Gray TV, Frontier, Ply Gem, BreitBurn price; calendar builds; Calpine terminates deal

By Paul Deckelman and Paul A. Harris

New York, Sept. 24 - The high-yield primary sphere began the new week pricing a series of quickly shopped deals Monday that ultimately added up to about $900 million of paper.

Gray Television Inc. came to market with an upsized $300 million of eight year notes - the biggest deal of the day.

Frontier Communications Corp. priced an upsized $250 million fungible add-on to its existing 2023 notes. Traders saw the new bonds little moved from their issue price.

BreitBurn Energy Partners LP came to market with a $200 million add-on to its existing 2022 notes.

And Ply Gem Industries, Inc. dropped by with a $160 million issue of 4.5-year notes.

The Gray, BreitBurn and Ply Gem deals came to market too late for any secondary trading.

While those deals were pricing, the Junkbondland forward calendar was building with additional new-deal announcements from Wolverine World Wide Inc., International Wire Group, Inc., Casella Waste Systems, Inc., Atlas Pipeline Partners LP and Elan Corp.

However, the calendar lost a deal, as Calpine Corp. elected to terminate the $615 million offering that the power-generating company announced last Thursday.

Secondary market traders said that activity was muted with nothing standing out.

However, there was some upside action seen in CIT Group Inc.'s bonds on speculation that the commercial lender might be looking to sell itself to a major banking concern.

Market performance indicators were lower across the board.

Gray TV upsizes

A busy Monday session saw four issuers price a face amount of $900 million, each one bringing a single-tranche deal.

Gray Television priced an upsized $300 million issue of eight-year senior notes (Caa2/CCC+) at 99.266 to yield 7 5/8%.

The yield printed at the tight end of yield talk that was set in the 7¾% area.

Bank of America Merrill Lynch was the left lead bookrunner for the debt refinancing. Wells Fargo was the joint bookrunner.

Frontier at the rich end

Frontier Communications priced an upsized $250 million tack-on to its 7 1/8% senior notes due Jan. 15, 2023 (Ba2/BB) at 104.25 to yield 6.551%.

The reoffer price came at the rich end of the 104 to 104.25 price talk.

Credit Suisse and J.P. Morgan were the joint bookrunners for the quick-to-market add-on, which was upsized from $200 million.

The Stamford, Conn.-based voice, broadband, satellite video and wireless internet company plans to use the proceeds for general corporate purposes, including debt refinancing.

The original $600 million issue priced at par Aug. 8, 2012.

BreitBurn taps 7 7/8% notes

BreitBurn Energy Partners and BreitBurn Energy Finance Corp. priced a $200 million add-on to their 7 7/8% senior notes due April 15, 2022 (B3/B) at 103.50 to yield 7¼%.

The reoffer price came on top of price talk.

Wells Fargo, BMO, Credit Suisse, J.P. Morgan and Mitsubishi were the joint bookrunners for the quick-to-market debt-refinancing issue.

The Los Angeles-based oil and gas acquisition, exploitation and development company plans to use the proceeds to repay bank debt.

The original $250 million issue priced at 99.154 to yield 8% on Jan. 10, 2012.

Ply Gem at the tight end

Ply Gem Industries priced a $160 million issue of senior notes due April 15, 2017 (Caa3/CCC) at par to yield 9 3/8%, at the tight end of price talk that was set in the 9½% area.

UBS was the lead left bookrunner for the quick-to-market debt refinancing. J.P. Morgan was the joint bookrunner.

Orange Switzerland sells notes

Orange Switzerland priced a €155 million issue of senior notes due Feb. 15, 2020 at par to yield 7¾% in a quick-to-market Monday transaction.

The yield printed at the tight end of the 7¾% to 8% yield talk.

Global coordinator and joint bookrunner Credit Suisse will bill and deliver. Deutsche Bank was also a global coordinator and joint bookrunner.

UBS, Citigroup, JP Morgan and Morgan Stanley also were joint bookrunners.

The Renens, Switzerland-based telecommunications company plans to use the proceeds to fund a dividend.

ADS Waste downsizes

Looking toward the Tuesday session, ADS Waste Holdings Inc. downsized its notes offer to $550 million from $700 million and shifted $150 million of proceeds to its bank loan.

The company talked the eight-year senior notes (Caa1) to yield 8¼% to 8½%.

Deutsche Bank, Macquarie, UBS, Barclays and Credit Suisse are the underwriters.

Atlas plans $300 million

Also for Tuesday, Atlas Pipeline Partners and Atlas Pipeline Finance Corp. plan to price a $300 million offering of eight-year senior notes (expected ratings B2/B).

Wells Fargo, Bank of America Merrill Lynch, Citigroup, Deutsche Bank and J.P. Morgan are the joint bookrunners.

The Moon Township, Pa.-based midstream energy services provider plans to use the proceeds to pay down its revolver.

Wolverine starts roadshow

The active forward calendar grew Monday.

Wolverine World Wide plans to start a roadshow Tuesday for its $375 million offering of eight-year senior notes (expected ratings B2/B+), which are expected to price on Friday.

J.P. Morgan and Wells Fargo are the joint bookrunners for the debt refinancing.

International Wire starts show

International Wire Group started a roadshow Monday for its $250 million offering of five-year senior secured notes (B3/B).

The deal is expected to price late in the present week.

J.P. Morgan, Wells Fargo and Jefferies are the joint bookrunners.

The Camden, N.Y.-based wire products manufacturer plans to use the proceeds, along with advances under its revolver, to retire all of its senior notes due 2015 and all of International Wire Group Holdings, Inc.'s PIK notes. The proceeds also will be used to fund a special distribution to Holdings and those proceeds will be used by Holdings to make a distribution and/or a stock repurchase.

Casella to tap 7¾% notes

Casella Waste Systems started a roadshow Monday for a $135 million add-on to its 7¾% senior subordinated notes due Feb. 15, 2019 (expected ratings Caa2/CCC+).

An investor call is scheduled for 12:30 p.m. ET on Tuesday.

The deal is expected to price before the end of the present week.

Bank of America Merrill Lynch and J.P. Morgan are the joint bookrunners.

The Rutland, Vt.-based solid waste collection, disposal and recycling service plans to use the proceeds, along with a concurrent public offering of common stock and borrowings under its credit facility, to refinance its existing 11% senior second-lien notes due 2014.

The original $200 million issue priced at par on Jan. 26, 2011.

ImPact to sell $135 million

ImPact Medical BV is marketing a $135 million offering of unrated five-year second-lien secured notes.

The Regulation S-only deal is expected to price during the Oct. 1 week.

Knight Capital is the sole bookrunner.

The notes come with three years of call protection.

The company will consider an equity component to enhance the yield.

The proceeds will be used to acquire three Latin American medical-device distribution companies and $43 million of EBITDA.

The issuer is a Dutch-based orthopedic and cardiovascular medical-device distributor, which will be headquartered in Atlanta. Its main operations are in Brazil.

Agrokor starts in London

Croatia's Agrokor DD began a roadshow Monday in London for its €475 million equivalent offering of seven-year senior notes (expected ratings B2/B), which will be sold in dollar- and euro-denominated tranches.

A roadshow in the United States is set to start Tuesday and wrap up Thursday.

J.P. Morgan will bill and deliver for dollar-denominated notes. BNP Paribas will bill and deliver for the euro-denominated notes.

BNP, J.P. Morgan and UniCredit are the joint bookrunners.

The Zagreb, Croatia-based consumer food-products company plans to use the proceeds to refinance debt.

Calpine withdraws

Finally, Calpine withdrew its $615 million offering of 10-year senior secured notes, according to a market source.

The transaction could not be completed in the 5% to 5¼% context that the company contemplated, the source added.

The deal was expected to price late last week.

Morgan Stanley, Barclays, Deutsche Bank and RBC were joint bookrunners for the debt-refinancing deal.

Frontier little moved

A secondary market trader said, "Usually, you get a quiet tone until a lot of the stuff prices. Then you have the usual flurry and then it all quiets down again."

Owing to the lateness of the hour at which most of the day's new deals finally priced, he said the only bonds he saw any aftermarket dealings in was Frontier Communications' add-on to its existing 7 1/8% notes due 2023.

But he quoted the Stamford, Conn.-based telecommunications company's quick-to-market offering at 1041/4, 105 bid, right at the upsized $250 million transaction's issue price.

Tesoro trades around

The trader otherwise saw only spotty activity in new or recently priced deals.

For instance, he said he saw as much as $14 million of Tesoro's 5 3/8% notes due 2022 changing hands during the session, making that San Antonio, Texas-based petroleum refining company's recent deal one of the more active issues. But he saw the bonds unchanged at the same 103 3/8 bid level seen at the close of last week.

Tesoro priced $475 million of those bonds at par in a drive-by deal Sept. 13, along with $450 million of new 4¼% notes due 2017, which also came at par. The new bonds quickly moved up to the 1021/2- to 103-level and stayed there even as activity in them died off, until Monday.

There was no real trading seen in the 2017 piece, in the meantime.

Valeant gains value

However, another trader saw Valeant Pharmaceuticals International Inc.'s new 6 3/8% notes due 2020 take an upside ride, quoting those bonds at 101¾ bid, 102¼ offered.

Friday's deals unseen

A trader said he saw no dealings Monday in any of the new deals that came to market on Friday, including New York-based art auction house Sotheby's Holding Inc.'s $300 million of 5¼% notes due 2022, Los Angeles-based commercial aircraft leasing company Air Lease Corp.'s upsized $450 million of 4½% notes due 2016 and York, Pa.-based paper and fiber-based engineering products producer P.H. Glatfelter Co.'s upsized $250 million of 5 3/8% notes due 2020.

All three issues priced at par Friday and then were seen trading higher. Sotheby's even jumped to 101½ bid, 102 offered, but were not seen around Monday.

Buyers getting choosy

With junk market still in the process of digesting the roughly $28 billion of new paper that came in the past two weeks - more than $12 billion in the week ended Friday and $16 million the week before that - traders said investors were getting a little more particular about the deals they wanted to buy.

"A lot of people are just passing on them or only picking one or two," said an investor while looking at Monday's lengthy roster of announced new deals.

Prior to its late-session pricing, he said he heard that some investors are looking at Gray Television's issue. "That one they're happy with, with talk around the 7¾% area, but they'll pass on some of the others," the trader said.

Secondary softens up

Away from the new-deal realm, the trader continued that he heard "a lot of bid lists" were circulating around, which suggested to him that people are trying to raise cash.

"I don't know what we're going to see toward the end of the week," he said, "but I think you might see some guys taking some money off the table. That's been my feeling, hedge fund guys, or guys like that."

Indicators head south

Statistical indicators of junk-market performance were lower across the board for a third straight session Monday after having been mixed on the day Friday.

The Markit Group CDX North American Series 18 High Yield Index lost 9/16 point to close at 101 3/16 bid, 101 5/16 offered, after being off slightly Friday.

The KDP High Yield Daily Index suffered its third straight loss Monday, plunging by 25 basis points to close out the day at 74.77, after falling by 12 bps on Friday.

Its yield rose by 9 bps, to 5.85%, on Monday after widening by 4 bps on Friday.

And the widely followed Merrill Lynch U.S. High Yield Master II Index endured its third straight loss, losing 0.12% on Monday, on top of Friday's 0.044%.

The loss left its year-to-date return at 12.515%, down from Friday's 12.65% and down from its peak level for the year of 12.814%, set Wednesday.

CIT up on buyout buzz

But while many issues were off, a trader said New York-based commercial lender CIT Group's bonds were strongly higher, in tandem with a jump in the company's shares.

He said its 5% notes due 2022 were up about 2½ points on the day, last trading at 104 1/8 bid. More than $8 million of the bonds traded by mid-afternoon, making it one of the more popular junk issues.

He also saw its 5% notes due 2017 up 2 points at 108 bid, while its 5¼% notes due 2018 rose by 1¼ point.

Its New York Stock Exchange-traded shares firmed by $2.30, or 5.91%, to close at $41.25 on volume of 6.5 million shares, more than five times the norm.

The rise in the company's securities came against a backdrop of an analyst at Stifel Nicolaus & Co. saying in a morning research note to investors that banking giant Wells Fargo Corp. could benefit from an acquisition of CIT.

Later on during the session, FOX Business News commentator Charles Gasparino tweeted that CIT boss John Thain is shopping the company around, "looking to land at a big bank."

Cristal Cody contributed to this report

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