CBS Outdoor, Volvo Rents lead $2.46 billion session; Best Buy, J.C. Penney fall on headlines

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., Jan. 16 - Four issuers combined to bring a total of five tranches on Thursday, raising $2.46 billion during a busy session in the high-yield primary market.

CBS Outdoor Americas Inc. brought $800 million in a two-part offering that came at the tight end of yield talk.

BlueLine Rental Finance priced $760 million of five-year second-lien notes, the proceeds of which will be used to fund the leveraged buyout of Volvo Rents.

In deals expected to price Friday, VTR Finance BV restructured its $1.4 billion offering of notes, collapsing the deal into one tranche of 10-year notes, and Stena AB talked its $400 million offering of non-callable 10-year notes to yield 7% to 7¼%.

In the secondary, high-yield investors wearily eyed the retail sector on Thursday as yet another round of weak holiday sales results were reported.

This time, the poor showing came from Best Buy Corp.

"We were surprised by the market decline," Hubert Joly, Best Buy chief executive officer, said during a conference call held Thursday morning. "Everybody expected it to increase by 2 or 3%, but it declined by 2%."

On top of Best Buy's weak results, J.C. Penney Co., Inc. announced late Wednesday that it was cutting more jobs and closing more stores in order to return to a profit. That news came on the heels of last week's holiday sales update, in which the company said it was "pleased" with the results but failed to provide any actual data to back up its optimism.

Overall, the market dipped during the day's session. Equities were also weaker, due in part to Best Buy's sales report and in part to mixed bank earnings.

CBS Outdoor two-part deal

CBS Outdoor Americas priced $800 million of senior notes (B1/BB-) in two $400 million tranches.

A tranche of eight-year notes priced at par to yield 5¼%, at the tight end of yield talk in the 5 3/8% area. And a tranche of 10-year notes priced at par to yield 5 5/8%, at the tight end of yield talk in the 5¾% area.

The eight-year notes came into the market with initial guidance in the high 5% range, with guidance tightening during marketing to 5¼% to 5 3/8%.

The 10-year notes came with initial guidance in the low 6% range, which narrowed to 5 5/8% to 5¾% during marketing.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and Wells Fargo Securities LLC were the active bookrunners.

Volvo Rents inside talk

A $760 million issue of five-year second-lien senior secured notes (B3/B) backing the leveraged buyout of Volvo Rents priced at par to yield 7%.

The yield printed 12.5 basis points inside of price talk in the 7¼% area.

The acquisition deal, via special-purpose vehicle BlueLine Rental Finance, was led by joint bookrunners BofA Merrill Lynch, Goldman Sachs & Co., Morgan Stanley & Co. LLC and Barclays.

Ply Gem moves up timing

Ply Gem Industries, Inc. priced a downsized $500 million issue of eight-year senior notes (Caa1/CCC+/) at par to yield 6½%.

The deal was downsized from $550 million, with $50 million of proceeds shifted to the bank loan.

The yield printed on top of yield talk.

Preliminary guidance had the notes coming with a yield of 6% to 6½%, according to a buyside source.

Timing was moved ahead. When announced on Thursday morning, the deal came on a timeline that had it pricing Friday morning.

Credit Suisse Securities (USA) LLC, UBS Securities LLC, J.P. Morgan Securities LLC, Goldman Sachs, RBC Capital Markets LLC and Stephens Inc. were the joint bookrunners for the debt refinancing.

Credit Acceptance drives by

Credit Acceptance Corp. priced a $300 million issue of seven-year senior notes (B1/BB) at par to yield 6 1/8%.

The yield printed in the middle of the 6% to 6¼% yield talk.

Wells Fargo was the left bookrunner for the quick-to-market debt refinancing deal. Credit Suisse and BMO Securities were joint bookrunners.

Telecom Italia oversubscribed

In the European market, Telecom Italia SpA launched and priced a €1 billion issue of 4½% seven-year senior notes (Ba1/BB+/BBB-) at a 300 bps spread to mid-swaps.

The spread came at the tight end of the 300 bps to 310 bps spread talk. Initial guidance was 325 bps.

The notes were sold at 99.447 and yield 4.594%.

The deal played to €7 billion of orders.

Barclays, Credit Agricole CIB, Goldman Sachs International and SG CIB were the joint bookrunners.

Talking the deals

VTR Finance restructured its $1.4 billion offering of senior secured notes (expected B1/B+) on Thursday.

The entire amount will now come in a tranche of 10-year notes that has been upsized from $800 million and is talked to yield 7% to 7¼%.

The Santiago, Chile-based cable and internet company withdrew a proposed $600 million tranche of eight-year notes that were talked, earlier on Thursday, to yield in the 6¾% area.

At that time, the 10-year tranche had been talked to yield 50 bps behind the eight-year tranche.

The deal is set to price Friday morning.

JPMorgan, BNP Paribas, Goldman Sachs and Morgan Stanley are the joint bookrunners.

Elsewhere, Sweden-based Stena talked its $400 million offering of non-callable 10-year senior notes (confirmed B2/expected BB) to yield 7% to 7¼%.

The deal is also expected to price Friday.

JPMorgan, Citigroup, BNP Paribas and HSBC Securities are the joint bookrunners.

Patheon starts roadshow

JLL/Delta Dutch Newco BV, issuing for the entity that will be formed by the combination of DSM Pharmaceutical Products with Patheon Inc., began a roadshow on Thursday for a $500 million offering of eight-year senior notes (expected ratings Caa2/CCC+).

The acquisition deal is expected to price Jan. 23.

JPMorgan, UBS, Jefferies, KeyBanc and Morgan Stanley are the joint bookrunners.

Market eases

The high-yield bond market declined on Thursday, following the trend of the equity markets.

The KDP High Yield index slipped to 74.94, to yield 5.43%. That compared with 74.96 and a yield of 5.41% on Wednesday.

As for the CDX North American High Yield index, a market source said the levels were off 7/32 of a point at 108 bid, 108 3/32 offered.

Best Buy sales disappoint

Best Buy took a hit Thursday after the electronics retailer reported that holiday sales fell.

A trader saw the 5% notes due 2018 fall nearly 2½ points to 1021/2, while the 5½% notes due 2021 lost over a point to end around 991/4.

He noted that the latter issue hit a low of 98 during the day's session.

"The stock was down 27% or so, and the bonds got hit pretty hard too," he said.

The stock closed at $26.83 (NYSE: BBY), down $10.74, or 28.59%.

Same-store sales dropped 0.8% for the nine weeks ended Jan. 4. Total revenues slipped 2.6% to $11.45 billion from $11.75 billion the year before.

There was, however, one bright spot in that online sales increased 23.5% year over year.

The company attributed to sales decline in part to "significant store traffic declines" and disappointing cellphone sales.

J.C. Penney softens

Best Buy wasn't the only retailer taking it on the chin Thursday: J.C. Penney debt was also weaker following news the company was planning job cuts and store closures.

A trader called the 6 7/8% notes due 2015 off a point at 93, while the 7.4% notes due 2037 dropped half a point to 711/2.

Another market source placed the 5.65% notes due 2020 at 76½ bid, down nearly a point.

In yet another step of the Plano, Texas-based company's prolonged turnaround plan, J.C. Penney said late Wednesday that it was cutting 2,000 jobs and shuttering 33 underperforming stores. In closing the stores, the company expects to save $65 million per year.

The closures are expected to take place by May.

NII gains, Verso dips

In other recently topical names, NII Holdings Inc. bonds remained active and better.

The 7 5/8% notes due 2021 rose half a point to 431/4, while the 8 7/8% notes due 2019 increased slightly to 463/4. The 10% notes due 2016 ended up a deuce at 601/4.

The bonds began to run up earlier in the week when the company announced a network-sharing agreement with Telefonica.

Meanwhile, Verso Paper Corp. came in a little, after running up in the previous week on news of a merger with NewPage Corp.

The 8¾% notes due 2019 fell 1½ points to 50, and the 11¾% notes due 2019 slipped almost a point to 108.

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