CHC Helicopter prices deal; Level 3 Continues to ease

By Paul Deckelman and Paul A. Harris

New York, April 21 - CHC Helicopter Corp. was heard by high yield syndicate sources to have priced a new deal during Wednesday's session and terms also emerged on a recent offering from Eldorado Resorts. The day also saw a deal for Leiner Health Products join the forward calendar and plans for a short roadshow for a new offering by Tele Columbus emerge.

In the secondary market, bonds of Level 3 Communications Inc. continued to retreat, despite a lack of fresh negative news about the Broomfield, Colo.-based telecommunications fiber optic network operator. PanAmSat Corp. notes were up on investor response to Tuesday's news that the satellite communications company is to be bought out by Kohlberg Kravis Roberts.

While Tuesday's amped-up anticipation of higher interest rates to come, sparked by some of Federal Reserve chairman Alan Greenspan's most unveiled remarks in recent memory, reportedly put the scare into a lot of junk players, Wednesday's high yield session saw a bit more activity, according to sell-side sources.

"It was a little bit more active, but still under some pressure given what is going on with the Treasury market," commented one investment banker shortly after Wednesday's close.

Citing that 10-year Treasury at a yield of 4.42%, in from Tuesday's close of 4.46%, the sell-sider said that Tuesday's sell-off in Treasuries continued to impact the market on Wednesday.

"It did not seem to create a whole lot of selling pressure throughout the day," the source specified. "But I think the market is just a lot more skittish than it was two weeks ago."

Still, the investment banker continued, rates haven't actually risen - they are merely expected to rise. And that could translate into a period of brisk business in the primary market.

"We could see a last-ditch effort on the part of a lot of these corporations to term out some of their bank debt at some of these very low rates," the senior sell-side official said.

"After that it's just going to be a matter of whether or not you those have to do it. At that point those who don't have to may elect to just sit with their capital structures."

The source went on to say that, beyond doubt, there are plenty of companies that could stand to refinance their bank debt.

"It just depends on how quickly the Fed is going to raise rates," the source said.

"Maybe we can keep a $2 billion to $4 billion [a week] pace of new issuance for the rest of the year if people think rate increases are going to be a slow, steady climb, as opposed to a situation where there are increases of 50 basis points here and 75 basis points there."

As to the uncertain signals regarding the liquidity of investors emanating from reports of cash flowing into and out of the high yield mutual funds, this sell-side official commented that the mutual fund flows don't loom quite as large in the high-yield liquidity picture as was once the case.

"Although they are an indicator that we don't have the high levels of liquidity that we did in January before money started flowing out, I think that there are other sources of liquidity in the high-yield market that are certainly providing funds for these new issues."

Another investment banker who spoke to Prospect News late Wednesday also said that considerable cash has been coming into high yield from sources more difficult to track than the mutual funds.

This official suggested that you don't need to be a very experienced tracker to pick out the footprints of hedge funds in the present primary market.

"That tends to be hot money," said the source, warning that the tide could turn quickly.

CHC leaves pad with $250 million

Terms on two deals were heard during Wednesday's primary market session.

CHC Helicopter Corp., of St. Johns, Newfoundland, sold $250 million of 7 3/8% 10-year senior subordinated notes (B2/B) at 99.455 to yield 7.453%.

The Merrill Lynch & Co.-led refinancing deal came at the tight end of the 7 3/8%-7 5/8% price talk.

When Prospect News quizzed one informed source about the apparent tightness of the transaction in light of the market choppiness reportedly catalyzed by the interest rate scare from the Fed, the source commented that is not advisable to predicate high yield transactions upon the pronouncements of central bankers.

"Every time Greenspan opens his mouth the markets move," the source said.

"But today Treasuries actually rallied a little bit.

"In the end it doesn't matter though. You can't make the decision on doing an execution based on whether Treasuries are rallying or based upon peoples' expectations about interest rates.

"You have to print these deals as soon as you can because you just don't know what's going to happen."

Terms also surfaced during the session on an offering from Eldorado Resorts LLC in conjunction with Eldorado Capital Corp. of $64.7 million of 10-year senior notes (expected B+) priced at par to yield 9%.

Talk on Invista, iPCS

Price talk of 9¼%-9½% emerged Wednesday on Invista's $575 million of eight-year senior note units (B1), expected by the end of the present week via JP Morgan and Credit Suisse First Boston.

The downsized offering of notes is coming in two tranches of units from four separate issuing entities.

And price talk is for a yield in the 10¾% area on iPCS Inc.'s upcoming $180 million eight-year senior unsecured notes (B3/CCC), expected to price Thursday via Credit Suisse First Boston and Bear Stearns & Co.

Pipeline continues to build

Seneca Gaming Corp. began a roadshow Wednesday for an offering of $225 million of eight-year senior notes (BB-). The roadshow is set to conclude on Friday, April 30.

Merrill Lynch & Co. and Banc of America Securities are joint bookrunners on the Western N.Y. State tribal gaming company's deal.

Meanwhile another name was added Wednesday to the notably busy European forward calendar.

Specialty and industrial chemical distributor Brenntag is expected to bring a €180 million high yield deal, possibly as early as May, via Goldman Sachs & Co.

Proceeds will be used to repay mezzanine debt and fund the acquisition of the Mülheim an der Ruhr, Germany-based company by Bain Capital.

CHC up in trading

A trader said the new CHC Helicopter 7 3/8% senior subordinated notes due 2014 saw some "pretty good demand" and traded up to about 100.5 bid, 101 offered, with "pretty good buyers," and "sellers coming in at 101, up from the bonds' issue price of 99.455 earlier in the session.

The same could not be said of Curative Health Services Inc.'s new 10¾% senior notes due 2011, which he described as "a pig." The deal, he said, "just barely got done," and he saw it trading in secondary offered at par, but with no bid, down from its Tuesday par issue price.

The trader said there seemed to be more interest in Charter Communications Operating LLC's new bonds, which "were trading around [Wednesday] after having seen "not much trading [Tuesday]." He said there was more demand for the $400 million of 8 3/8% second-lien senior notes due 2014, which he saw trading around their par issue price, while the $1.1 billion of 8% second-lien seniors due 2012 were around 99.75 bid, 99.875 offered, down from their par issue price.

Another trader saw both the new Charters around par bid, 100.125 offered.

He also saw Premcor Refining Group's new 6 1/8% notes due 2011 and 6¾% notes due 2014 both around Tuesday's par issue price.

Among other recent issues, the first trader said, Extendicare Health Services Inc.'s 6 7/8% notes due 2014, which had priced at 97.5 on April 15, were still hanging in around that level, while XM Satellite Radio's senior secured floating rate notes due 2009 remained around their par issue price, buoyed by "better buyers."

Sirius slips

XM competitor Sirius Satellite Radio Inc.'s bonds were off a bit after the company reported a loss of $146.4 million, (12 cents a share) share), for the first quarter, compared with earnings of $51.9 million, or 16 cents a share, a year ago, when the satellite radio broadcaster had posted a gain on debt restructuring.

Wall Street had been looking for about 10 cents a share of red ink.

The company's loss from operations widened to $119.5 million from $99.1 million a year ago.

Sirius said that it added a net 90,602 subscribers in the first quarter, bringing its total subscriber base to 351,663.

While that was up from 68,059 at this time last year, it still lags far behind XM's more than 1.7 million subscribers.

Sirius said that it still expects to have over a million subscribers tuning in by the end of the year.

Sirius' 14½% notes eased to 107.25 bid and its 15% notes to 108.5 bid, both down half a point on the session.

PanAmSat lifted

Also in the satellite sphere, Tuesday's news of the pending KKR buyout of PanAmSat was seen having boosted the latter's 8½% notes due 2012 by more than two points to 107.5 bid.

The $3.55 billion deal includes the assumption of some $750 million of PanAmSat debt.

The bonds of PanAmSat's 80% owner, DirecTV, were meanwhile seen little changed on Wednesday, holding onto the gains they had notched Tuesday on the news when the satellite broadcaster's 8 3/8% notes gained about half a point to close at 113.25.

Level 3 down again

Elsewhere, Level 3 Communications bonds were seen pushing downward for a third consecutive session, despite a lack of any real news about the company; its 9 1/8% notes due 2008 were seen at 77 bid, down about a point-and-a-half while its 11¼% notes were at 79 and its zero-coupon bonds at 75, both down about two points on the session. The company's notes have eased at least four points on the week, traders said, despite the lack of real news.

A trader said that AK Steel Corp. bonds, which had moved up about a point or so on Tuesday in response to better earnings from the Middletown, Ohio-based steelmaker, "came in [today], since it looks like steel demand from China" - one of the factors propping up the revival of the U.S. steel industry, by sopping up product from the Far East that might otherwise find its way to the States - "might not be as great as everyone thinks."

He saw AK's 7¾% notes half a point down at 92.5, while its 7 7/8% notes were likewise half a point lower, at 94.5.

"The market was softer [Wednesday]," a trader said, "after being up earlier in the week by half to three-quarters of a point each day."

He said bearishness over Fed boss Alan Greenspan's congressional testimony suggesting interest rates could be in for a rise, and the resulting weakness in stocks and Treasuries, had scared some participants off.

"The flows were pretty light. We had some bid [wanted] lists and some liquidation lists - but there were a lot of accounts sitting on the sidelines."

Another trader summed the situation up in just one sentence - "it was a pretty lackluster day."

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