was quoted solidly higher later on.

The day's two completed deals, totaling $1.55 billion, rounded out a week which saw around $3.10 billion of new dollar-denominated, purely junk-rated paper from domestic or industrialized-country borrowers, according to data compiled by Prospect News.

That was down from the $6.43 billion of new paper that priced the preceding week ended last Friday, April 12.

The deals also brought the year-to-date new-issuance total to $103.36 billion - down 0.9% from the pace seen at this time a year ago, according to the data.

Thursday's giant-sized new issue from Japanese telecommunications company Softbank Corp. was tacking on some big gains in Friday's aftermarket dealings. Although investment-grade rated, it saw considerable high-yield interest.

Traders also reported that Thursday's other deal, from energy operator Rosetta Resources, Inc., meantime continued to trade strongly, on active volume.

Statistical indicators of market performance were higher across the board on Friday, after having been mixed on Thursday. However, they were all down on a week-to-week basis from the previous Friday.

Charter's $1 billion drive-by

The Friday session saw two dollar-denominated tranches of notes price, generating a total of $1.55 billion of proceeds.

Charter Communications priced a $1 billion issue of senior notes due Jan. 15, 2024 (B1/BB-/BB-) at par to yield 5¾%.

The yield printed at the wide end of the 5 5/8% to 5¾% yield talk.

The deal was at par 1/8 bid, par 5/8 offered in the secondary according to an investor who did not take part.

The fact that the deal went forward with a lot of market participants in Boston sidelined by events surrounding recent terrorism in that city generated some surprise among market sources who spoke to Prospect News on Friday.

One Boston-based trader who was at work suggested that there was a sufficient "roll factor," among holders of the 7 7/8% notes due 2018, which Charter is taking out with the proceeds to get the deal done.

BofA Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Barclays, J.P. Morgan, UBS and Morgan Stanley were the joint bookrunners for the quick-to-market deal.

WIND upsizes

The euro primary market session generated news on Friday.

WIND Telecomunicazioni priced an upsized dual-tranche, multi-currency senior secured notes deal (Ba3/BB-/BB).

The deal included an upsized $550 million tranche of seven-year fixed-rate notes which priced at par to yield 6½%.

The tranche was increased from $400 million. The yield printed at the tight end of yield talk that was set in the 6 5/8% area.

In addition WIND priced a €150 million tranche of six-year floating-rate notes at par to yield three-month Euribor plus 525 basis points.

The Euribor spread came at the tight end of the Euribor plus 525 bps to 550 bps spread talk.

BNP Paribas, Banca IMI, Societe Generale, UBS and UniCredit were the bookrunners.

The Italian telecommunications firm, a unit of Russia's Vimpelcom, plans to use the proceeds to repay bank debt.

RPG atop tightened talk

RPG Byty priced a €400 million issue of seven-year senior secured notes (Ba2//BB) at par to yield 6¾%.

The yield printed on top of yield talk that was revised from earlier talk of that had been set in the 7% area.

Goldman Sachs and JPMorgan were the bookrunners.

The proceeds will be used to repay existing debt and for other corporate purposes.

The Ostrava, Czech Republic-based company operates and leases residential apartments.

CST sets roadshow

There was one roadshow announcement on Friday.

CST Brands, Inc. plans to conduct a roadshow for its $550 million offering of 10-year senior notes during the April 22 week.

Credit Suisse, J.P. Morgan, Wells Fargo, Mitsubishi, RBC and RBS are the joint bookrunners.

Proceeds will be used to fund a distribution to Valero Energy Corp. as part of a tax-free spinoff of Valero's retail business.

The prospective issuer is a San Antonio-based independent North American retailer of transportation fuels and convenience merchandise.

A better day

A secondary market trader said that "a lot of the stuff that came did well today," reflecting a somewhat brighter tone in the junk market.

He cited "a lot of pent-up demand" for new paper as a key factor.

WIND deal does well

A trader said that WIND Acquisition Finance's 6½% notes had moved up to 102¼ bid on Friday afternoon. However, he saw "no right side yet" for the Italian telecommunications company's new deal, which had priced at par and then was quoted higher.

Charter a no-show in trading

Friday's other pricing, from Stamford, Conn.-based cable television systems operator Charter Communications, came too late in the session for any kind of a meaningful aftermarket, a market source said.

The company's outstanding established bonds showed neither a firming, nor a declining trend, a trader declared.

He saw Charter's 7% notes due 2019 "trading about where they had been trading" before the news that the company was doing $1 billion bond deal and was entering into a new credit facility as well.

He saw the '19s around the 108½ level, adding that "they haven't moved."

However, at another desk, a market source said that Charter's CCO Holdings 5¼% notes due 2022 lost between ½ and ¾ point on the day, ending at 99¾ bid.

The company's 7 7/8% secured notes due 2018 continued to trade above the 106 bid level.

Softbank continues to soar

Softbank's 4½% notes due 2020 - which had priced at par on Thursday and then moved up solidly in initial aftermarket dealings - remained strong on Friday, traders said.

The Japanese telecommunications company's $2,485,000,000 offering of those dollar notes - part of a larger $3.3 billion equivalent two-tranche deal that also included a tranche of euro-denominated bonds - were quoted by a trader at "a 102ish level today."

That would be around where the bonds had gone out on Thursday, with traders at that time quoting them in a 101½ to 102 bid context.

However, on Friday, a trader had them going home at levels as high as 103 bid, 103½ offered.

There seemed to be little impact from the news reports indicating that Softbank - which is doing its bond deal to partially finance its better-than $20 billion acquisition offer for Sprint Nextel Corp. - does not plan at this time to increase its offer, even though rival suitor DISH Network Corp. has put out a considerably larger $25.5 billion bid for Overland Park, Kan.-based Sprint, the third-largest U.S. wireless carrier.

Rosetta remains strong

Thursday's other deal - from Rosetta Resources - continued to trade well, market participants said,.

"It's doing very well," one trader said, quoting the Houston-based independent oil and gas production company's new 5 5/8% notes due 2021 at 102¼ bid, well up from Thursday's par issue price for that $700 million deal..

A second trader pegged the bonds at 102 1/8, and said that volume in the new issue was very brisk, topping $25 million at mid-afternoon, well above that of the next nearest bond on the most-actives list.

Market indicators turn firmer

Overall, statistical junk performance indicators turned firmer on Friday, after having been mixed on Thursday. However, they were down across the board from their closing levels the previous week, on Friday, April 12.

The Markit Series 20 CDX North American High Yield Index was up by 5/16 point on Friday to end at 104 3/32 bid, 104 7/32 offered, versus Thursday's 5/32 point loss. However, the index was down from the previous Friday's close of 104½ bid.

The KDP High Yield Daily Index, meanwhile rose by 2 basis points, its second consecutive gain, to end at 75.66. On Thursday, it had been up by 1 bp.

And its yield came in by 2 bps on Friday, ending at 5.43%, after having been unchanged on Thursday.

But those levels represented a deterioration from the week-earlier index reading of 75.79 and yield of 5.40%.

The widely followed Merrill Lynch High Yield Master II index posted its second consecutive advance on Friday, rising by 0.031%, on top of Thursday's 0.017% gain.

That lifted its year-to-date return to 3.607% from Thursday's 3.575%, but left it still below the previous Friday's 3.71%, its peak level for the year so far.

On the week, the index lost 0.099% - its first weekly downturn after nine straight weekly gains, including the previous week's 0.676% advance.

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