Cinemark, Limited Brands price deals; Paetec, Real Mex hit the road; overall market easier

By Paul Deckelman and Paul A. Harris

New York, June 16 - Cinemark USA Inc. and Limited Brands Inc. successfully priced new issues on Tuesday; in each case, traders said that the new bonds firmed modestly when they moved over to the secondary side.

Also seen a little higher was the new issue from CB Richard Ellis Services, Inc., which priced the upsized deal during Monday's session.

Paetec Holding Corp. announced plans for a new eight-year secured bond offering. Market sources said the Fairport, N.Y.-based telecommunications company was beginning a short road show to market the deal to potential investors, with pricing seen at the end of that two-day campaign.

Also seen hitting the road was Cypress, Calif.-based restaurant operator Real Mex Restaurants, Inc., which hopes to serve up an offering of three-year secured paper.

New-deal players meantime heard price talk emerge on Miami-based information technology operator Terremark Worldwide Inc., whose offering of eight-year first-lien notes is expected to price sometime this week.

Back among the established issues, traders saw a mostly downside bias to the market, with particularly notable pullbacks in bonds of some companies whose big, liquid issues are often seen as something of proxies for the overall market, like Community Health Systems Inc., First Data Corp. and Aramark Corp. The latter company, a Philadelphia-based food service operator and uniforms provider, was especially actively traded.

Ford Motor Co.'s bonds, strong performers until just recently, continued to ease from the highs which they had hit last week, reflecting the overall negative tone in the market, participants said.

Limited Brands prices atop talk

Two issuers combined to price a face amount of $970 million on Tuesday, each with a single tranche.

Neither deal was upsized.

Limited Brands priced a $500 million issue of 8½% 10-year senior notes (Ba2/BB) at 96.752 to yield 9%, on top of the price talk.

J.P. Morgan and Banc of America Securities were joint bookrunners.

The Columbus, Ohio-based specialty retailer will use the proceeds to repay debt and for general corporate purposes.

The deal went very well, according to an informed source who added that it was multiple-times oversubscribed.

Limited Brands launched the offer with the expectation that it would run a three-day or four-day roadshow, the banker recounted.

However the book built so quickly that the company and the dealers decided to wrap it up as quickly as possible in order to prevent a lot of hard feelings with respect to allocations.

Hence the deal that had been expected to run a brief roadshow instead priced Tuesday after launching on Monday.

Presently there is a generic bid for high-quality paper, the source conceded.

Some on-the-run high-yield bonds (the official specified HCA Inc.'s secured paper and Cablevision's notes) have drifted into the mid-to-high eights, the source said.

Rising prices like that, in the secondary market, seemed to render investors even more intent to get into the Limited Brands deal, which yielded 9%, the official added.

Cinemark prices $470 million

Also on Tuesday Cinemark USA priced a $470 million issue of 8 5/8% 10-year senior notes (B3/B-) at 97.56 to yield 9%.

The yield was printed at the wide end of the 8¾% to 9% price talk.

Barclays Capital Inc. was the left bookrunner for the debt refinancing and general corporate purposes deal from the Plano, Texas-based motion picture exhibitor. Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. were joint bookrunners.

Headwinds from AMC

Cinemark traded up in the secondary market Tuesday afternoon.

The new 8 5/8% senior notes due 2019 were at 98 5/8 bid, 99 1/8 offered, after having priced at 97.56, according to a syndicate source.

The Cinemark execution was a little tough given the market conditions that have prevailed since the beginning of the week, the source conceded.

Also, as the house lights were going down for the Cinemark deal, some investors were no doubt reflecting upon how another recent movie-exhibitor deal, this one from Kansas City-based AMC Entertainment Inc. has underperformed in the secondary, the official asserted.

AMC's 8¾% senior notes due 2019, which priced at 97.582 to yield 9 1/8% in a $600 million issue (B1/B-) that priced on May 27, were 95½ bid at Tuesday's close, the source said.

"People saw how that traded down significantly," the official remarked, adding that the AMC deal, in combination with the overall weakness in Tuesday's capital markets, created headwinds for the Cinemark deal.

Terremark sets price talk

Terremark Worldwide set price talk for its $400 million offering of eight-year senior secured first-lien notes (B2/B-) at 13% on Tuesday.

The notes are expected to be offered at an original issue discount of 4 to 5 points, the source added.

Books close at 10 a.m. ET on Wednesday, with pricing to follow.

Credit Suisse, Jefferies & Co. and RBC Capital Markets are joint bookrunners for the debt refinancing and general corporate purposes deal from the information technology company, which is based in Miami.

Paetec starts $350 million

Paetec Holding launched a $350 million offering of eight-year senior secured notes on Tuesday.

The deal, which is being led by Banc of America Securities and Deutsche Bank Securities, will run a brief roadshow through Wednesday.

The Fairport, N.Y.-based integrated communications services provider will use the proceeds to repay bank debt.

Full roadshow for Real Mex

Meanwhile Real Mex Restaurants began a full roadshow on Tuesday for its $110 million offering of 3.5-year senior secured notes (expected ratings B2/B-).

The roadshow is expected to carry on into the latter part of next week.

Jefferies & Co. is the bookrunner for the debt refinancing deal from the Cypress, Calif.-based restaurant company.

New Cinemark, Limited Brands bonds move up

When the new Cinemark Holdings 8 5/8% notes due 2019 were freed for secondary dealings, a trader said that the Plano, Tex.-based movie theater operator's bonds were "doing OK," having moved up to a 981/2- 99 context from the 97.56 level at which the $470 million issue had priced earlier in the session.

"There was a bunch of trading earlier around the 98½ level, and now they've moved up a little bit."

A second trader also saw the bonds at 981/2-99, while at another desk, a trader saw them at 98¼ bid, 98¾ offered.

A trader meantime said that the market had been "waiting with baited breath" for Limited Brands' deal, which in fact did finally come to market late in the day. A trader saw the Columbus, Ohio-based specialty retailer's $500 million of new 8½% non-callable notes due 2019 - which had priced at 96.752 to yield 9% -- having moved up to 97½ bid, 97¾ offered.

CB Richard moves up - then fades out

A trader said that the new CB Richard Ellis 11 5/8% senior subordinated notes, which had priced on Monday, "kind of died after a while."

He saw the Los Angeles-based commercial real estate services company's offering - upsized to $450 million from the originally planned $400 million - "bracketing" the 98 level - well above the 96.873 price at which the bonds came to market Monday to yield 12¼%.

At another desk, a trader saw the notes at 97 5/8 bid, 98¾ offered.

Market indicators turn mixed

Among the established issues, a trader saw the CDX Series 12 High Yield index - which had retreated marginally on Monday - throwing in the towel on Tuesday with a 1 3/16 points plunge to end at 84¼ bid, 84¾ offered.

The KDP High Yield Daily Index, which had lost 6 basis points on Monday, fell by another 18 to end Tuesday at 63.28, while its yield widened by 6 bps to 10.30%.

In the broader market, advancing issues - which had led decliners for an amazing 20 consecutive sessions, going all the way back to May 18 - finally gave up that winning streak on Tuesday, falling behind by a ratio of not quite six to five.

Overall market activity, measured by dollar-volume totals, jumped nearly 47% versus Monday's levels.

A trader initially characterized Tuesday's market as perhaps down at the most ¼ to ½ point, although he acknowledged that several large, liquid, widely held issues that are considered by some to function as sort of "barometers" for the overall market, were definitely on the downside.

"There's something to be said with the extent of the drop in the last couple of days of two to three of our largest barometer issues, that are all over $1 billion, and with decent volume - not just odd-lots trading."

Someone, he suggested, "is unloading this paper - it could be accounts just anticipating a bigger drop, raising cash, or it could be dealers trying to lighten up on inventory. Time will tell."

Barometers get bopped

He saw Franklin, Tenn.-based hospital operator Community Health Systems' $3 billion issue of 8 7/8% notes due 2015 falling more than a point on the day to 973/4, on $16 million. "It was the second day in a row that we've seen the barometers get hit more than the overall market. I can't imagine that anyone would characterize today as being down 1¼ points."

He saw First Data's 9 7/8% notes due 2015, which dipped to 70½ from 72 on Monday, "another barometer down 11/2." Some $14 million of the Greenwood Village, Colo.-based electronic transaction processor's paper changed hands.

The most active of the group, he said was Aramark's 8½% notes due 2015, which saw turnover of $23 million, as the bonds eased to 97¾ bid from 98 1/8 previously. That 3/8 point decline "would be more indicative [of the overall market's behavior], I would think - but yet, two out of the three barometers were down over a point - so there's some selling going on."

Another downsider was Freeport-McMoRan Copper & Gold Inc.'s 8 3/8% notes due 2017, which are usually found high up on the most-actives list, and Tuesday was no exception. The Phoenix-based metals mining company's bonds dipped by ¾ point to 101, on volume of $24 million.

Other losers among the active issues included Akron, Ohio-based tiremaking giant Goodyear Tire & Rubber Co.'s 10½% notes due 2016, which the trader saw "getting tapped for 1½ points" down to 101½ bid, with $17 million traded; Nashville-based hospital operator and Community Health Systems sector peer HCA Inc.'s 9¼% notes due 2016, which "got hit" by a point down to par, on volume of $14 million; and Warsaw, Ind.-based medical devices maker Biomet Inc.'s 10% notes due 2017, off by ¾ point to 102¾ on $10 million traded.

Sallie Mae gets around

But while those names were fairly active, a trader said that "Sallie Mae [SLM Corp.] appears to be the big trader," estimating total activity among several issues of the Reston, Va.-based education financing concern's several issues of bonds to be "over $100 million - at least the way Trace calculates it."

Another trader saw one of the company's issues, the floating-rate notes due 2010, as notably active, with $36 million traded - topping the high yield actives list, he said. The bonds firmed slightly to 91 bid from 90½ on Monday.

He also saw another Sallie Mae issue, its 8.45% notes due 2018, unchanged at 85 bid on busy volume of $22 million.

Ford runs out of gas

A trader saw Ford Motor Co.'s 7.45% bonds due 2031 drop to 641/2, down from 67 on Monday and well down from recent peaks hit last week around 70, although there was only some $2 million of the issue traded.

The Dearborn, Mich.-based Number-Two domestic carmaker's bonds had been on a tear over the previous few weeks, rising session by session in a steady progression to about the 70 level at midweek last week after having languished below 30 at the beginning of April, given a boost by Ford's success in cutting its big debt load though an exchange offer, as well as investor optimism about its prospects and the simple fact that - as one trader succinctly put it - "it's not GM," needing no federal bailout money like bankrupt Big Three rivals General Motors Corp. and Chrysler did. However, after that mid-week peak, the bonds began to soften a little, easing into the current upper 60s context.

While that downturn may be a case of Ford finally having exhausted its momentum and stalling out, the trader opined that the Ford bonds were heading lower in tandem with the generally easier tone seen in high yield over the past few sessions, when "except for the new issues, there's nothing really trading up the last couple of days. It's pretty much an umbrella over the entire market."

Another trader saw the Ford long bonds fall 2½ points to 64½ bid, 66½ offered.

He meantime saw GM's benchmark 8 3/8% bonds due 2033 unchanged at 13 bid, 14 offered.

A second trader saw the GM benchmark's at 13 5/8, off from 13¾ on Monday, though on only $1million traded.

While GM auto-financing unit GMAC LLC's junk-rated paper was relatively inactive - its 8% bonds due 2031 saw no round-lot trading Tuesday, while its 7¾% notes coming due in January 2010 dipped to 971/2, or a 12% yield to maturity, on just $5 million of volume - GMAC's recent high-grade rated, government-backed paper was extremely active, with a trader estimating its turnover at an astounding $125 million.

That $3.5 billion issue of 2.2% notes due 2012 - which priced on June 3 at 99.841 to yield 2.247% -- was trading at 99.44 bid, he said, up from 99.08 at the end of Monday's session.

Broader market easier

Elsewhere, a trader said that Six Flags Inc.'s 12¼% exchange notes due 2016 had a 64 bid in the early going, and then a 62½ offering, with no bid. After that, he said, there was a bid as low as 58, with no offering. By the end of the day, the bonds were back trading in the low 60s, around 63.

He said that the 9 5/8% notes due 2014 - which had fallen in active dealings on Monday following the news of the New York-based theme park company's Chapter 11 filing-traded between 10¼ and 11, "a lot of bonds," versus around 12 on Monday.

A second trader saw those bonds at 101/2, versus 11 on Monday, with $14 million traded.

A trader said Michaels Stores Inc.'s 11 3/8% notes due 2016 "got hit too," seeing them going home at 781/2, down from 81 on Monday, with $13 million traded. "I guess it wasn't a big arts and crafts weekend," he quipped - a reference to the Irving, Tex.-based specialty retailer's merchandising niche.

Another retailing credit going lower was Dallas-based upscale department store operator Neiman Marcus Group's 9% notes due 2015, which dropped to 64 bid from 66½ on Monday, with $11 million traded.

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