CKE prices, Fidelity slates mega-deal, GenOn to also sell notes; CIT up amid quiet secondary

By Paul Deckelman and Paul A. Harris

New York, July 6 - With the Fourth of July holiday break now history, the high-yield market got back to work on Tuesday - at least the new-deal portion of it did.

CKE Restaurants, Inc. successfully came to market with a $600 million offering of eight-year secured notes. However, the Carpinteria, Calif.-based restaurant chain operator's new deal priced late in the session and was not seen trading around in the aftermarket.

In fact, there was little really going on at all in the secondary realm, with traders characterizing Tuesday as almost a continuation of the just-passed holiday break. One of the few names seen somewhat active was CIT Group Inc., fresh off a barrage of news at the tail end of last week, when few people were around or actually paying attention, including the appointment of a new chief financial officer and the completion of several corporate funding initiatives.

Back in the primary arena, Fidelity National Information Services, Inc. announced plans for a $1.2 billion two-part notes offering, with syndicate sources hearing that the Florida-based provider of banking and payments technology hit the road to market its seven- and 10-year notes.

GenOn Energy - the company being formed by the merger of power producers Mirant Corp. and RRI Energy Inc. - said in a regulatory filing that it expects to sell $1.4 billion of senior notes as part of its larger funding package for the merger.

Out of Europe came word that a pair of prospective German issuers - tiremaker Continental AG and drug wholesaler Phoenix Pharmahandel GmbH & Co. KG - had begun marketing their respective euro-denominated deals to would-be buyers.

CKE prices $600 million

Tuesday was a slow day in the high-yield market as New York-based players trickled back into their offices, returning from the three-day Independence Day weekend.

CKE Restaurants priced the day's only deal.

Columbia Lake Acquisition Corp., which will be merged into CKE Restaurants, priced a $600 million issue of 11 3/8% eight-year senior secured second-lien notes (B2/B) at 98.085 to yield 11¾%.

The yield printed on top of the price talk.

Morgan Stanley & Co. Inc., Citigroup Global Markets Inc. and RBC Capital Markets Corp. were the joint bookrunners.

Proceeds will be used to help fund the buyout of the company by Apollo Global Management and to repay all balances under the existing credit facility.

Not the easiest deal

The CKE deal, which wrapped up its roadshow well ahead of the Independence Day break, obviously wasn't the easiest deal, according to a sell-side source who had a close look.

A handful of accounts who really like the credit anchored the book, the sell-sider added.

Restaurants are always a tough sector in the high yield, and present market conditions didn't help, the sell-sider said.

Also, the fact that Apollo Management took CKE private earlier this year, did not necessarily auger in the deal's favor, the sell-sider remarked, adding that some accounts pulled out because they did not want to become involved with the sponsor.

The 11¾% yield that was printed on Tuesday's CKE notes probably represents the right price for the deal, the sell-sider added.

The company came hoping it might get the deal done in the low 11% range, with a more aggressive covenant package, but needed to compromise on both counts in order to get it done.

Fidelity National plans $1.2 billion

Apart from CKE it could be a quiet week in the primary market, the sell-side source said.

Fidelity National Information Services began a brief roadshow on Tuesday for its $1.2 billion two-part offering of senior notes.

Both tranches are expected to price during the present week.

The deal features seven-year notes, which come with three years of call protection, and 10-year notes, which come with four years of call protection.

Bank of America Merrill Lynch, JP Morgan, Goldman Sachs & Co. and Wells Fargo Securities are the joint bookrunners.

Credit ratings in the mid-to-low double B range are expected for the notes, which come to market via Rule 144A with registration rights.

The first call premiums for both tranches of notes will be calculated at par plus 0.75% of the respective coupons.

Proceeds, along with proceeds from the company's amended credit facility, will be used to repurchase shares of common stock and pay down the Metavante credit facility.

Continental kicks off benchmark deal

Meanwhile, the European high-yield market continued to generate news.

Conti-Gummi Finance BV, a financing unit of Germany's Continental AG, began a brief roadshow on Monday for its benchmark euro-denominated offering of five-year senior secured notes (B1/B).

The roadshow, which wraps up on Thursday, includes stops in London, Frankfurt, Paris and Amsterdam.

Citigroup and Royal Bank of Scotland are global bookrunners for the Rule 144A and Regulation S offering.

Proceeds will be used to refinance debt.

Phoenix Pharmahandel to sell €500 million

Elsewhere, Phoenix PIB Finance BV, a financing unit of Germany's Phoenix Pharmahandel, is in the market with a €500 million offering of four-year non-callable senior notes (expected ratings B1/B-).

The deal is expected to price on Friday.

The syndicate includes Deutsche Bank Securities, BayernLB, Commerzbank, Credit Agricole, Danske Bank, Erste Group, Helaba International Finance plc, HSBC, ING, Landesbank Baden-Württemberg, Mediobanca, Nordea, Royal Bank of Scotland, Raiffeisen Zentralbank Oesterreich, SEB, UniCredit and WestLB.

Proceeds will be used to refinance debt.

In addition to the bonds, the financing is expected to include €2.6 billion in syndicated loans.

Germany-only euro junk market

"All the European high-yield news is coming out of Germany," a New York-based debt capital markets banker observed on Tuesday.

In addition to the Continental and Phoenix transactions, Germany's Oxea GmbH is expected to price its €500 million equivalent offering of seven-year senior secured notes (B2/B+), this week.

A U.S. roadshow was scheduled to get underway on Tuesday.

Deutsche Bank Securities, Morgan Stanley and JPMorgan are leading the Oxea deal.

And last week, German packaging company Nordenia Holdings GmbH priced a €280 million issue of 9¾% seven-year second-priority notes (B2/B/) at 98.76 to yield 10%, via Barclays Capital and Deutsche Bank Securities.

Recent new deals unseen

Several traders said they saw no activity among the bond deals which priced last week, including Insight Communications Inc., whose $400 million offering of 9 3/8% eight-year notes had priced at par last Wednesday and had then proceeded to move up over the next two sessions.

A trader said that the New York-based Midwestern cable systems operator's bonds, which had firmed to 101½ bid, 102 offered by last Friday, were still at that level, with no trading seen on Tuesday.

"There was nothing cooking there," he declared.

Market indicators gain

Among established issues having no new-deal connections, a trader saw the CDX North American HY Series 14 Index up 1/8 point on Tuesday to end at 94¼ bid, 94¾ offered, after having gained 3/8 point on Friday.

The KDP High Yield Daily Index meantime firmed by 14 basis points on Tuesday to 70.38, after having eased by 2 basis points on Friday. Its yield came in by 6 bps to 8.71%, after having moved upward by 1 bp on Friday.

Advancing issues led decliners for a second consecutive session on Tuesday, by a six-to-five margin, after having regained their lead on Friday after the previous day's decline, topping them by around a nine-to-seven ratio. Advancers and decliners have battled back and forth for dominance over the last few sessions.

Overall activity, represented by dollar-volume levels, more than doubled on Tuesday from the extremely quiet levels seen on Friday, when volume shrank by 63% as activity wound down ahead of the July 4 weekend.

A trader said that Tuesday's session "started out like it was going to be a pretty good day, but then kind of died down as the afternoon went on and the equity market faded a little bit."

The bellwether Dow Jones Industrial Average, which as one point early in the session was up by as much as 172 points, gave it all back and then some to dip into the red by early afternoon, before finally coming out of its swoon to end up 57.14 points, or 0.59%, to end at 9,743.62. Other, broader market indexes like the Standard & Poor's 500 and the Nasdaq composite, also bounced back from afternoon deficits to end slightly higher.

For instance, the trader saw one of the junk market's key benchmark issues, Community Health Systems Inc.'s 8 7/8% notes due 2015 as "essentially unchanged" during the session, as the Franklin, Tenn.-based hospital operator's "didn't do much," moving in a narrow range between a low of 103 bid and a high of 103 5/8.

The trader said that the muted activity was likely attributable to some market participants extending the three-day Independence Day holiday break by another day. Another factor, he pointed out, was the weather- with temperatures in New York and other Northeastern business centers approaching a humid 100 degrees, "people were dying of the heat. If someone were down at the beach, I don't think they would want to come back to the city."

"It was definitely a little on the slow side," another trader said. "Anybody who could [stay out], did," judging by the relatively small volume of e-mail messages he had received.

CIT seen busy

A trader said that CIT Group Inc.'s 7% notes due 2017 was "one of the more active names on the day," seeing the bonds up about ½ at 92½ bid, 92¾ offered, although there was "nothing too dramatic" about its movement.

Another trader said the New York-based commercial lender's bonds were quoted "a little higher on the longer end," seeing the '17s around a 92-92½ range, which he called probably up ½ point to a full point.

However, he saw the company's shorter-end bonds, like its 7% notes due 2013, unchanged at 96 bid.

A market source at another desk was quoting the 2017 bonds at 92 1/8, up more than 2 points, in brisk trading of over $22 million of bonds by mid-afternoon. The source also saw the 7% notes due 2014 actually off slightly at 94 bid, on robust trading volume. CIT's 7% notes due 2016 were seen trading just below the 93 mark, up more than 2 points on the session.

The bonds may have been given a boost by positive news which the company announced at the end of last week, which some participants might have been absent for or might have overlooked in the run-up to the July 4 holiday break.

CIT announced that it had closed on two new funding facilities totaling about $800 million and had completed about $500 million in asset sales to improve it liquidity picture. The company also said that it had prepaid $1.25 billion of first-lien debt.

On top of that, CIT announced on Friday that it had hired a new chief financial officer, Scott T. Parker, as well as a new corporate controller, Carol Hayles.

First Data seen firmer

Also among the financial names, a trader said that First Data Corp.'s bonds "moved a little bit," with its 9 7/8% notes due 2015 "pretty active earlier on this morning," before ending in a 76-76½ context, which he called up perhaps ½ point from Friday's levels, on "decent volume."

A market source at another desk, seeing the bonds around 761/2, pronounced them up 1½ points.

"A lot of First Data traded," yet another participant said, "but then they always trade a lot." He also saw the 9 7/8s in a 76-76 ¾ range, versus 75-75¾ on Thursday," so they were up close to a point."

A company spokesman was quoted by The Wall Street Journal as saying that the Atlanta-based electronic transaction processor could tap the junk market for funds "today" if it wanted to take out some of the $15 billion of debt coming due by 2014 which the company racked up as buyout financing when it was taken private in 2007 by Kohlberg Kravis & Roberts.

The paper quoted company spokesman Chip Swearngan as saying that First Data has enough cash on hand to manage its debt, and is "comfortable" with its capital structure."

Energy names quiet down

A trader said the recently busy oil names connected with the Gulf of Mexico drilling rig disaster "seemed to be pretty quiet - there was some activity, but it looks like they ended up where they started the day."

He saw beleaguered British oil giant BP Capital Markets plc's 5¼% notes due 2013 ending around 94½ bid, while its 4¾% notes due 2019 around 871/2, which he said "didn't seem like that much change from where they started."

A market source at another shop saw "pretty good volume" in the 51/4s, which he pegged down ¼ point on the day at 941/2. He saw its 3 7/8% notes due 2015 unchanged to off slightly at 87¼ bid, also on pretty good volume.

The first trader meantime theorized that "the same held true as well" for BP's junior partner in the ruptured Macondo Prospect oil well, Anadarko [Petroleum Corp.], seeing its 5.95% notes due 2016 in an 88-89 context, "pretty much where they started the day."

But a second trader saw the Woodlands, Tex.-based independent oil and gas exploration and development operator's 5.95s up a point at 88½ bid, while quoting its 6.95% notes due 2019 unchanged at 891/2.

Meanwhile, Transocean Inc.'s 6.80% bonds due 2038 "moved up a bit," to trade in a 90-91 context and go out at 91 bid, terming that up between ½ point and a full point, although the company's 6% notes due 2018 were unchanged around 92.

However, another trader saw the latter issue up around ¾ point on the day at 921/4, on more than $290 million traded, while "its other issues didn't really have much volume."

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