Upsized Clear Channel, Videotron deals price; Tuesday deals active, Caesars up on numbers

By Paul Deckelman and Paul A. Harris

New York, Feb. 29 - The high-yield market closed out February the same way that it had begun the month - with a big helping of brand-new junk bonds, and brisk activity in its recently priced issues.

Some $3 billion of new dollar-denominated paper came to market during Wednesday's session, although it was all attributable to just two deals.

Media giant Clear Channel Worldwide Holdings Inc. priced a massively upsized, quickly shopped $2.2billion two-part transaction, consisting of A and B tranches of eight-year senior subordinated notes. After a slight upside flurry, both halves of the new deal were seen by traders to have come off those peaks and headed back down to around their issue price. The company's existing paper, meanwhile, traded up on sizable volume.

The day's other deal - also well upsized - came from Canadian broadband and cable operator Videotron Ltd., which priced $800 million of 10-year notes in a quick-to-market deal. Those bonds, too, languished in the aftermarket.

There was considerable activity in the new bonds which priced during Tuesday's barrage of new drive-by deals, from issuers Linn Energy LLC, Virgin Media Finance plc, R.R. Donnelley & Sons Co., Holly Energy Partners LP and Hertz Corp. Out of that more than $3 billion of freshly minted junk paper, only the Linn deal was seen not moving up solidly.

On the forward calendar front, building products maker New Enterprise Stone & Lime Co., Inc. was heard by syndicate sources to be shopping a $250 million offering of six-year secured paper

. Away from the new deals, Caesars Entertainment Corp.'s bonds were moving around after the gaming powerhouse reported earnings. The bonds climbed despite a wider loss, helped by improved revenues at its Las Vegas casinos.

Clear Channel hugely upsizes

The Wednesday primary market saw a pair of issuers raise a total of $3 billion with a combined three tranches of notes.

Clear Channel Worldwide Holdings priced a massively upsized $2.2 billion senior subordinated notes transaction (B3/B/B+).

The deal included an upsized $275 million tranche of series A notes and an upsized $1.925 billion tranche of series B notes.

The overall size was increased from $1.25 billion. Series A tranche was upsized from $250 million and series B tranche from $1 billion.

Both tranches were priced at par to yield 7 5/8%, in the middle of price talk that was set at 7½% to 7¾%.

Goldman, Sachs & Co., Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and RBS Securities Inc. were the bookrunners for the deal.

Proceeds from the series A tranche will be used to fund a dividend, market sources say. Proceeds from the series B tranche will be used to repay bank debt.

Videotron at the tight end

Canada's Videotron priced a greatly upsized $800 million issue of non-callable 10-year senior notes (Ba1/BB/) at par to yield 5%, at the tight end of the 5% to 5¼% price talk. The amount was increased from $500 million

Bank of America Merrill Lynch, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and Citigroup Global Markets Inc. were the joint bookrunners for the quick-to-market issue.

The Montreal, Quebec-based cable operator plans to use the proceeds to repurchase its 6 7/8% senior notes due 2014 and repay its revolver.

Stora Enso prices €500 million

Finnish paper and forestry products manufacturer Stora Enso priced a €500 million issue of 5½% seven-year bonds (Ba2/BB/) at a 362.5 basis points spread to mid-swaps.

The spread came on top of spread talk.

Citigroup, Deutsche Bank AG, Goldman Sachs and SEB Bank managed the sale.

The Helsinki-based company plans to use the proceeds for general corporate purposes, including refinancing of the bond maturing in 2014

Afren sets price talk

Pan African energy producer Afren plc talked its $300 million to $350 million offering of seven-year notes (/B/B) with a 10½% to 10¾% yield.

The deal is set to price on Thursday.

BNP Paribas, Deutsche Bank AG and Goldman Sachs International are the bookrunners.

Proceeds will be used to repay bank debt and for general corporate purposes.

Based in London, Afren conducts its oil and gas exploration, development and production operations in African countries including Nigeria, Gabon, Republic of the Congo, Ivory Coast and Ghana.

The deal has been well received by emerging markets investors, according to a trader based in New York who added that although it won't price until Thursday, the bonds are up a point already in the gray market.

Afren's existing bonds have been trading with a yield of approximately 10%, and its share price has been up as much as 60 points since the beginning of the year, the trader said.

The deal, which had been expected to garner just a modicum of interest among real-money accounts, gained momentum last week while roadshowing in London when those accounts began expressing enthusiasm, the trader said.

Afren's existing bonds, the 11½% senior secured notes due February 2016, are 2½ points higher over the past two weeks, the trader said.

The preponderance of interest in the deal has come from emerging markets accounts, sources say.

Viridian talks £405 million

Northern Ireland-based Viridian talked its £405 million equivalent offering of five-year senior secured notes (//BB) to yield 11¾% to 12% on Wednesday, according to market sources.

The deal, which is being offered in dollar- and sterling-denominated tranches, is expected to be priced with an original issue discount of 3 to 4 points.

Pricing is set to take place when the market opens on Thursday in New York.

Global coordinator Deutsche Bank AG will bill and deliver. Royal Bank of Scotland is also a global coordinator and joint bookrunner. UBS, Commerzbank and Barclays Capital are joint bookrunners.

Proceeds will be used to repay bank debt and for general corporate purposes.

New Enterprise plans notes

New Enterprise Stone & Lime Co., Inc. plans to price a $250 million offering of senior secured PIK option notes due March 15, 2018 on Thursday morning.

Bank of America Merrill Lynch has the books.

The coupon will be payable in cash or in kind, or in a combination of the two.

Proceeds, along with a new ABL revolver, will be used to repay all outstanding debt under the company's term loan A, term loan B and revolver, and certain other debt.

New Enterprise takes its place in the Thursday deck which also includes GulfMark Offshore, Inc.'s $300 million offering of 10-year senior notes (B1/BB-), via Credit Suisse, Wells Fargo and RBS.

Although official price talk did not surface on Wednesday, unofficial talk has the deal coming with a yield in the 6½% area, according to a trader from a high-yield mutual fund.

Also set for Thursday is TransUnion LLC's $600 million offering of 6.25-year payment-in-kind toggle notes (Caa1/B-), via Goldman Sachs.

Unofficial talk on that deal is 9¾% to 10%, the trader said late Wednesday.

Gategroup starts brief roadshow

Zurich-based travel services provider gategroup plans to start a brief roadshow on Thursday for its €350 million offering of seven-year senior notes (confirmed B1/expected BB).

The deal is expected to price during the Friday session in London.

Global coordinator and joint bookrunner Credit Suisse will bill and deliver. Citigroup, Deutsche Bank AG and Goldman Sachs International are also joint bookrunners.

Proceeds will be used to repay debt.

Eco-Bat starts roadshow

Eco-Bat plans to meet with investors at a breakfast in London on Thursday to pitch its €300 million offering of five-year senior notes (expected ratings B1/B).

Friday investor meetings are scheduled for Amsterdam and Paris.

The deal is expected to price on Friday.

Citigroup and Credit Suisse are global coordinators and joint bookrunners. Barclays and ING are also joint bookrunners.

Credit Suisse will bill and deliver.

The Derbyshire, England-based company plans to use the proceeds to repay its revolver and for general corporate purposes.

Clear Channel ends near par

When Clear Channel's huge new two-part deal was freed for trading after pricing late in the session, the new bonds were seen having initially firmed on the break.

A trader saw both the $275 million A tranche and the nearly $2 billion B tranche at 100 3/8 bid, 101 3/8 offered, versus the par level where both parts of the mega-deal had priced.

A second trader also saw those levels - but then subsequently saw the new paper offered at 100 3/8, "after that 100 3/8 bid got whacked."

Yet another trader, queried later on, pegged the broadcasting and outdoor advertising company's A tranche at 99¼ bid, 99¾ offered, while seeing its B tranche at par bid, 100¼ offered.

Clear Channel's existing issues were meantime seen mostly higher on the day.

A market source quoted its 10¾% notes due 2016 up 1 point at 82 bid on volume of over $26 million - busy enough to end up on the Junkbondland most-actives list for the day.

Its 4.9% notes due 2015 also gained 1 point, to the 84½ bid level, with more than $13 million of the bonds trading around.

Its 9% notes due 2021 rose by 1 point to end at 92½ bid.

But Clear Channel's 11% notes due 2016 actually eased by ¼ point, market sources said, to finish at 79¼ bid, on volume of over $25 million.

Videotron holds near issue

The day's other new deal, from Canadian broadband and cable operator Videotron, was quoted by a trader at 100½ bid, up slightly from the bonds' par issue price.

A second trader also saw the bonds get up to that point - but said later on that after hitting that peak, "they've come in," to close out the session wrapped around issue at 99 7/8 bid, 100 1/8 offered.

"They didn't exactly run away" to the upside, he observed.

Lackluster trading in Linn

Traders saw busy dealings in the slew of new issues which had come to market during Tuesday's more than $3 billion primary pricing parade.

The big deal of that session, from Houston-based oil and gas exploration and production company Linn Energy "just couldn't get out of its own way," a trader observed. "It was the only one [of Tuesdays' new deals] to underperform."

He saw those 6¼% notes due 2019 - which had been upsized to $1.8 billion from the originally announced $1.5 billion - trading at 99 7/8 bid, 100 1/8 offered.

That drive-by issue had priced on Tuesday at 99.989 to yield 6¼%, but came to market too late in the day for any kind of aftermarket.

When they started trading on Wednesday morning, the trader said, "their first trade was under par, but then they moved up" from their initial lows.

A second trader saw the bonds at par bid, 100¼ offered. "They were in between those levels most of the day, sometimes down one-eighth, sometimes up one-eighth," he added.

Low coupon, no problem

Away from Linn Energy, traders said that Tuesday's deals mostly held their own, or perhaps even firmed a little, if they had traded right after pricing, or else they moved up if they hadn't initially traded on Tuesday but were freed for Wednesday dealings.

A trader saw Virgin Media Finance's 5¼% notes due 2019 firm smartly on Wednesday to 101¾ bid, 102 offered, saying they traded around those levels for most of the day.

The London-based communications and entertainment provider's quickly shopped deal priced at par on Tuesday after being upsized to $500 million from $400 million, but it came too late that session for any trading.

A second trader said the new bonds "were Tracing wildly." He said they finished at 102 1/8 bid, after having been a little lower earlier, "so they moved up, and they did pretty well."

The first trader noted that this was "yet another 5% coupon" - the latest in a growing group of junk issues which have priced in recent days with coupons under 6%, which historically has been an unofficial cutoff line below which it was thought that a junk bond deal couldn't fly because of a too-sparse coupon.

Yet, besides Wednesday's Videotron deal and Tuesday's Virgin Media transaction, the junk market has also recently seen QEP Resources, Inc.'s 5 3/8% senior notes due 2022, which priced on Monday, the pair of deals for 5% notes due 2022 on Friday from Ball Corp. and Range Resources Corp., and even last Tuesday's split-rated offering of 5¼% notes due 2022 from Methanex Corp., which attracted some junk investor interest, given the lack of any other new paper out there at that time.

The junk players, he said, "are buying what's available out there," rather than turning their noses up at what might be considered a too-low yield, while some high-grade accounts reaching down into the upper tier of the junk ranks to pick up some more yield than they were normally used to seeing, were also helping those deals do well in the aftermarket.

Tuesday deals trade around

Among other deals which had initially appeared on Tuesday, a trader saw R.R. Donnelley's 8¼% notes due 2019 "also doing well," seeing the Chicago-based integrated communications and business services provider's $450 million of new notes trading up to 101¾ bid, 102 offered.

That quickly shopped deal had priced at par on Tuesday after being upsized from the originally announced $300 million, but appeared too late for any trading at that time.

A second trader also saw the bonds at 101½ bid, 102 offered.

Holly Energy Partners' new 6½% notes due 2020 were seen on Wednesday trading in a 102 1/8 bid, 102 5/8 offered area.

The Dallas-based energy pipeline company had priced its quick-to-market $300 million offering at par on Tuesday, and the new bonds then traded to around a 102 to 102¼ bid context in the aftermarket.

Hertz's $250 million add-on to its existing $1 billion of 6¾% notes due 2019 which had been sold last year was seen on Wednesday having gotten as good as 104¾ bid, 105¼ offered, before coming in a little to end at 104 5/8 bid, 104 7/8 offered.

The Park Ridge, N.J.-based car-rental industry leader had priced its opportunistically timed tack-on deal on Tuesday at 104 to yield 5.833%, and the new bonds traded a little in Tuesday's aftermarket at 104¼ bid, 104½ offered.

Tuesday deals trade busily

Those new deals from Tuesday's session were mostly seen trading on very robust volume, putting them near the top of the day's most-actives list.

A market source said that the Virgin Media bonds racked up more than $32 million in round-lot trades by mid-afternoon, while the R.R. Donnelley deal was not far behind, at $29 million.

Other busy recent bonds on Wednesday included the new issues from Chesapeake Energy Corp., Goodyear Tire & Rubber Corp., and the deals from QEP Resources and Range Resources.

Caesars up on numbers

Traders said that once again, junk market activity was mostly new-deal focused. One of the exceptions, however, was Caesars Entertainment, seen moving around after the company reported earnings.

The gaming giant reported a wider fourth-quarter loss, but said that revenues from its Las Vegas properties improved.

The increase in revenues spurred investors to push up the company's bonds.

"They had good numbers," a trader said, seeing the 10% notes due 2018 shoot up to 77 "right way," as the midweek session began. The notes hit a high of 78, before settling back in to 77 bid, 77½ offered, he said.

That compared to Tuesday's closing levels of 753/4, he added.

Another trader said the paper was "straddling 78," quoting the bonds at 77 bid, 78 offered.

A third market source called the 10% notes up nearly 2 points at 77½ bid.

Activity was brisk, with over $20 million of the 10% notes changing hands and about $17 million of the company's 11¼% secured notes due 2017, which gained ¼ point to end at 109 5/8 bid.

For the fourth quarter, Caesars saw net revenues gain 2.4% to $2.17 billion. The company attributed the increase to higher revenues in Las Vegas, as well as from its international and online businesses. The net loss, however, widened by 12.2% to $220.6 million. The loss was attributed to higher interest expense.

For the year, revenues increased slightly to $8.83 billion. Net loss declined by 17.3% to $687.6 million from $831.1 million.

"The continued growth in Las Vegas was driven by robust international play and higher room and occupancy rates at our properties," said Gary Loveman, chairman, president and chief executive officer of Caesars Entertainment, in the earnings statement.

"The outlook for continued strong group bookings and increased visitation to that market bodes well for the success of our Caesars Palace projects, including the Nobu hotel tower and restaurant additions and the Octavius Tower completion, which opened to the public in January this year."

Loveman also noted that the company realized $63 million in incremental expense reductions in the fourth quarter from cost-cutting initiatives.

"I'm confident that our overall operational performance, organizational streamlining, financial enhancements and growth projects already under way are positioning us for sustainable growth in the years ahead," he said.

Stephanie N. Rotondo contributed to this report

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