Sugarhouse prices dollar deal; Netflix megadeal taps euro market; new Bill Barrett notes busy

By Paul Deckelman and Paul A. Harris

New York, April 26 – For a third straight session, the high-yield market saw but a single dollar-denominated pricing take place on Wednesday, as casino operator Sugarhouse HSP Gaming Prop Mezz LP did a $300 million offering of eight-year secured notes.

That regularly scheduled forward calendar deal followed the new issues that got done on Monday and Tuesday – communications-oriented real estate investment trust Uniti Group Inc.’s seven-year issue on Monday and oil and natural gas exploration and production operator Bill Barrett Corp.’s eight-year deal on Tuesday. Like the Sugarhouse deal, both of those transactions were smallish forward calendar offerings.

While that was what was going on in Junkbondland’s dollar-denominated segment, entertainment company Netflix, Inc., became the latest domestic issuer to tap the euro-denominated market, pricing an upsized €1.3 billion 10-year issue. Secondary market traders said the California company’s existing dollar-denominated notes were seen lower in conjunction with that euro megadeal.

The traders did not see much in the way of aftermarket action in the new Sugarhouse bonds, owing to the lateness of the hour at which they priced – but they said there was more than ample volume going on in the new Bill Barrett paper, which had priced late in Tuesday’s session and thus did not start trading around until Wednesday, moving up modestly on the day.

Away from the new issues, United States Steel Corp.’s various notes were seen lower on busy volume on Wednesday, after the metals giant’s disappointing quarterly numbers.

Statistical market performance measures turned mixed on Wednesday, after having been higher across the board on Monday and again on Tuesday. It was the fourth mixed session in the last six trading days, with the indicators having been mixed over the final three days of last week as well as on Wednesday. The two stronger sessions on Monday and Tuesday had been the first such upturns the indicators had seen since back on April 3.

Sugarhouse prices tight

The dollar-denominated primary market saw a single deal price on Wednesday.

Sugarhouse Casino priced a $300 million issue of eight-year senior secured notes (B3/B-) at par to yield 5 7/8%.

The yield printed at the tight end of yield talk in the 6% area.

Goldman Sachs was the left bookrunner for the debt refinancing deal. Wells Fargo, U.S. Bancorp and Fifth Third Bank were the joint bookrunners.

Pending dollar-denominated deals expected to clear before the weekend include Garda World Security Corp.'s $630 million of eight-year senior notes (Caa2/CCC+/B-), via left bookrunner Citigroup, and Covey Park Energy LLC's $450 million of eight-year senior notes (B3/B) via left bookrunner Goldman Sachs.

The market awaits official talk on both of those offers.

Netflix upsizes

Europe hogged the spotlight in Wednesday's new issue market.

Making its debut as an issuer of euro-denominated bonds, Netflix, Inc. priced an upsized €1.3 billion issue of 10-year senior bullet notes (B1/B+) at par to yield 3 5/8%.

The issue size was increased from €1 billion.

The yield printed at the tight end of yield talk in the 3¾% area.

“The market is really strong right now,” remarked a source in London who was close to the transaction.

“This deal saw incredibly strong demand, not only from U.S. accounts familiar with the name, but also from blue ribbon European accounts attracted to this issuer's huge market cap, among other things.”

Morgan Stanley, JPMorgan, Goldman Sachs and Deutsche Bank were the joint bookrunners.

The Los Gatos, Calif.-based entertainment company plans to use the proceeds for general corporate purposes which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.

Atalian upsized and tight

La Financiere Atalian SA launched and priced an upsized €625 million issue of seven-year senior notes (B2/B+) at par to yield 4%.

The deal size was increased from €600 million.

The yield came inside of original yield talk in the 4¼% area.

Joint global coordinator and physical bookrunner Credit Suisse will bill and deliver. BNP Paribas is also a joint global coordinator and physical bookrunner.

The Paris-based provider of outsourced building services plans to use the proceeds to take out its 7¼% senior notes due 2020, to pay off existing bilateral agreements and for general corporate purposes, including acquisitions.

Netflix and Atalian left in their wake a couple of euro-denominated deals expected to get done before the weekend.

Travelex Holdings Ltd. is marketing €360 million of five-year senior notes (B3/B-) via JPMorgan. And Senvion is planning to price €400 million 5.5-year senior secured fixed-rate green bonds (B2/B+).

Sugarhouse not immediately seen

In the aftermarket, traders did not immediately report any initial dealings in the Sugarhouse Casino 5 7/8% senior secured notes due 2025.

They cited the relative lateness of the hour at which the Philadelphia-based gaming operator’s new deal had gotten done on Wednesday.

Bill Barrett is busy

But the traders saw considerable aftermarket dealings during the session in the new Bill Barrett 8¾% notes due 2025, which had priced late in the day on Tuesday and which only started trading on Wednesday morning.

A trader pegged those bonds at 100 5/8 bid, while a second saw the new notes trading between 99¾ and 100 5/8, though with most of the day’s activity in the 100¼ to 100 5/8 bid area.

“Bill Barrett came out a little slow,” one of the traders opined, noting the initial dealings below par, the level at which the Denver-based oil and natural gas E&P company had priced its $275 million deal on Tuesday following a short roadshow.

Another trader pointed out that the issue “came with a nice coupon well above the average junk-bond yield below 6%.

More than $39 million of the Bill Barrett bonds changed hands, making it the busiest purely junk credit of the session.

U.S. Steel trades off

Away from the new deals, traders saw the various issues of U.S. Steel’s paper retreating after the Pittsburgh-based company’s disappointing results. Its 7½% notes due 2022 lost 5/8 point, ending at 102¼ bid on over $11 million of volume, while its 7 3/8% notes due 2020 were seen down a deuce on the day at 107½ bid with over $13 million traded.

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