Holidays, U.S. downgrade weigh on high yield; Community Health declines; Burger King slips

By Stephanie N. Rotondo and Paul A. Harris

Portland, Ore., April 18 - Holidays bookending the week resulted in a quiet day in the secondary high-yield market on Monday.

"We're not even at $1 billion," a trader said.

News that Standard & Poor's had placed United States' debt on negative outlook might have also played a role in dragging that market down. The Dow Jones Industrial Average, for example, dropped about 140 points on the day as market players tried to discern what it all meant.

But despite the overall subdued climate, Community Health Systems Inc. remained "a very active one," according to another trader. However, the bonds came under pressure as the week began.

Burger King Capital Holdings' new deal - priced Thursday - weakened with the broader market, pulling down its older notes along with it.

Meanwhile, NewPage Corp.'s subordinated debt remained weak as investors reacted to news out Friday regarding another executive departure.

Dynegy Inc. was also on the softer side. Last week, the energy company said it had hired advisors to help put together a restructuring plan.

Market indicators fall

The CDX North American High Yield index fell 7/16 of a point, a trader said, to close at 101 7/8 bid, 102 offered.

The KDP High Yield index meantime slipped to 75.73, with a 6.61% yield, from 75.82, with a 6.58% yield, on Friday.

Carmeuse upsizes

Belgian limestone producer Carmeuse SA completed Monday's sole new deal, an upsized $450 million issue of seven-year senior secured notes (B1/BB-), which priced at par to yield 6 7/8%.

The yield printed in the middle of the 6¾% to 7% price talk.

J.P. Morgan Securities LLC., BNP Paribas Securities Corp., Credit Agricole Corporate and Investment Bank and ING Bank NV were the joint bookrunners for the debt refinancing deal, which was upsized from $375 million.

The par-pricing notes traded at 101¼ bid during a session characterized by quiet flows and turbulence in the stock market, according to a trader who watched the Carmeuse transaction.

Markets became unsettled by news that S&P has lowered its outlook on the United States' triple A credit rating, the trader remarked.

Although the CDX index came under pressure by the same news that rattled the stock market, cash bonds showed resilience, market sources said.

That resilience was especially notable among recently price deals.

Calumet Specialty Products Partners, LP's new 9 3/8% senior notes due 2019 (B3/B/), which priced at par on Friday in a $400 million issue, were up 3 points mid-Monday afternoon, a trader said.

Quiet week expected

With the Passover holiday upon us, as well as spring break in some New York schools, players are looking for a quiet week ahead in the junk bond market.

Few deal announcements are expected, observers said on Monday.

Much of the pre-Easter primary market business is expected to unfold during the earlier part of the week.

On Monday, Medical Properties Trust, Inc. talked its $450 million offering of 10-year senior notes (Ba2/BB/) with a 6¾% to 7% yield.

The deal, via J.P. Morgan Securities LLC, Merrill Lynch, Deutsche Bank Securities Inc. and RBC Capital Market, is set to price on Tuesday.

Meanwhile, Dematic SA talked its $300 million offering of five-year senior secured first-lien notes (B3/B) with a yield in the 8¾% area on Monday.

The books are scheduled to close at noon ET on Tuesday, and the deal is expected to price thereafter.

J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. are the joint bookrunners.

Meanwhile, Lee Enterprises, Inc.'s $1.05 billion two-part offering of senior secured notes (Caa2) remained a topic of conversation on Monday.

The Davenport, Iowa-based newspaper publisher plans to sell $675 million of six-year first-lien notes and $375 million seven-year second-lien notes.

The first-lien notes are being discussed in the context of a 10% yield, according to a trader.

The second-lien deal, which is heard to be coming with a 15% coupon at a significant discount, is believed to have been the subject of reverse inquiry and, as such, is largely spoken for, the trader added.

Although some market sources were expecting terms on the deal before the Monday close, none were available late in the session, an informed source said.

Credit Suisse Securities and Deutsche Bank Securities Inc. are the joint bookrunners for the debt refinancing deal.

Another deal set to price before Easter is Consolidated Minerals Ltd.'s $400 million offering of five-year senior secured notes (B2/BB-).

Yield conversations have taken place in the mid-8% range, a market source said.

Deutsche Bank Securities Inc. and Citigroup Global Markets are the joint bookrunners.

Meanwhile, rate conversations regarding Community Choice Financial, Inc.'s $370 million offering of eight-year senior secured notes have taken place in the context of 10½% to 11%, the source added.

Credit Suisse Securities (USA) LLC and Jefferies & Co., Inc. are the joint bookrunners for the deal, which is also set to price before Easter.

Finally, the last euro-denominated deal expected to come before Easter is Belgium's Ideal Standard International SA, which is in the market with a €250 million offering of seven-year senior secured notes (expected ratings Caa1//B+).

Price talk and final terms are expected on that deal on Tuesday.

Goldman Sachs International and Deutsche Bank are the joint bookrunners.

Satmex starts roadshow

Finally on Monday, in a deal expected to play to both high-yield and emerging markets audiences, Mexico's Satelites Mexicanos SA de CV (Satmex) began a roadshow for its $325 million offering of six-year senior secured notes (B3//) via Jefferies.

Proceeds will be used to redeem the existing first-lien notes and to fund other needs.

A roadshow in the United States will get under way during the April 25 week.

Calcipar trades up

Calcipar SA's new $450 million issue of 6 7/8% notes due 2018 priced on Monday at par. By the close of business, the new notes were trading at 101¼ bid, 101¾ offered, a trader said.

The bonds (B1/BB-) were sold in a Rule 144A private placement.

Community Health digs deeper

Community Health Systems' 8 7/8% notes due 2015 were "trading a ton," a trader said, despite an overall muted trading day.

He called the paper down nearly a point at 1013/4.

Another trader said the debt was "very active," pegging the issue around the 102 mark.

Another market source also placed the notes around 102, down half a point.

Last week, Community Health came under fire when takeover-target Tenet Healthcare Corp. filed a lawsuit alleging improper billing practices. It was soon revealed that the U.S. government was investigating the matter.

On Monday, Community Health persisted in its hostile bid for Tenet, sweetening its offer to a mostly cash bid.

Community Health had originally proposed a buyout at $6 per share. The company is now offering $1 of Community Health stock and $5 in cash.

"Converting our offer to all cash underscores our commitment to completing this transaction and renders Tenet's irresponsible and inaccurate lawsuit irrelevant to our offer," said Wayne T. Smith, chairman, president and chief executive officer of Community Health, in a prepared statement.

"We are confident that our business practices are appropriate, and we will respond in detail to Tenet's claims in due course.

"Tenet shareholders should be outraged by the billions of dollars in shareholder value that the Tenet board has destroyed for its own shareholders and the industry at large as a result of its reckless and self-serving allegations," Smith continued.

"We are confident that Tenet shareholders will hold the entrenched Tenet board accountable for this scorched earth response to our acquisition proposal."

"The revised bid actually locks in a fixed value for Tenet, one that is potentially lower since it excludes the upside potential down the road from Community [Health] stock, which confirms our view that Community [Health] will not overpay for Tenet's assets - and apparently no one else wants to either since no other bidders have emerged," wrote Gimme Credit LLC analyst Vicki Bryan in an afternoon note to clients.

Community Health is a Brentwood, Tenn.-based operator of acute care hospitals in non-urban markets located throughout the U.S.

Burger King slides

Burger King's recently issued 0% discount notes due 2019 declined over a point to end around 573/4, according to a trader.

He also saw the 9 7/8% notes due 2018 at 105, down three-quarters of a point.

The Miami-based fast food eatery sold $400 million of the new senior discount notes on Thursday at 58.613. Proceeds will be used to either fund a dividend or to finance a strategic investment, should such an opportunity arise.

NewPage weaker on CFO exit

Concerned investors continued to put pressure on NewPage's 10% notes due 2012 in the wake of Friday's news that its chief financial officer, David Prystash, was resigning.

One trader called the notes down a point at 591/2, while another called the paper unchanged around 61.

Prystash reportedly chose to leave the Miamisburg, Ohio-based coated papermaker of his own accord. Curtis Short, controller and chief accounting officer, has been named the interim CFO, effective May 11.

Still, the departure marks the fourth executive resignation since last summer.

Dynegy debt declines

A trader said that Dynegy's debt dipped in Monday trading, seeing the 7¾% notes due 2019 at 761/2.

Another source deemed the notes over a point lower at 76½ bid.

On Wednesday, the Houston-based power producer announced it had hired Lazard Ltd. as financial advisor and White & Case LLP as legal advisor for a potential restructuring plan.

The hiring came after two failed takeover attempts - one from Blackstone Group LP late last year and one from Carl Icahn in early 2011. Back in March, Dynegy warned a Chapter 11 filing might be in the cards if it could not get its balance sheet stabilized.

GM down with equity

General Motors Corp.'s bonds saw "a little bit of action," a trader said.

The trader said the debt was weaker "what with the stock moving lower."

He saw the benchmark 8 3/8% notes due 2033 at 27 bid, 27½ offered.

Another trader called the notes down over a point at 27 bid, 28 offered.

The stock (NYSE: GM) declined 27 cents, or 0.89%, to $29.97 per share.

Last week, Motors Liquidation Co. - the company formed in June 2009 to deal with the company's bankruptcy case - said it would be distributing equity to creditors by April 21.

Also in the autosphere, Ford Motor Co.'s 7.45% notes due 2031 were deemed unchanged at 109 bid, 110 offered.

GM is a Detroit-based automaker.

Broad market loses ground

Elsewhere in Junkbondland, Clear Channel Communications Inc.'s 11% notes due 2016 closed a point lighter at 931/2, according to a trader.

The trader also saw Caesars Entertainment Corp.'s 10% notes due 2018 falling 1½ points to finish around 90.

At another shop, a trader said Capmark Financial Group Corp.'s debt - the 3¾% notes due 2010, the 7 7/8% notes due 2012 and the 8.30% notes due 2017 - closed a couple points higher around 53.

The bankrupt firm filed its reorganization plan on Monday.

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