Upsized Rouse deal prices, Shaw also; Calpine Canada bonds dive

By Paul Deckelman and Paul A. Harris

New York, May 2 - The Rouse Co. LP/TRC Co-Issuer Inc. was heard by high-yield syndicate sources to have priced a solidly upsized offering of seven-year notes on Tuesday. Also successfully coming to market, the sources said, was Shaw Communications Inc.'s new tranche of 10-year 6.15% senior notes.

Elsewhere in the primary sphere, iPayment Inc.'s initially planned $280 million offering of eight-year notes was substantially downsized, with a chunk of that financing now expected to be done as bank debt.

In the secondary market, Calpine Canada Energy Finance ULC was absolutely "getting mooshed," in the words of one trader, heard down anywhere from eight to 10 points on the session.

On the earnings front, Visteon Corp.'s bonds and shares were solidly higher, as the Van Buren Township, Mich.-based automotive components supplier -which is restructuring with the help of former corporate parent Ford Motor Co. got back in the black in the latest quarter and upped its 2006 outlook.

A senior sell-side source said shortly after the close Tuesday that the broad high-yield market was up slightly on the session.

Meanwhile the North American primary market saw action as two issuers with credit ratings in the high double-B range priced deals, high grade-style, on spreads to on-the-run government paper.

Rouse massively upsizes

Co-issuers The Rouse Co. LP and TRC Co-Issuer, Inc. priced a massively upsized $800 million issue of 6¾% seven-year senior notes (Ba1/BB+) at a 175 basis points spread to Treasuries, on top of the price talk. The deal was increased from $500 million.

The notes sold for a dollar price of 99.688 to yield 6.807%.

Lehman Brothers ran the books for the debt refinancing from the Columbia, Md., REIT which is focused on shopping centers and office buildings, as well as mixed-use and industrial properties.

An informed source simply characterized the Rouse transaction as a very solid deal.

Shaw sees big U.S. demand

Elsewhere Shaw Communications Inc. priced a C$300 million issue of 6.15% 10-year senior notes at a spread to Government of Canada Treasuries of 190 basis points, also on top of price talk.

The issue was sold at a dollar price of 98.052 resulting in a 6.417% yield.

TD Securities and RBC Capital Markets were joint bookrunners for the debt refinancing and working capital deal from the Calgary, Alta.-based diversified Canadian communications company.

Moody's Investors Service assigned its Ba2 rating to the notes. Standard & Poor's rated the notes at BB+. Dominion Bond Rating Services rated the notes at BB (high).

An informed source said that the deal saw exceptional demand out of the United States and added that Canadian institutional demand was as expected.

The source said retail appetite for the Shaw Communications new 6.15% notes due 2016 was not fully satisfied.

iPayment downsizes, talks notes

Meanwhile on Tuesday, iPayment Inc. downsized its offering of eight-year senior subordinated notes (Caa1/CCC+) to $205 million from $280 million.

The company shifted $65 million to its term loan and decreased the amount of proceeds that it intends to raise by $10 million.

Price talk on the notes is 10% to 10¼%, with pricing expected on Wednesday.

Banc of America Securities has the books for the acquisition financing from the Nashville-based provider of credit and debit card-based payment processing services.

As the Tuesday session wound down the iPayment transaction was the last scheduled deal on the forward calendar for the first week of May 2006.

Europcar adds to euro calendar

Although anticipated dollar issuance stood at an anemic $330 million at Tuesday's close - tallying deals thought to be in the market - euro issuance is another story.

At the May 2 close the euro forward calendar stood at €1.425 billion.

The most recent addition came from Europcar AMAG Services AG.

The company is set to begin a roadshow Wednesday and Thursday in London for its €500 million two-part notes transaction.

The car rental arm of Volkswagen AG plans to sell seven-year senior subordinated secured floating-rate notes and eight-year senior subordinated unsecured fixed-rate notes.

Deutsche Bank Securities has the books.

Proceeds will be used to help fund the acquisition of Europcar by private equity firm Eurazeo from Volkswagen AG for approximately €3.32 billion.

Europcar joins Lottomatica SpA which is in the market with a €750 million offering of hybrid capital securities due 2066 (expected Ba3) via Credit Suisse.

Proceeds from the deal will be used by the Rome-based manager of operator of lottery games to help fund its acquisition of Gtech Holdings, a West Greenwich, R.I., gaming technology and services provider.

Also roadshowing is Mechachrome International Inc., in the market with a €175 million offering of eight-year senior subordinated notes (Caa1) via Merrill Lynch.

The Montreal-based designer, manufacturer and assembler of precision-engineered industrial components for the automotive and aerospace industries will use the proceeds to repay debt.

All three of the euro-denominated deals are expected to price next week.

Rouse edges higher in trading

When the new Rouse Co. 6¾% notes due 2013 were freed for secondary dealings, the bonds firmed slightly to 99.75 bid, par offered, from their 99.688 issue price earlier in the session.

CMP Susquehana Corp.'s new 9 7/8% senior subordinated notes due 2014, which priced late Monday at par, were seen pretty much straddling that issue price on Tuesday, quoted at 99.875 bid, 100.375 offered.

Calpine Canada plunges

Back among the established issues, "the big mover was Calpine Canada," a trader said, quoting the Calpine Corp. special-purpose unit's 8½% notes due 2008 "off at least eight, nine, 10 points" at 47 bid, 49 offered.

Another trader likewise saw those bonds - which he said "had been rallying lately" - at 47 bid, 48 offered, down from 56 bid, 57 offered previously.

"They had run up in comparison to some of the other [Calpine] debt," the first trader said. "The thought was that they were going to be worth more - they were going to get a bigger recovery" from the bankrupt parent San Jose, Calif.-based power producer's restructuring, which is now going on under Chapter 11.

"I haven't read yea or nay on that yet," he said, "but I guess it's not true - because they were getting mooshed here, and [the bond bears] are pretty much picking on that issue.

"It really ran up and it was trading a hell of a lot stronger than a lot of the other [Calpine] paper - but now it's getting crushed, down anywhere from eight to 10 points on the day."

Another market source said that those bonds which were trading around 60 a month ago, got as good as a 64ish context around the middle of the month. From there, they gradually declined into the upper 50s as April was coming to an end, still holding as high as 57 bid late last week. The source saw those bonds actually retreat into the lower 50s - around 53-54 - in Monday's dealings, and saw them tumble further Tuesday, gyrating around between 47 and 49.5 late in the session.

Perhaps coincidentally, - or perhaps not - Calpine and its Canadian subsidiary announced late Monday that they would begin making available on the Sedar document retrieval website maintained by the Canadian Securities Administrators - essentially, Canada's counterpart to the Edgar system operated by the Securities and Exchange Commission - "applicable documentation relating to internal financings entered into by ULC with Calpine and affiliated companies Calpine Canada Energy Ltd. and Quintana Canada Holdings, LLC. This documentation is being placed on Sedar as a way of making it readily available to all creditors of ULC," the companies said.

Parent Calpine's own bonds, meantime, were seen as mixed. What issues were lower suffered nowhere near that kind of dramatic drop. A market source called Calpine's 8¾% notes due 2007 down two points at 55 bid. However, another source saw the parent's 8½% notes due 2011 as having moved up to around the 37 bid area from recent levels around 33.5.

Visteon higher on results

Among companies that were reporting earnings, Visteon stood out. A trader quoted its 8¼% notes due 2010 and its 7% notes due 2014 each up 2½ points, with the 81/4s at 92.25 bid, 93.25 offered, and the 7s at 82.25 bid, 83.25 offered.

Visteon's New York Stock Exchange-traded shares meantime jumped $1.09 (18.60%) to close at $6.95 on volume of 14.9 million, nearly seven times the norm.

The rise in the bonds and shares was propelled by the company's solid swing to profitability, as it reported earnings of $3 million (two cents per share), versus a year-earlier loss of $163 million ($1.30 per share). Visteon was thus seen to have solidly benefited from a deal it reached last fall to hand about two dozen unprofitable plants back to its erstwhile parent, which is attempting to sell those facilities. Visteon's downsizing did cause its sales to fall about 41% to $2.97 billion from $4.99 billion. Those sales were in line with Wall Street estimates - but the analysts had also expected the company to report continued red ink, to the tune of about 48 cents per share.

Charter mixed after earnings

Also reporting earnings was Charter Communications Inc., which reported a wider first-quarter loss versus a year ago - but which said that it was making progress in lowering churn and bad debt expense, while upping its subscriber numbers and the average revenue per customer that it generates.

That mixed bag of results caused the St. Louis-based cable systems operator's bonds to also end mixed. A market observer quoted Charter's zero-coupon holding company notes due 2011 up two points at 64 bid, although he saw most of the company's other issues either unchanged, like its 8% operating company notes due 2012, which stayed at par, or else up or down no more than ¼ to ½ point from Monday's levels.

Granite steady despite sale

He also saw Granite Broadcasting Corp.'s bonds little changed on the session, despite the New York-based television station group owner's reduced net loss ($15.6 million/80 cents per share, versus $19.4 million/$1 per share a year earlier), and, probably more importantly, the company's announcement that it has agreed to sell its two biggest TV stations, in Detroit and San Francisco. Cash-hungry Granite stands to receive proceeds of $150 million in cash, before closing and other adjustments.

Nonetheless, its 8 7/8% notes due 2008 were perhaps half a point better at 92.75 bid, while its 9¾% notes were off about half a point at 92.

Sirius higher even after loss

Also in the communications area, Sirius Satellite Radio Holdings' bonds firmed, despite the New York-based satellite broadcaster having reported a first-quarter loss of $458.5 million (33 cents per share), wider than year-ago red ink of $193.6 million (15 cents a share). Powered by the publicity it garnered by giving outspoken radio bad boy Howard Stern virtually unlimited freedom to say or do whatever the self-styled "King of All Media" feels like doing on the air, Sirius' revenues and subscriber numbers jumped versus year-ago levels, and the company upped its 2006 subscriber target to more than 6.2 million customers, from the previous 6 million goal.

Its 9 5/8% notes due 2013 were up ¾ at 98 bid 99 offered.

Toys up further

Still basking in the glow of better fiscal fourth-quarter and 2005 numbers - which took its bonds up three points on Monday - Toys "R" US bonds were "a little stronger again today [Tuesday] - but nothing like yesterday [Monday]," a trader opined, "maybe up half a point."

He saw the Wayne, N.J.-based toy retailer's 7 3/8% notes due 2018 at 75.75 bid, 76.75 offered, half a point better, while "the one that was most interesting" was the 7 7/8% notes due 2013, at 83.75 bid, 84.75 offered. "Everyone thinks that one's cheap, compared to the '18s," he said, "but it takes a little time - once they get interested, I think they'll push this paper a little stronger."

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