tw telecom, Windstream, R.R. Donnelley drive-bys lead $1.8 billion day; Penney busy amid board brawl

By Paul Deckelman and Paul A. Harris

New York, Aug. 12 - The high-yield primary arena saw a quartet of issuers bring opportunistically timed and quickly shopped deals to market on Monday, according to syndicate source.

When it was all over, some $1.8 billion of new dollar-denominated, fully junk-rated paper had priced, up from the roughly $750 million of bonds from domestic or industrialized-country issuers that had come to market during Friday's session.

tw telecom holdings inc. brought an $800 million two-part deal, consisting of new 10-year notes and a tranche of paper mirroring the terms of its existing 2022 notes.

Also out of that same telecommunications sector, Windstream Corp. brought a $500 million add-on offering to its existing 2021 bonds.

Printing, packaging and marketing company R.R. Donnelley & Sons Co. priced an upsized $400 million of 8.5-year notes, while wood-products provider Boise Cascade Co. did a smallish add-on offering to its existing 2020 notes.

Traders saw aftermarket dealings in the new issues from tw telecom and R.R. Donnelley, with Boise Cascade seen as too little and Windstream as having come too late for any kind of secondary activity.

However, Windstream's existing bonds were seen lower on news of the company's new deal.

Away from the new-deal arena, there was activity in J.C. Penney Co. Inc. bonds amid the continued high drama publicly pitting the troubled retailer's biggest shareholder against the current interim chief executive and his supporters on the company's board of directors.

Overall, statistical market performance indicators were mixed for a second consecutive session on Monday.

tw telecom two-part deal

Four issuers brought a combined five tranches - all of it quick-to-market - to a busy Monday session in the high-yield primary market.

Network services provider tw telecom priced $800 million of senior notes (B1/B+) in two tranches.

The deal included a downsized $350 million tranche of new 10-year notes, which priced at par to yield 6 3/8%.

The tranche was downsized from $400 million, and the yield printed on top of yield talk.

In addition, the Littleton, Colo.-based company priced an upsized $450 million tranche of notes mirroring its 5 3/8% senior notes due Oct. 1, 2022 at 96.25 to yield 5.913%.

The mirror notes tranche was upsized from $400 million, and the reoffer price came in the middle of the 96 to 96.5 price talk.

Credit Suisse, Morgan Stanley and Well Fargo were the joint bookrunners for the debt refinancing deal.

Windstream taps 7¾% notes

Windstream priced a $500 million add-on to its 7¾% senior notes due Oct. 1, 2021 (existing ratings B1/B) at 103.5 to yield 7.171%.

The reoffer price came on top of price talk.

Goldman Sachs, J.P. Morgan, Citigroup, RBC and RBS were the joint bookrunners for the debt refinancing.

R.R. Donnelley upsizes

R.R. Donnelley priced an upsized $400 million issue of non-callable 8.5-year senior notes (existing ratings Ba3/BB) at par to yield 7%.

The deal was upsized from $350 million, and the yield printed at the tight end of the 7% to 7¼% yield talk.

BofA Merrill Lynch, Citigroup, JP Morgan and US Bancorp were the joint bookrunners for the debt refinancing.

Boise Cascade 6 3/8% notes

Boise Cascade priced a $50 million add-on to its 6 3/8% senior notes due Nov. 1, 2020 (B2/B+) at 103.5 to yield 5.589%.

The reoffer price came on top of price talk.

Wells Fargo was the left bookrunner. BofA Merrill Lynch, J.P. Morgan and U.S. Bancorp were the joint bookrunners.

The Boise, Idaho-based vertically integrated wood products manufacturer and building supplies company plans to use the proceeds for working capital and general corporate purposes.

ACI unsecured deal

The Monday session was also replete with deal announcements.

ACI Worldwide, Inc. plans to price a $300 million offering of seven senior notes (expected ratings B2/BB-) late this week.

Wells Fargo is the left bookrunner. BofA Merrill Lynch is the joint bookrunner.

The Naples, Fla.-based provider of payment systems plans to use the proceeds to repay its credit facility and for general corporate purposes.

NuStar begins roadshow

NuStar Logistics, LP began a roadshow on Monday for its $300 million offering of non-callable 7.5-year senior notes (expected ratings Ba1/BB+/BB).

J.P. Morgan, Mizuho and SunTrust are the joint bookrunners.

The San Antonio-based provider of petroleum terminaling and storage services plans to use the proceeds for general corporate purposes, including the partial repayment of its revolver.

Shingle Springs $250 million

Shingle Springs Tribal Gaming Authority began a roadshow on Monday for a $250 million offering of eight-year senior notes (B3/CCC+).

BofA Merrill Lynch is the bookrunner for the debt refinancing deal that is expected to price during the present week.

tw trades near issue price

In the secondary market, a trader saw both tranches of the new tw telecom bonds trading "basically right at issue or a little bit better," slightly above their respective issue prices.

He said that the company's 5 3/8% "mirror" notes due 2022were trading around 96½ bid, 97½ offered, versus that paper's 96.25 pricing level.

And he saw its 6 3/8% notes due 2023 at 100¼ bid, 101¼ offered.

A second trader saw the 2023 notes in a par to 100½ bid context, and the 2022s in a 96½ to 97 bid range.

Yet another trader pegged the mirror notes at 96 bid, 96¾ offered.

tw telecom's existing 8% notes due 2018 - to be taken out via a tender offer funded with the proceeds from the new deal - were up by 1 3/16 bid, going home just below the 108 bid mark.

The Gimme Credit independent market research service took a cautious approach to tw telecom, with senior analyst Kim Noland noting in a research piece that while industry consolidation among voice and data network services providers "has helped firm pricing in the enterprise segment, which in turn is leading to increases in adjusted EBITDA [...] TWTC faces competition from regional Bells as they start to focus on the large enterprise arena."

Noland also opined that while synergies from tw telecom's purchase of sector peer Xspedius Communications "will continue to drive improvement in operating results, the company barely generates positive free cash flow (after capex) given the large annual investment in local loops and running fiber."

Gimme Credit has an underlying view of tw telecom as "stable."

R.R. Donnelley rises

A trader said that R.R. Donnelley's new 7% notes due 2022 had firmed to 101 bid, 102 offered as things wound down for the day - up from the par level at which the Chicago-based printing, packaging and marketing concern's issue had priced earlier.

A trader said that the new Windstream bonds were "probably coming too late" for any kind of an aftermarket.

However, a short time later, another trader located the Little Rock, Ark.-based telecommunications company's new add-on issue at 103¾ bid, 104¼ offered, versus their 103.5 pricing level.

At another desk, the existing 2021 bonds were quoted going home at 105 bid, although that was down by¾ point from where they had been before the company's announcement of the new issue.

Windstream knocked around

Among the company's other existing bonds, a market source said that Windstream's 7¾% notes due 2020 lost 1 point on the day, ending up at 105½ bid, on round-lot volume of over $5 million, as well as busy odd-lot trading.'

The 6 3/8% notes due 2023 were also down 1 point, at 92 bid, while the 7% notes due 2019, which are to be taken out using the proceeds from the new bond deal, traded little changed from recent levels at 102 5/8 bid. Volume was over $3 million.

Iron Mountain improves

A trader said that Iron Mountain Inc.'s new 6% notes due 2023 were "a little bit better" on Monday, seeing the paper in a 100 1/8 to 100½ bid context.

"They moved up a little bit," he suggested. "We traded them below par - at 99½ to par - and then they traded right up."

The new bonds, which were actively traded at the end of last week after the Boston-based information technology and document storage company priced its $600 million of those bonds on Thursday, continued to trade actively on Monday, with a market source seeing more than $17 million having changed hands right around par.

That made it one of the day's busiest purely junk-rated issues.

Penney paper gyrates

Away from new-deal names, there was brisk activity in J.C. Penney bonds on Monday amid new developments in the troubled Plano, Texas-based retailer's increasingly soap opera-like saga.

Penney's most liquid issue - its 5.65% notes due 2020 - was among the most actively traded junk credits in morning dealings, with over $7 million having changed hands in round-lot trading by noon, on top of a number of smaller odd-lot transactions.

However, little was seen later on in the day in terms of large-sized trades after that morning flurry. The bonds were finishing on Monday in a narrow range around 69½ to 69¾ bid, down slightly from levels around 70 seen on Friday.

Penney's 7.95% notes due 2017 finished at 83¾ bid, down about a half-point on the day, with over $5 million of those notes having changed hands.

The renewed activity in Penney paper comes amid public disclosure of what is shaping up to be an ugly boardroom brawl between 18% owner William Ackman - Penney's largest single shareholder - and the rest of the company's board of directors.

Ackman had reportedly been the force behind the replacement of then-chief executive officer Mike Ullman by former Apple Inc. executive Ron Johnson, whose efforts to turn the company around were considered to have only made its problems worse. Johnson was ousted earlier this year, with Ullman returning to the top spot.

An unhappy Ackman has recently been going public with his complaints about how the company is being run, urging the replacement of interim chief Ullman.

Other board members were reportedly miffed that the company's dirty laundry was being washed in public, with news accounts saying they were considering taking action against Ackman. But later on in the day, reports indicated that efforts were underway to bridge the gap between Ackman and the other directors, in hopes of resolving the situation.

Market indicators mixed

Statistical junk market performance indicators were mixed for a second straight session on Monday.

The Markit Series 20 CDX North American High Yield index dropped 1/8 of a point on Monday to end at 104 31/32 bid, 105 1/32 offered. It was the index's second consecutive loss, following Friday's 1/16 point easing.

But the KDP High Yield Daily index saw its third straight gain on Monday, rising by 5 basis points for a second consecutive session to close at 73.59. Its yield declined by 2 bps, to 6.09%, after having been unchanged on Thursday and again on Friday.

And the widely followed Merrill Lynch High Yield Master II index also saw its third straight gain on Monday, rising by 0.03%, on top of Friday's nearly identical 0.028% improvement.

That raised the index's year-to-date return to 3.196% from the 3.165% recorded on Friday. The return was down from its peak level for the year so far of 5.835%, recorded on May 9, though up solidly from its 2013 low point of 0.384%, set on June 25.

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