B Communications, Meritor deals price, trade up; overall market seen firm, Caesars paper busy

By Paul Deckelman and Paul A. Harris

New York, Feb. 10 - The high-yield primary sphere began the new week on Monday on a moderately busy note, as a little more than $1 billion of new dollar-denominated, junk-rated paper from domestic or industrialized-country borrowers came to market, which was well up from Friday's single-tranche deal worth $175 million.

Most of that came from an upsized $800 million seven-year secured deal from Israeli telecommunications company B Communications Ltd., a regularly scheduled deal off the forward calendar.

There was also a quickly shopped $225 million of 10-year paper from domestic automotive components manufacturer Meritor Inc.

Both of those new deals were quoted at firmer levels in the aftermarket.

But traders saw little aftermarket activity in other recently priced issues.

Away from the new-deal realm, there was sizable activity in Caesars Entertainment Corp. bonds in the wake of news that the gaming giant has hired investment bank Lazard as an advisor on what to do about its giant-sized debt load.

There was also a fair amount of activity in Sprint Corp. and T-Mobile USA Inc. paper amid reports that Sprint executives may be having second thoughts about making an acquisition bid for smaller rival T-Mobile in the midst of federal anti-trust regulators' lack of enthusiasm for such a wireless merger.

Overall, traders saw the market taking a firm stance.

Statistical measures of market performance were higher for a third straight session.

The primary market news volume picked up on Monday, with much of the news having to do with companies from outside of the United States.

In terms of straight-out dollar-denominated junk, two issuers completed single tranche deals, raising a combined total of $1.03 billion.

B Communication priced an upsized $800 million issue of seven-year senior secured notes (/BB-/BB-) at par to yield 7 3/8%.

The yield printed at the tight end of yield talk in the 7½% area.

The deal was upsized from $775 million.

In a restructuring, the telecommunications company withdrew a proposed euro-denominated carve-out tranche.

JPMorgan, Citigroup, HSBC and Discount Underwriting and Issuing Ltd. were the joint bookrunners for the refinancing deal.

Meritor drives by

Meritor priced a $225 million issue of 10-year senior notes (B3/expected B-/B-) at par to yield 6¼% in a quick-to-market transaction.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

J.P. Morgan, BofA Merrill Lynch, Citigroup RBC and RBS were joint bookrunners for the debt refinancing deal.

Hunt at a discount

In a non-rated, Regulation D private placement Hunt Cos. priced a $525 million issue of non-rated 9 5/8% seven-year notes at 98.752 to yield 9 7/8%.

The yield printed in the middle of the 9¾% to 10% yield talk.

Jefferies led the deal.

The Regulation D notes will be exchanged into Rule 144A and Regulation S notes upon settlement.

Ineos dual-currency deal

Switzerland-based Ineos Group Holdings SA was scheduled to participate in a global conference call with investors on Monday morning to discuss its €1,032,000,000-equivalent dual-currency offering of five-year senior notes (confirmed B3/existing B-).

The debt refinancing deal, which features tranches of dollar-denominated notes and euro-denominated notes, is expected to price on Tuesday.

Both tranches are being whispered in the low 6% context, according to a trader.

Tranche sizes remain to be determined.

Joint global coordinator Citigroup will bill and deliver for the dollar-denominated notes. Joint global coordinator JPMorgan will bill and deliver for the euro-denominated notes.

Barclays, BofA Merrill Lynch, Goldman Sachs and UBS are joint bookrunners.

Stena 10-year bullet

Stena International SA was scheduled to hold a conference call with investors late Monday morning to discuss its $350 million offering of non-callable 10-year senior secured notes (Ba2/BB+).

The deal, which is whispered at 5½%, is set to price on Tuesday.

Citigroup is the left bookrunner for the debt refinancing deal. JP Morgan bookrunner.

Fresenius investor call

Fresenius SE & Co. KgaA plans to participate in an investor conference call at 11 a.m. ET on Tuesday to discuss its $300 million offering of non-callable seven-year senior notes (expected ratings Ba1/BB+).

The deal is set to price later on Tuesday.

JP Morgan, BofA Merrill Lynch, DnB and Scotia are the joint bookrunners for the debt refinancing.

Innovia starts roadshow

Innovia Group (Finance) plc began a roadshow on Monday in London for its €340 million offering of six-year senior secured floating-rate notes (expected ratings B2/B).

Joint bookrunner Deutsche Bank will bill and deliver. Barclays and HSBC are also joint bookrunners.

The Wigton, Cumbria, United Kingdom-based manufacturer of specialty films plans to use the proceeds to refinance debt and to repay shareholder loans.

Yioula pulls deal

Yioula Glassworks SA announced in a Monday press release that, due to market conditions, it has chosen not to proceed at this time with a possible debt capital markets transaction.

As was reported, the Greece-based glass container manufacturer was in discussions with investors about a proposed €165 million offering of senior secured notes due 2020 via bookrunner Citigroup.

Proceeds were to have been used to refinance debt and for general corporate purposes.

B Comm, Meritor trade up

In the secondary market, a trader saw B Communications' 7 3/8% senior secured notes due 2021 firm to 101½ bid, 102 offered, while a second quoted those bonds at 101¾ bid, 102 offered, well up from the bonds par issue price.

One of the traders meantime pegged Meritor's 6¼% notes due 2024 at 100¾ bid, 101 offered. Another trader saw those bonds in a 100 to 100½ bid context.

That was up from the par level at which the Troy, Mich.-based automotive components manufacturer priced its offering.

Hunt bonds seen higher

Also among the new issues, a trader said that Hunt Cos.' 9 5/8% notes due 2021 moved up to 100¼ bid, 100¾ offered.

That was up solidly from the 98.752 level at which the El Paso, Texas-based real estate company had priced its private placement offering.

Recent deals little seen

Away from the issues that priced on Monday, traders did not see very much activity among the various bond deals that came to market last week.

A trader said that BioScrip, Inc.'s 8 7/8% notes due 2021 traded at 101¼ bid, 102¼ offered, "but that's the only recent one" that he saw trading.

Those levels were about in line with where the bonds had traded on Friday.

The Eden Prairie, Minn.-based health care services provider priced its $200 million offering at par on Thursday.

A trader quoted Lansing Trade Group LLC's 9¼% notes due 2019 offered at 100¾ late in the day "just as we were leaving."

The Overland Park, Kan.-based independent commodity merchandising and handling company priced its $175 million issue at par on Friday, the sole deal of that session. The bonds had not been seen later that same session.

A trader generally characterized last week's deals as "all up - but it's almost like they're out of sight, out of mind. The underwriters are holding them to themselves right now because there's a lot of demand."

He explained, "They sell them all out, on the original - and then they have accounts sell them back to them. So everybody's happy."

Secondary seen strong

Away from the new issues, a trader described Monday's market as "a really quiet, uneventful day."

But a second trader opined that the market "is fairly firm."

He said that "if the flows are any kind of a leading indicator, there are many more buyers than sellers out there today. He estimated the ratio of accounts that are buying versus those that are selling at about 3-to-1. The tone is definitely favorable."

Caesars bonds busy

Among the more active issues in the junk world on Monday, Caesars Entertainment's 10% notes due 2018 were seen by a market source having gained 1 point, going home at 49¼ bid.

Over $25 million of those bonds - originally issued by Caesars' predecessor company, Harrah's Entertainment Inc. - were seen changing hands.

Caesars' own 8½% notes due 2020 lost ¼ point on the day to end at 94 bid, on volume of about $4 million.

The Las Vegas-based gaming giant's Nasdaq-traded shares fell by 83 cents, or 3.67%, to $21.81, on volume of over 2.1 million, more than twice the norm.

Those gyrations took place amid news reports indicating that it had hired investment bank Lazard Ltd. as an advisor to guide it through a financial structuring of its roughly $20 billion debt load.

Those reports quoted unidentified sources as saying that such an overhaul of its debt structure would not involve a bankruptcy filing.

Caesars incurred most of that debt during its 2008 leveraged buyout by Apollo Global Management and TPG Capital.

Sprint, T-Mobile trade around

Elsewhere, Sprint Corp.'s 6% notes due 2022 were seen down 1/8 of a point at 98¾ bid, a market source said. He estimated round-lot volume at over $7 million and said there had been very heavy volume of smaller odd-lot trades as well.

He also saw sector peer T-Mobile USA's 6.731% notes due 2022 up 1/8 point at 105¾ bid, also on over $7 million of turnover. The Bellevue, Wash.-based Number-Four U.S. wireless carrier's 6.633% notes due 2021 gained½ point to 106¼ bid, although there was no size trading in that particular credit.

The bonds' activity occurred amid news reports indicating that executives of the Overland Park, Kan.-based No. 3 U.S. wireless operator may be rethinking their intention of making an acquisition bid for its smaller rival - this after federal anti-trust regulators expressed skepticism that such a combination would pass muster in the current regulatory environment.

Sprint's New York Stock Exchange-traded shares dropped 33 cents, or 4.11%, to end at $7.69, on volume of 31 million, about 1½ times their usual turnover. T-Mobile's NYSE-traded shares eased by 36 cents, or 1.18%, to close at $30.07. Volume of 8.2 million shares was about average.

Sprint, additionally, is scheduled to release its fourth-quarter earnings on Tuesday morning.

Market indicators stay firm

Statistical junk-market performance indicators were unchanged to higher across the board for a third consecutive session on Monday, after having been mixed the two sessions before that.

The Markit Series 21 CDX North American High Yield index was unchanged on Monday, after having risen by 7/16 of a point on Friday to close at 107 3/16 bid, 107 5/16 offered.

The KDP High Yield Daily index was up for a third straight session on Monday, climbing by 10 basis points to end at 74.56, on top of Friday's 12 bps jump and the 8 bps improvement seen on Thursday, which broke a four-session losing streak. Its yield fell by 5 bps for a second straight session, to 5.52%, after having come in by 4 bps on Thursday - its first decline after having risen over the prior four sessions.

The widely followed Merrill Lynch High Yield Master II index, meanwhile, posted its fourth consecutive gain on Monday, rising by 0.149% after having gained 0178% on Friday.

The gain raised its year-to-date return to 1.14% from Friday's finish at 0.989% -- the first time the index reading has been above the 1.0% mark since Jan. 23, when it had finished at 1.111%. However, it was still down from the 1.185% it had reached on Jan. 22, its high point of the year so far.

The index's yield to worst declined to 5.608% from Friday's 5.646% and from last Tuesday's 5.735%, its peak level for the year so far. Those levels remained well above the low yield for the year, 5.386% on Jan.22.

Its spread to worst came in to 431 bps over comparable Treasuries, versus 435 bps on Thursday and Friday and from last Tuesday's 444 bps, the wide point for the year so far. Those levels remained well above the tight spread for the year, 398 bps, on Jan. 22.

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