Primary quiets down, though Buena Vista Gaming deal slates; new Pinnacle Foods paper gains

By Paul Deckelman and Paul A. Harris

New York, April 16 - The high-yield primary arena, which had seen a fairly sedate session on Monday, quieted down even further on Tuesday, with market sources saying that not a single junk-rated, dollar-denominated deal from a domestic or industrialized-country issuer priced.

In fact, there weren't even any new split-rated deals for investors to focus on either for the first time since the complete shutout that was seen on April 1.

The only news coming out of the new-issue realm on Tuesday was about a $220 million offering of eight-year secured notes from California tribal casino operator Buena Vista Gaming Authority. Syndicate sources saw that deal hitting the road on Wednesday for marketing to would-be investors, with actual pricing expected next week.

Secondary market traders saw Monday's $350 million offering from Pinnacle Foods Finance LLC firm solidly from the par level at which those bonds priced.

Apart from the new deals, traders saw continued brisk activity in Sprint Nextel Corp.'s bonds, those of its Sprint Capital Corp. subsidiary and those of would-be Sprint acquirer DISH DBS Corp. Unlike Monday, however, when all of those bonds were down across the board on the news that DISH had made an unsolicited $25 billion offer to acquire Sprint, the bonds of those entities were seen mixed on Tuesday.

There were also some notable movements in the deeply distressed bonds of the Texas utility operator formerly known as TXU Corp., as restructuring negotiations with creditors failed to result in any agreements.

Statistical measures of secondary market performance turned mostly higher on Tuesday, after having moved lower across the board on Monday, a downturn which broke a three-session winning streak before that.

SoftBank moving forward

Despite a strong rally in stocks, news volume went more or less slack in the high-yield primary market on Tuesday, following Monday's capital markets volatility and the bombings, which took place at the finish line of the Boston Marathon.

"I think people are sort of having a quiet day in light of Monday's events - especially the bombing in Boston," a debt capital markets banker remarked.

Indeed, conversations with market sources on both the buyside and sellside revealed somewhat somber moods all around.

Nevertheless, look for a $500 million-plus drive-by deal on Wednesday from a company in the energy sector, the banker advised.

Also, there were deal announcements on Tuesday, and deals already in the market continued to take shape.

SoftBank Corp.'s $2 billion equivalent dual-currency bond deal, backing its proposed $20.1 billion takeover of Sprint Nextel, appears set to go forward despite the competing $25.5 billion bid from Dish Network, market sources say.

SoftBank is roadshowing the split-rated dollar- and euro-denominated seven-year senior notes (confirmed Baa3/expected BB+).

The dollar-denominated notes are guided at 4½% to 4¾%, according to an investor, who added that orders for the dollar piece were said to be at $3 billion as of Tuesday afternoon.

The euro-denominated tranche is guided expected to come 1/8 of a point behind the dollar tranche.

Official price talk is expected on Wednesday, and the deal is expected to price before the end of the present week.

Deutsche Bank is the left bookrunner for both tranches.

Right bookrunners for the dollar denominated tranche include BofA Merrill Lynch, Barclays, Credit Agricole CIB, Mizuho Securities, Morgan Stanley and Nomura.

Right bookrunners for the euro-denominated notes included Barclays, Credit Agricole, Mizuho and Nomura.

Buena Vista starts Wednesday

Buena Vista Gaming plans to start a roadshow on Wednesday for its $220 million offering of eight-year senior secured notes.

The deal is expected to price during the April 22 week.

Credit Suisse and BofA Merrill Lynch are the joint bookrunners for the casino construction funding deal.

In addition to standard call provisions and a 101% poison put, the deal features a mandatory annual redemption provision through which Buena Vista would be required to use 50% of available funds to offer to take investors out of bonds at 103.

Euro junk audience for RPG

In Europe, Czech Republic-based RPG Byty is on a roadshow for a €400 million issue of seven-year notes.

The deal is expected to play to both emerging markets and high-yield investors, according to a sellside source in London.

Goldman Sachs and JPMorgan are the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used to repay debt for general corporate purposes.

The roadshow began Tuesday and will conclude on Friday.

'Slow, slower, slowest'

In the secondary junk market, a trader characterized the tone of Tuesday's session as "slow, slower and slowest."

"It's definitely on the slower side after yesterday's excitement with the unfortunate events that occurred in Boston. And with commodities selling off, people were on the sidelines today in a wait-and-see mode, with only very selective trading going on today."

He added: "It definitely feels like an August summer week - it doesn't feel like April."

He said that the market was exhibiting lassitude despite it being earnings season, which in theory should provide the impetus for either upside or downside movements by companies' bonds, depending on how closely their actual earnings tracked analysts' forecasts.

HCA not much moved

For instance, the trader said that movements in HCA Inc.'s paper amounted to "no great shakes," even as the Nashville-based hospital giant's shares were gyrating around following the release late Monday of substantially weaker-than-expected preliminary first-quarter results.

"The problem is that whenever you have weakness, it's met by strength, and there's cash on the sidelines. So I didn't see any great shakes," he said, although he allowed that the bonds might be "off a little bit."

Probably HCA's most active issue, a market source indicated, was its 6½% notes due 2020, or its 7½% notes due 2020, with both seeing over $4 million of size trading. The 6½% notes firmed by 3/8 points to end at 113¼ bid, while the 71/2s gained 1/8 point to end at 117¼ bid.

Other HCA issues had even smaller trading volume than that and some, like its 6 3/8% notes due 2015, lost ground during the session.

HCA's New York Stock Exchange-traded shares fell by 4.2% during regular trading on Monday, closing at $36.72. Then the shares lost another 4.7% in extended after-hours dealings on Monday, retreating to $35.

That downturn followed the company's release of the preliminary earnings data, including its projection that revenue for the first quarter ended March 31 will come in around $8.44 billion - almost unchanged from a year ago, but well down from the $8.65 billion that Wall Street is looking for.

The company blamed the expected lower revenues figure on a slowdown in the rate of growth in admissions and a weakness in outpatient volumes. It also projected adjusted EBITDA of $1.57 billion, down from $1.82 billion a year ago and below the roughly $1.68 billion analyst's consensus.

Full results are due on May 2.

However, while the shares trading around early Tuesday below their official Monday close, they climbed later in Tuesday's session to actually end up on the day by $1.15, or 3.13%, at $37.87.

HCA also was heard on Tuesday to have launched a new $1.25 billion term loan financing expected to lower the interest it pays on its present facility by some 50 basis points.

New Pinnacle Foods firms

Elsewhere, traders said that Pinnacle Foods' new $350 million offering of 4 7/8% notes due 2021 were trading up after having been freed for secondary dealings.

One pegged the bonds as having initially traded in a 101 3/8 to 101¾ bid context. Then later in the day, he said they traded up to 101¾ to 101 7/8, the last market he saw.

A second trader located the bonds at 101 5/8 bid, 101 7/8 offered.

The Mountain Lakes, N.J.-based producer of various major frozen- and packaged-foods brand names, including such familiar favorites as Birds Eye frozen vegetables, Mrs. Paul's frozen fish sticks, Duncan Hines cake mixes and Vlasic pickles, priced its quick-to-market offering at par on Monday after having downsized the deal from an originally announced $400 million.

However, it hit the tape too late in the afternoon on Monday for any meaningful aftermarket dealings and did not begin trading till Tuesday morning.

Also among the recently priced deals, a trader said that Taylor Morrison Communities, Inc.'s 5¼% notes due 2021 were trading at 101¾ bid, 102¼ offered. That was up about a quarter-point on the session from closing levels around 101½ bid, 102 offered on Monday.

The Scottsdale, Ariz.-based homebuilder had priced $550 million of the notes at on Thursday in a quick-to-market transaction after upsizing the deal from an originally announced $500 million. The bonds traded at 101 bid, 101¾ offered when they hit the aftermarket late Thursday, improving to 101½ bid, 102 offered on Friday.

Sprint gyrations continue

Away from the new deals, it was another fairly busy day for the bonds of Sprint Nextel Corp. and its Sprint Capital Corp. subsidiary.

The overland Park, Kan.-based wireless operator's bonds had taken a big hit on Monday on the news that satellite television broadcaster DISH Network has proposed acquiring Sprint for $25 billion in cash and stock - with a big portion of the $17 billion cash portion of the buyout to be financed via new debt.

However, on Tuesday, a trader said, "the Sprint bonds were up a quarter-point across the board," with investors buying on the big dips - some as much as 3 points on the day, or even more - which had been seen on Tuesday.

Parent Sprint's 6% notes due 2022 gained as much as 1 1/8 points on the day, another market source said, quoting the bonds going out at 102 7/8 bid on round-lot volume of over $28 million, one of the day's most active junk issues.

However, he also saw Sprint Capital's 8¾% notes due 2032. down another half-point on the day Tuesday, to 118 3/8 bid. That was on top of the more than 4-point plunge seen on Monday from pre-news trading levels around 123 bid.

DISH's bonds, which also fell on Monday, were mixed on Tuesday. Its 7 7/8% notes due 2019 gained 1¾ points to end at 113¼ bid, but its 7 1/8% notes due 2016 dropped three-quarters of a point to close at 109¾ bid.

TXU trades off

From the distressed-debt market came word that widely held Texas Competitive Electric Corp.'s bonds took a hit as the Houston-based utility operator and its parent said restructuring negotiations failed to result in any agreements.

A trader said the 15% notes due 2021 dropped 4 points to end around 26. The "real junior stuff," such as the 10¼% notes due 2015, fell to 9, down from 12 previously.

In a regulatory filing on Monday, Energy Future Holding Corp. and several subsidiaries - including Texas Competitive - said that they had proposed a restructuring of the companies' capital structure to certain creditors.

However, the parties were not able to reach an agreement and, according to the filing, talks were halted.

The companies - formerly officially and now more familiarly known as TXU - asserted that they would continue to explore options, either with its current proposal or via other avenues.

Market indicators rebound

Overall, statistical junk performance indicators were mostly higher on Tuesday after having turned lower across the board on Monday, which broke a three-session winning streak.

The Markit Series 20 CDX North American High Yield index gained 23/32 of a point on Tuesday to end at 104 3/8 bid, 104 5/8 offered. On Monday, it had lost three-quarters of a point, a downturn that snapped a string of seven consecutive gains before that.

The KDP High Yield Daily index, meanwhile, was unchanged on Tuesday at 75.69, after having fallen by 10 basis points on Monday, its first loss after three straight gains before that. Its yield was also unchanged, at 5.44%.

On Monday, the yield had risen by 4 bps, its first such widening after three straight sessions before that on the decline.

And the widely followed Merrill Lynch High Yield Master II index edged back into the black on Tuesday, rising 0.005%. On Monday, it had posted its first loss after five consecutive gains before that, dipping by 0.095%.

The slight upturn lifted its year-to-date return to 3.617%, which was up from Monday's 3.611%, though still down from Friday's 3.71% that marked its fifth consecutive new peak level for 2013.

Stephanie N. Rotondo contributed to this review

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