CNG, Affinity price to end $4.7 billion week; Cincinnati Bell better; Bon-Ton gyrates

By Paul Deckelman and Paul A. Harris

New York, May 4 - CNG Financial, Inc. came to market on Friday with an upsized $400 million issue of eight-year senior secured notes.

The high-yield primary sphere also saw Affinity Gaming LLC price a $200 million issue of six-year notes.

Both of those new deals were seen higher when they were freed to trade.

The deals closed out a week with about $4.7 billion of new dollar-denominated, junk-rated paper, about the same volume of new issuance seen the week ended April 27.

That brought issuance volume for the year to date up to $123.593 billion in 257 tranches, running about 6% behind the year-earlier cumulative volume of $132.056 billion in 303 tranches.

Besides the dollar-denominated paper, two euro-denominated transactions priced, as vehicle-rental company Europcar Groupe SA did a downsized and restructured €324 million of five-year senior subordinated secured notes and papermaker Lecta SA came in with a €590 million two-part offering of fixed- and floating rate paper.

Apart from the deals that have already priced, syndicate sources heard price talk emerge on restaurateur Ruby Tuesday Inc.'s $250 million of eight-year notes,, which could come to market as soon as Monday.

Away from the new-deal world, traders saw solid gains in Cincinnati Bell Inc.,, which announced plans pay down debt using some of the proceeds from an upcoming stock offering.

There was active trading in Bon-Ton Stores Inc.'s bonds,, which have taken a drubbing since the retailer reported weak April sales numbers.

And Chesapeake Energy Corp.'s bonds edged higher for a second straight session to close out a wild week,, which saw the natural gas company's bonds and shares badly battered on bad numbers and questions about its CEO's private financial transactions.

Overall, the junk market pretty much held its own, considering the sharp slide seen in stocks in the wake of much weaker-than-expected April jobs growth. Statistical indicators of junk performance were mixed on the day, though mostly higher on a week-to-week basis.

CNG prices at par

A busy Friday in the primary market produced news from Europe and the United States.

CNG Holdings priced an upsized $400 million issue of eight-year senior secured notes (B3/B) at par to yield 9 3/8%.

The yield printed on top of revised yield talk. Earlier talk had been set in the 9½% area.

Credit Suisse, Jefferies and Wells Fargo were the joint bookrunners for the deal, which was upsized from $350 million.

The Cincinnati-based provider of international alternative financial services plans to use the proceeds to fund the tender offer for its existing 12¼% notes and 13¾% notes and for general corporate purposes.

The additional proceeds from the upsizing will also be used for general corporate purposes.

Affinity Gaming restructures

Affinity Gaming priced a restructured $200 million issue of six-year senior notes (Caa1/B) at par to yield 9%.

The yield printed on top of the yield talk.

The tenor of the notes was reduced to six years from eight years. Call protection was decreased to three years from four years.

Deutsche Bank, J.P. Morgan, Jefferies and Macquarie were the joint bookrunners.

Proceeds, along with funds from a $235 million credit facility, will be used to refinance debt obtained with the company's Chapter 11 proceedings.

The deal struggled a little, said a trader from a high-yield mutual fund who was told that the order book finish right at the deal size.

Lecta prices two-parter

In Europe, Luxembourg's Lecta priced €590 million of senior secured notes (B1//) in two tranches.

The transaction included an upsized €390 million tranche of Euribor plus 550 basis points six-year notes, which were priced at 99.

The tranche came upsized by €30 million from the upper end of the €330 million to €360 million range at which the deal launched. The Euribor spread came at the wide end of the 525 bps to 550 bps spread talk. The reoffer price came on top of price talk.

Lecta also priced a downsized €200 million tranche of fixed-rate notes at par to yield 8 7/8%.

The tranche came downsized by €30 from the €230 million to €260 million range at which the deal launched. The yield printed at the tight end of yield talk, which was set in the 9% area.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Suisse and Morgan Stanley were also joint bookrunners.

The coated paper manufacturer plans to use the proceeds to refinance debt.

Europcar prints 14% yield

France's Europcar priced a downsized and restructured €324 million issue of 11½% five-year senior subordinated secured notes (Caa1/B-) at 91.216 to yield 14%.

The deal was downsized from €335 million.

The yield printed 150 basis points beyond the wide end of the 12¼% to 12½% yield talk. The reoffer price came 3¾ points below the cheap end of discount talk, which had been set at 3 points to 5 points.

Call protection was extended to the life of the bond from previous call protection of three years.

Deutsche Bank, Credit Agricole, Goldman Sachs, JPMorgan, SG and Royal Bank of Scotland were joint lead managers.

Deutsche Bank will bill and deliver.

The Saint Quentin en Yvelines, France-based car rental company plans to use the proceeds to refinance debt.

It was a rocky ride for Europcar, sources said.

The 14% yield represents a massive increase in the cost of capital that the car rental company was contemplating when it came to market targeting a yield in the context of 10% to 11%, a sellsider said.

Ruby Tuesday sets price talk

Although investors are eager to put cash to work, activity in the primary market is apt to remain well south of $10 billion during the week ahead, as issuers who can afford to be patient will likely elect to ride out the chop that has lately taken hold in the global capital markets, sources say.

The May 7 week will get under way with an active calendar of deals.

On Friday, Ruby Tuesday talked its $250 million offering of eight-year senior notes (B3/B-/) with a yield in the 7¾%.

The books close at 2 p.m. ET on Monday, except for accounts meeting with management on Monday, and the deal is set to price thereafter.

Bank of America Merrill Lynch is the sole bookrunner.

All told, the week will get rolling with a $2.2 billion active calendar of deals expected to price before Friday.

Among them is Magnum Hunter Resources, with a $450 million offering of eight-year senior notes via Citigroup and Credit Suisse.

Although official price talk has yet to surface Magnum Hunter is expected to come with a yield in the low 9% range, according to a trader who expected the deal to price on Thursday.

CNG, Affinity move up

When the new CNG Financial 9 3/8% senior secured notes due 2020 were freed for secondary dealings, traders saw the Cincinnati-based alternative financial services provider's upsized $400 million issue having traded up.

A trader pegged the bonds at 101¼ bid, 101¾ offered, while a second trader, who said that his shop was not involved, quoted them at a wide 101 bid, 102 offered, versus the deal's par issue price.

Affinity Gaming LLC's 9% notes due 2018 were seen by a trader at 101½ bid, 102 offered.

The Las Vegas-based operator of casinos hosting the local population, rather than high-rolling tourists who favor the bigger, glitzier gambling palaces on the city's fabled Strip, priced its $200 million issue at par.

A second trader heard the deal offered at 102¼ without seeing a bid.

However, he said that it was clear to him that the both Affinity and the CNG deal "were trading up from issue."

He noted the fact that junk bonds generally were down about a quarter-point on a generic basis, apparently taking something of a cue from stocks, which weakened notably after the Labor Department reported that only 115,000 new jobs were created in April - far less than the roughly 170,000 that Wall Street had been expecting.

This was the third straight decline in the closely watched non-farm payrolls figure and was taken as an indicator that the U.S. economic recovery is moving at a much slower and weaker pace than hoped for.

"Given that today was a weaker day, they held their own on a down day," the trader added.

Recent deals stay strong

Among the deals priced on Thursday or earlier in the week, a trader saw iStar Financial, Inc.'s 9% notes due 2017 trading at 98 bid, "right at their issue price."

The New York-based commercial real estate lender priced its quickly shopped and upsized $275 million offering on Thursday at 98.012 to yield 9½%. The deal was enlarged from an originally planned $250 million and had traded up slightly when it was freed, going out on Thursday quoted at 98½ bid, 99 offered.

Thursday's other notable deal - Rite Aid Corp.'s $421 million add-on to its 9¼% senior guaranteed notes due 2020 - was trading at 101 7/8 bid, 102 offered.

The Camp Hill, Pa.-based drugstore chain operator had priced its quick-to-market offering at 101.25 to yield 8.962%, and it traded up to the 101½ bid, 102 offered level in Thursday's aftermarket.

"The one that's really hanging in there," a trader said, was Sabre Inc.'s 8½% senior secured notes due 2019. He quoted the notes at bid levels between 102 and 1021/2.

The Southlake, Texas-based travel information technology company's $400 million issue, a scheduled forward-calendar deal rather than a drive-by transaction, priced at par on Wednesday and almost immediately got as good as 102 3/8 bid, 102 5/8 offered.

The bonds continued to hover above the102 level on Thursday and again on Friday.

Junk holds its own

Away from the new deals, a trader opined: "Obviously, the stock market was pretty sloppy today" in the wake of the poor jobs figures, with the bellwether Dow Jones Industrial Average plunging 168.32 points, or 1.27%, to close at 13,038.27.

The broader Standard & Poor's 500 index dropped by 1.61% on the session, while the even broader Nasdaq composite index lost 2.25%. It was the worst week of the year for the equity market.

Against that somber backdrop, though, junk "basically did go almost its own way," the trader said, allowing that there was a little weakness in the energy names, given that a slowing economy spells a downturn in energy use.

Market measures mixed on day

Statistical measures of junk market performance were mixed on Friday for a third straight session, although they were seen mostly higher on the week.

A trader saw the Markit Group CDX North American Series 18 High Yield Index off for a second straight day, losing 3/8 of a point Friday to end at 96 bid, 96 1/8 offered. The index had fallen by 5/16 of a point on Thursday, after having been unchanged the two previous sessions.

The index was down versus its close at the end of the previous week, on April 27, when it stood at 96 5/8 bid, 96 7/8 offered.

The KDP High Yield Daily Index, meanwhile, edged up by 1 basis point on Friday to close at 74.22, after having gained 11 bps on Thursday. Its yield came in by 2 bps on Friday to 6.41%, after having declined by 5 bps Thursday.

Those levels compare favorably with the week-earlier index reading of 73.90 and its yield of 6.56%.

And the widely followed Merrill Lynch U.S. High Yield Master II Index posted its ninth straight daily gain on Friday, rising by 0.075%, following Thursday's 0.13% advance.

That lifted its year-to-date return to 6.782%, a new peak level for 2012, from 6.703% Thursday, the previous 2012 high-water mark.

The cumulative return was seen at its highest level since Dec. 31, 2010, when it ended that year at 15.19%.

The index showed a one-week gain of 0.696%, its third straight weekly gain in a row. Last Friday, it showed a year-to-date return of 6.045%.

Cincinnati Bell seen better

Among specific non-new-deal names on Friday, a trader said that one of the most notable in Junkbondland was Cincinnati Bell, Inc.

"[Cincinnati Bell was] up pretty strongly today, and the stock was even up a little bit - but the bonds were strong."

He said that the Ohio-based telecommunications company's paper "has been moving up strongly all week."

He said that the company's 8 3/8% notes due 2020 were trading on Thursday in a 1021/2-to-102 5/8 context, but on Friday, the notes moved up to 104¾ bid, 105 offered, "on pretty decent volume, too."

More than $10 million of the bonds traded, putting the credit high up on the junk most-actives list.

He likewise saw Cincinnati Bell's 8¼% notes due 2017 move up from the 103 area on Thursday, to 106½ bid, 107 offered on Friday.

Another active issue was the company's 8¾% notes due 2018, moving up to the 98 bid level, with over $7 million changing hands.

A second trader also saw upside activity in the company's bonds, quoting them up "at least a point or more."

He suggested that the bonds may have been given a boost by the news that Raymond James had upgraded Cincinnati Bell's New York Stock Exchange-traded shares to an "outperform."

Even though the recommendation was for the equity, he said, "It's a positive catalyst because what's good for the stock is probably good for the bonds as well.

Those shares rose by31 cents, or 8.71% on Friday, to close at $3.87, on volume of 5.9 million, or more than four times the norm.

The key to the bonds' movement may lie in an announcement the company made on Thursday, when it said that it plans to pursue an initial public offering of shares of common stock of a company that will be formed to own and operate CyrusOne, Cincinnati Bell's data-center business.

Cincinnati Bell said that its objectives from the planned transaction are "to execute its growth strategy for the Data Center business, ultimately pay down debt to amounts appropriate for the remaining telecommunications company and to maximize value for Cincinnati Bell's shareholders. Cincinnati Bell intends to use a portion of the public offering proceeds to repay indebtedness."

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