RCN Telecom prices; Endeavor, returning Mohegan on tap; forward calendar builds

By Paul Deckelman and Aleesia Forni

New York, Aug. 5 - The high-yield primary arena opened the first full week of August trading on Monday by pricing one dollar-denominated, purely junk-rated deal from a domestic or industrialized-country borrower: RCN Telecom Services, LLC.

The cable, internet and voice services provider brought a $200 million offering of seven year notes to market, which firmed slightly when it freed for secondary dealings.

Apart from that sole pricing, though, the new deal realm was busy on Monday.

Syndicate sources heard price talk out on two deals, which are expected to get done on Tuesday once the order books close.

Oil and gas exploration and production company Endeavor Energy Resources LP is bringing a $300 million eight-year issue and casino operator Mohegan Tribal Gaming Authority has its $500 million of eight-year notes. The latter deal is making a quick comeback, upsized and with some reported covenant changes, after market participants heard late last week that its scheduled pricing had been postponed.

The syndicate sources also saw three prospective junk transactions join the forward calendar: a $500 million sale of 10-year notes from energy operator Murphy Oil USA, Inc., $400 million of eight-year notes from William Carter Co., which markets apparel for babies and young children, and a $300 million issue of seven-year senior notes from animated movie and television program producer Dream Works Animation SKG, Inc.

The Murphy deal was heard to have hit the road on Monday on a marketing campaign directed at potential investors.

Away from the new deal developments, market participants said that Monday's session was sleepy, with nothing really standing out in any kind of size.

Statistical indicators of junk market performance were seen lower across the board after three consecutive sessions of having finished mixed last week.

RCN prices wide

Monday's primary market saw a new issue from RCN Telecom and RCN Capital Corp., according to a syndicate source.

The companies sold $200 million of 8½% seven-year senior notes (Caa1/CCC+/) on Monday at par.

The notes priced at the wide end of talk, which was set at a yield of 8¼% to 8½%.

Credit Suisse Securities (USA) LLC and SunTrust Robinson Humphrey Inc. were the joint bookrunners for the Rule 144A and Regulation S for life notes offering.

The cable company plans to use the proceeds to fund a shareholder dividend.

RCN operates in Boston, Chicago, Washington, D.C., Lehigh Valley, Pa., New York City and Philadelphia.

Tuesday to see Endeavor

Looking ahead to Tuesday's session, players are expecting to see new deals from Endeavor Energy Resources and Mohegan Tribal.

Both companies set price talk for their respective issues during Monday's session.

Endeavor Energy Resources and EER Finance, Inc. are planning a $300 million issue of eight-year senior notes, with talk set at 6½% to 6¾%, according to a market source.

Books close Tuesday at 11:30 a.m. ET and pricing is expected thereafter.

The company previously held a roadshow during the Sept. 29 week.

The Rule 144A and Regulation S for life notes will be non-callable for three years, then callable at three-quarters of the coupon.

Proceeds will be used to repay existing debt and for general corporate purposes.

The notes feature an up to 35% equity clawback for the first three years and a 101% poison put.

Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, Credit Agricole Securities (USA) Inc., Mitsubishi UFJ Securities, U.S. Bancorp Investments Inc. and RBS Securities Inc. are the bookrunners.

Endeavour is a Midland, Texas-based oil and gas exploration and production company.

Mohegan Tribal Gaming set talk for its upsized offering of $500 million of eight-year senior notes at 9¾%.

Books close Tuesday at 9:30 a.m. ET, and pricing is expected thereafter.

Additional proceeds will be used to repurchase the company's 11% senior subordinated notes.

The company had planned the original $425 million deal to price on Thursday, but the deal was postponed last week.

Credit Suisse Securities (USA) LLC, RBS Securities Inc., Goldman Sachs & Co., Credit Agricole CIB, SunTrust Robinson Humphrey Inc., Jefferies LLC, BofA Merrill Lynch and Nomura are the joint bookrunners.

The Rule 144A with registration rights notes will become callable in three years at par plus 75% of the coupon. The notes feature a 101% poison put.

The Montville, Conn.-based owner and operator of gaming properties plans to use the proceeds to refinance its third-lien notes.

Murphy Oil roadshow

Murphy Oil began a marketing trip on Monday ahead of a planned $500 million sale of 10-year senior notes, according to a syndicate source.

The Rule 144A and Regulation S with registration rights notes are expected to price Friday.

The notes will be non-callable for five years.

Proceeds from the offering will be used to fund a dividend to Murphy Oil Corp.

J.P. Morgan Securities LLC and Stephens are the joint bookrunners.

RBC Capital Markets, Regions, Wells Fargo Securities, UBS, BTMU, Fifth Third, Capital One, Comerica and PNC are the co-managers.

The oil and gas exploration and production company is based in El Dorado, Ark.

Carter's, Dreamworks

Two new issues were announced in the high-yield space on Monday from William Carter Co., a wholly owned subsidiary of Carter's, Inc., and DreamWorks.

Carter's plans to offer $400 million senior notes due 2021, according to a company press release.

Carter's plans to use the proceeds from the Rule 144A and Regulation S transaction for share repurchases, dividends and other general corporate purposes.

The company is an Atlanta-based branded marketer of apparel for babies and young children.

DreamWorks announced plans to sell $300 million senior notes due 2020, according to an 8-K filing with the Securities and Exchange Commission.

Proceeds from the Rule 144A and Regulation S deal will be used to prepay the outstanding loans under its credit facility and for general corporate purposes, which may include acquisitions and repurchases of the company's common stock.

DreamWorks is a Glendale, Calif.-based creator of computer-generated animated feature films, television specials and series, live entertainment properties and online virtual worlds.

RCN up a little on break

In the secondary market, a trader quoted RCN Telecom's new 8½% notes due 2020 at 100½ bid, although he noted that his shop "really wasn't too involved in it."

A second trader saw the bonds, which had priced at par, going home in a par to 100¼ bid context.

Junk credits take a back seat

The first trader opined that "it was kind of a quiet day" in Junkbondland on Monday.

"I don't know if it was a summer thing or what, but it looked like a lot crossover-type credits were trading and some other non-traditional, sort of emerging markets stuff, but traditional high yield didn't seem to be extremely active today."

Recent deals steady

Among recently priced issues, traders saw in most cases only relatively small changes in their levels - if any - from where they had been on Thursday.

One trader, for instance, pegged Standard Pacific Corp.'s 6¼% notes due 2021 at 100½ bid, 100¾ offered.

That was up by perhaps 1/8 of a point from where the Irvine, Calif.-based homebuilder's new paper had been seen trading on Friday.

"There were just a couple of trades in the issue," he noted.

The quick-to-market $300 million tranche of 8.25-year notes had priced at par on Thursday, after the offering was upsized from an originally announced $250 million.

Thursday's $750 million issue of 7 3/8% /8 1/8% senior PIK toggle notes due 2018 from Health Technology Intermediate, Inc. were seen trading at 101¾ bid, 102¼ offered, which a trader called down a quarter-point from Friday's levels about the 102 mark.

The issuer - a holding company for Danbury, Conn.-based IMS Health, Inc., a provider of information to the healthcare and pharmaceutical industries - priced its quickly shopped issue at par. The bonds moved up to around the 101½ bid level in initial aftermarket dealings late Thursday, and then continued to firm on Friday.

Thursday's other pricing - United Airlines Inc.'s 5 3/8% class B pass-through certificates due 2021 - was seen by a trader Monday around the par level, unchanged from Friday's finish and from where that $209.036 million of paper had come to market when Chicago-based airline giant United made an unexpected landing in the junk realm.

The company sold those junk-rated notes as part of a considerably larger $929.351 million two-part transaction that also included $720.315 million of high-grade-rated 4.30% class A pass-through paper due 2025.

A market source saw LSB Industries, Inc.'s 7¾% senior secured notes due 2019 lose a quarter-point on Monday to end at 102 bid,103 offered. While that was off the highs seen late last week, it was still clearly up from the par level at which the Oklahoma City-based specialty chemicals manufacturer priced its $425 million issue on Wednesday, after upsizing the deal from $400 million initially.

And Pinnacle Entertainment Inc.'s 6 3/8% notes due 2021were seen having retreated by as much as¾ point on Monday, to par bid, 100½ offered.

The Las Vegas-based casino operator had priced $850 million of those bonds last Tuesday at par via its PNK Finance Corp. subsidiary, upsizing the drive-by deal from $800 million originally, and they improved to as good as 100¾ bid, 101¼ offered by Friday afternoon, before stumbling on Monday.

Market indicators slip

Apart from the new issues, a trader called Monday's session "kind of a muted day."

Statistical junk market performance indicators turned lower across the board on Monday, after three consecutive sessions near and at the end of last week in which they had been mixed.

The Markit Series 20 CDX North American High Yield index eased by 1/16 of a point on Monday to end at 105 25/32 bid, 105 27/32 offered, after having risen by 7/16 on Friday.

The KDP High Yield Daily index posted its fourth consecutive loss on Monday, losing 5 basis points to end at 73.67, after having backtracked by 6 bps on Friday. Its yield crept upwards by 1 bp, to 6.04%, its second consecutive widening. That came on top of the 2 bps rise recorded on Friday.

And the widely followed Merrill Lynch High Yield Master II index lost 0.003% Monday, its fourth consecutive downturn. It had fallen by 0.109% on Friday.

The loss dropped the index's year-to-date return to 3.262% from Friday's 3.266% level. The return was well down from its peak level for the year so far of 5.835%, recorded on May 9, though up solidly from its 2013 low point of 0.384%, set on June 25.

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