Bankrate prices to end $7.5 billion week; Mohegan delays deal; Penney gyrations continue

By Paul Deckelman and Aleesia Forni

New York, Aug. 2 - The high-yield primary sphere saw one new deal having priced on Friday, syndicate sources said, capping off the busiest new-issue week seen in Junkbondland in more than two months.

Bankrate Inc., which distributes personal finance-related information on the internet, came to market with a $300 million offering of five-year secured notes, the sources said. Traders did not see any immediate aftermarket activity in the new credit.

That deal brought to about $7.5 billion the amount of new dollar-denominated, junk- rated paper from domestic or industrialized-country issuers that priced during the week in 21 tranches, according to data compiled by Prospect News - up from $6.23 billion of new issuance in 16 tranches seen the week before, ended July 26.

It was also the busiest week for new issuance since the week ended May 24, when some $11.85 billion had priced, according to the data.

The week's new issuance meantime brought the year-to-date total up to $191.64 billion in 443 tranches, according to the data - running some 16.2% ahead of the pace seen last year, which ultimately turned out to be a record-setting year for new bond deals; $164.86 million had priced in 353 tranches by this time last year.

While the Bankrate deal was getting done, the syndicate sources heard that Mohegan Tribal Gaming Authority had postponed its planned $425 million offering of eight-year senior notes, although they held out the possibility that the transaction might still take place in the upcoming week.

In the secondary market, traders said that new deals remained the main focus and saw some scattered activity in Thursday's offerings from Standard Pacific Corp. and Health Technology Intermediate Inc.

Away from the new deals, a trader said J.C. Penney Co. Inc.'s bonds continued to gyrate around at mostly lower levels several days after a news report indicating a key lender is suspending credit it had extended to some of the vendors who sell merchandise to the department store retailer. The bonds continued to erode despite a denial by Penney of the assertions contained in that news story.

Statistical indicators of junk market performance were seen mixed across the board on Friday versus the previous session and were mostly lower versus their levels a week ago.

Bankrate prices at a discount

Primaryside sources said Friday that Bankrate priced a $300 million offering of 6 1/8% senior secured notes (/BB-/) due 2018, the day's sole dollar-denominated, junk-rated pricing.

The bonds came at a discount, pricing at 98.938 to yield 6 3/8%.

Goldman Sachs & Co. and RBC Capital Markets were the joint bookrunners for the Rule 144A and Regulation S offering.

The company - a North Palm Beach, Fla.-based publisher and distributor of personal finance content on the internet - plans to use the proceeds to redeem all of its 11¾% senior secured notes due 2015, $195 million of which are currently outstanding, and for general corporate purposes.

Mohegan on hold

The syndicate sources meantime said that the only other news to come out of the primary on Friday were indications that Mohegan Tribal Gaming Authority has postponed its planned $425 million offering of eight-year senior notes - at least temporarily.

That deal had been expected to price on Thursday but never appeared.

One of the sources, however, said that the deal might still price during the upcoming week.

Credit Suisse Securities (USA) LLC, RBS Securities Inc., Goldman Sachs, Credit Agricole CIB, SunTrust Robinson Humphrey Inc., Jefferies LLC, BofA Merrill Lynch and Nomura are the joint bookrunners for the pending transaction.

Should the deal finally go through, the Montville, Conn.-based owner and operator of gaming properties plans to use the proceeds to refinance its third-lien notes.

A slate of deals

The newly-minted month of August is traditionally thought of as the "dog days of summer," and activity in the high-yield market at some point drops off. But so far, there are no signs yet that the usual lull is about to begin.

Syndicate sources said that some $2.5 billion of junk bonds are being marketed to prospective investors via roadshows and other, less-traditional methods - and that even more paper could price should other borrowers decide to opportunistically tap the revived and once-again fairly vibrant junk primary and bring quickly shopped drive-by deals.

Among the deals sitting on the forward calendar and expected to price in the upcoming week, those sources said, is one megadeal-sized transaction, with BMC Software Inc. planning to bring $1.38 billion equivalent of new eight-year senior notes to market in tranches of $1.05 billion and €250 million. The Houston-based software company began a roadshow for the bonds this past Wednesday.

The notes will be brought to market via joint bookrunners Credit Suisse, RBC, Barclays, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Jefferies and Mizuho Securities.

Proceeds from the Rule 144A and Regulation S transaction will be used to help the leveraged buyout of the company by Bain Capital, Golden Gate Capital, GIC Special Investments Pte. Ltd. and Insight Venture Partners.

RCN Telecom Services, LLC and RCN Capital Corp. are bringing a $200 million seven-year senior notes issue to market via joint bookrunners Credit Suisse and SunTrust Robinson Humphrey. Syndicate sources said that price talk on the deals envisions a yield between 8¼% and 8½%. Books will close Monday morning at 10 a.m. ET, with pricing expected soon thereafter. The cable provider wants to use the proceeds to fund a shareholder dividend.

Price talk has also been released on two other deals that could come to market soon.

Chattanooga, Tenn.-based U.S. Xpress Enterprises, Inc., a truckload carrier and diversified provider of truckload, intermodal and logistics services, plans to price $250 million senior secured second-lien notes due 2020, with price talk of 9½% to 9¾%. That deal will come to market via joint bookrunners Wells Fargo and Morgan Stanley & Co. LLC, with Regions Securities LLC along as a co-manager.

The company plans to use the proceeds to repay its existing senior secured credit facility, receivable securitization facility and other debt.

Southern States Cooperative, Inc.'s $130 million senior notes due 2021 were being talked at a yield around the 9¼% area.

The Richmond, Va.-based supplier of agricultural products and services' deal will come to market via bookrunner BMO Capital Markets Corp. and co-managers Fifth Third Securities Inc., PNC Capital Markets and RB International Markets, with proceeds going to refinance debt.

Elsewhere, Endeavor Energy Resources, LP and EER Finance, Inc. expect to price $300 million eight-year senior notes via Credit Suisse, Wells Fargo Securities LLC, Credit Agricole, Mitsubishi UFJ Securities, U.S. Bancorp Investments Inc. and RBS Securities, all of whom will be joint bookrunners.

The Midland, Texas-based oil and gas exploration and production company plans to use the deal proceeds to repay existing debt and for general corporate purposes.

Playa Resorts Holding, BV's $300 million seven-year senior notes are expected to price early in the new week via BofA Merrill Lynch and Deutsche Bank as joint bookrunners and Credit Suisse and Goldman Sachs as co-managers.

The owner, operator and developer of all-inclusive resorts in the Dominican Republic, Mexico and Jamaica plans to use the deal proceeds, along with a new term loan and a significant investment from Hyatt Hotels Corp., to acquire thirteen resorts.

And Australia's Orionstone Pty. Ltd. is expected to hit the road on Monday to market its $200 million seven-year secured notes issue via sole bookrunner Morgan Stanley. Pricing for the Mackay, Australia-based supplier of heavy earthmoving rental equipment to the infrastructure, oil, gas, and mining industries is expected to occur on Aug. 9, with proceeds going for debt repayment.

New deals trade around

In the secondary market, traders saw some activity in some of the recent new deals.

Standard Pacific's 6¼% notes due 2021 were seen by a trader at 100 3/8 bid, 100 5/8 offered. The Irvine, Calif.-based homebuilder's quick-to-market $300 million offering had priced Thursday at par after having been upsized from the original $230 million.

Healthcare Technology Intermediate's 7 3/8%/8 1/8% senior PIK toggle notes due 2018 were seen Friday at 101¾ bid, 102¼ offered - about where they had traded on Thursday after the Danbury, Conn.-based provider of information to the healthcare and pharmaceuticals industries had priced its quickly shopped $750 million deal at par.

LSB Industries, Inc.'s $425 million of 7¾% senior secured notes due 2019 remained at the 102¼ bid, 102 5/8 level, where the Oklahoma City-based chemicals manufacturer's deal had traded after pricing at par on Wednesday.

Penney bonds still struggle

Away from the new deals, J.C. Penney's bonds remained under pressure on Friday - this despite the underperforming retailer's Thursday denial of a news report claiming that that a key lender had cut credit to some of the vendors who provide merchandise for the department store chain.

The denial had initially given the company's bonds a boost from the low levels to which they had fallen late Wednesday after that negative report first came out, but those early gains did not last, and most J.C. Penney issues ended Thursday having moved lower, with that negative momentum continuing into Friday.

Penney's most liquid outstanding issue, its 5.65% notes due 2020, closed on Friday at 73 bid. Those bonds had been trading above 80 before the news report came out, then dipped to 75 post-news on Wednesday, Although they struggled to get back to around a 77 close Thursday, they again lost ground Friday, although a market source noted that almost all of the trading was relatively small odd-lot transactions.

That was also pretty much the case with J.C. Penney's other issues.

Its 7 5/8% notes due 2016 were seen on Friday trading around 90 1/8 bid, down about ½ point from Thursday's close, and well down from the levels around 96 5/8 seen late Tuesday, the last session before the negative news report came out. The bonds had nosedived to below 90 following the news report and have gyrated around down there ever since.

The retailer's 7.4% bonds due 2037, which dipped a point or so to around 76 on Wednesday, had moved back up to around 78 on Thursday morning but then surrendered those gains to close at 75 bid. On Friday, they fell further, finally going out at 703/4.

But the market sources noted that trading in all the issues was very light, with few large trades seen.

Market indicators mixed

Statistical junk market performance indicators were mixed for a third straight session on Friday and were lower for a second consecutive week.

The Markit Series 20 CDX North American High Yield index rose by 7/16 point to end at 105¾ bid, 106 offered, after having lost 3/32 point on Thursday.

It was about unchanged on the week, versus the 105¾ bid, 105 7/8 offered level seen the previous Friday, July 26.

But the KDP High Yield Daily index saw its third consecutive loss on Friday, backtracking by 6 basis points to close at 73.72, on top of Thursday's 5-bps downturn.

Its yield rose by 2 bps to finish the week at 6.03%, its first increase after two sessions of having been unchanged.

Those results compared unfavorably to the 73.94 index reading and 5.95% yield seen the previous Friday.

And the widely followed Merrill Lynch High Yield Master II index lost 0.109% Friday, its third consecutive downturn. It had fallen by 0.03% on Thursday.

The loss dropped the index's year-to-date return to 3.266% from Thursday's 3.378% level. 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.

For the week, the index was down by 0.193%, its second straight weekly downturn. It had lost 0.568% the previous week, when the year-to-date return ended at 3.466%.

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