Clear Channel prices new deal; ArcellorMital downgraded, bonds gain; TXU bonds get a boost

By Stephanie N. Rotondo and Paul A. Harris

Phoenix, Nov. 6 - The high-yield bond market was posting gains on Election Day.

A trader again remarked that investors were particularly keen on new issues, noting that Clear Channel Outdoor Holdings had priced its $2.725 billion two-tranche issue of senior notes.

In the secondary, ArcellorMittal was dubbed "the most active name of in the market." The steelmaker's debt was mostly firm on the day, despite being downgraded by Moody's Investors Service.

"They're now [rated] junk by both agencies," a trader said.

Elsewhere, Energy Future Holdings Corp.'s debt got a big pop as the company clarified its previously reported tax liability issue. When the utility had first noted the problem in October, its bonds took a massive dive.

Indexes close stronger

Market indicators were firm as the market awaited Election Day results.

The KDP High Yield Index moved up to 74.39 with a 6.05% yield. That compared to Monday's reading of 74.38 with a 6.06% yield.

The CDX North American Series 19 High Yield Index moved up nearly half a point to 99 13/16 bid, 99 15/16 offered.

Clear Channel deal

The primary market was in high gear with three issuers bringing a combined five tranches and raising a total of $4.55 billion.

Clear Channel priced $2,725,000,000 of 10-year senior notes (B1/B/BB-) in two tranches.

The transaction included a $728,392,500 tranche of 6½% series A notes, which priced at 99 to yield 6.639%. The yield printed 14 basis points beyond the wide end of the 6¼% to 6½% yield talk.

In addition, the company priced a $1,989,250,000 tranche of series B notes at par to yield 6½%, at the wide end of the 6¼% to 6½% yield talk.

Along with coming wide relative to price talk, the bonds initially traded lower in the secondary market, according to the trader who saw the series A notes, which priced at 99, trading at 98¼ bid, 98½ offered, away from the bookrunner.

The par-pricing series B notes were 99½ bid, also away from the bookrunner, the trader said.

The 99 reoffer price for the smaller series A tranche amounted to a liquidity discount, the trader added.

When price talk circulated on Monday, the market heard that the order book was at deal-size, the trader said.

Goldman Sachs, Citigroup, Morgan Stanley, Credit Suisse, Deutsche Bank and Wells Fargo were the joint bookrunners.

The San Antonio-based outdoor advertising company plans to use the proceeds, together with cash on hand, to fund the tender offer for its existing 9¼% series A senior notes due 2017 and 9¼% series B senior notes due 2017.

E*Trade on top of talk

E*Trade Financial Corp. priced $1.305 billion of senior notes (existing ratings B2/B-) in two tranches.

The transaction included a $505 million tranche of five-year notes, which priced at par to yield 6%. The yield printed on top of yield talk.

In addition, the company priced an $800 million tranche of seven-year notes at par to yield 6 3/8%. The yield on the long bonds also came on top of yield talk, which had them coming 37.5 basis points behind the five-year notes.

Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley were the joint bookrunners for the quick-to-market debt refinancing deal.

CyrusOne prices through talk

CyrusOne LP and CyrusOne Finance Corp. priced an upsized $525 million issue of 10-year senior notes (B2/B+) at par to yield 6 3/8%.

The yield printed 12.5 basis points beneath the low end of the 6½% to 6¾% yield talk.

Barclays, Citigroup, KeyBanc, RBS and UBS were the joint bookrunners for the issue, which was upsized from $500 million.

Proceeds will be used to repay $475 million of related-party notes payable to Cincinnati Bell, and the remainder will be used for general corporate purposes.

The issuing entities are subsidiaries of Cincinnati Bell.

Talking the deals

Looking toward the Wednesday session, Vivint, Inc. set price talk for its $1.305 billion two-part notes offer on Tuesday.

A $925 million tranche of seven-year senior secured notes (B1/B) is talked to yield 6¼% to 6½%.

A $380 million tranche of eight-year senior unsecured notes (Caa1/CCC+) is talked to yield 8½% to 8¾%.

Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Macquarie and Goldman Sachs are the joint bookrunners.

Mattamy Group Corp. set price talk for its $450 million equivalent dual-currency offer of eight-year senior notes (B1/BB).

The deal features dollar-denominated notes, which are talked with a yield in the 6½% area, and a tranche of Canadian dollar-denominated notes, which are talked in the area of 37.5 basis points behind the yield of the dollar-denominated notes.

Credit Suisse, RBC and Citigroup are the joint bookrunners.

And in the crossover market, Land O'Lakes, Inc. talked its $250 million split-rated offering of non-callable 10-year senior notes (Ba2/BBB-) with a yield in the 6% area.

Bank of America Merrill Lynch is the bookrunner for the deal, which is being transacted on the high yield desk.

In the Canadian market, Athabasca Oil Corp.'s expected offering of C$600 million five-year senior secured second lien notes are talked to yield in the low 7% area, a source said.

Guala Closures brings FRN

Italy's Guala Closures SpA plans to host an investor conference call on Wednesday to discuss its €275 million offering of seven-year senior secured floating-rate notes (expected ratings B1/B).

Joint bookrunner Credit Suisse will bill and deliver. Banca IMI, Natixis and UniCredit are also joint bookrunners.

The Alessandria, Italy-based manufacturer of closures for beverage containers plans to use the proceeds to repay bank debt.

Inmet folds bid for Petaquilla

Finally on Tuesday, Petaquilla Minerals Ltd. announced that Inmet Mining Corp. decided to allow its tender offer for Petaquilla shares to expire, ending Inmet's hostile takeover bid.

In the press release, Petaquilla announced that it will continue to implement its business plan, including the spin-out of its infrastructure business to shareholders, the development of its Lomero-Poyatos gold mine in Spain and its previously announced high-yield note offering.

When Inmet undertook the takeover bid in mid-summer, the company asserted that Petaquilla should not go forward with the bond deal.

However, in mid-October, Petaquilla talked its $210 million of offering of five-year senior secured notes (Caa1) with a 12% yield, as well as attached warrants for shares of the company's common stock.

Proceeds will be used to refinance debt and to finance capital expenditures related to the Lomero-Poyatos mine.

The deal does indeed remain in the market, an informed source said on Monday.

Clear Channel treads lightly

A trader said Clear Channel Outdoor's new $735.75 million 6½% series A notes, which priced early Tuesday at 99, initially "traded a little below new issue price," but moved back up by the end of the day.

Other Clear Channel paper was holding its ground, according to traders.

One trader saw the 7 5/8% notes due 2020 were steady at 96 5/8, while the 9¼% notes due 2017 - an issue that will be taken out with proceeds from the new issue - was "flat" at 1073/4.

Another trader quoted the 7 5/8% notes at 97 bid, 97½ offered.

Clear Channel Outdoor is a subsidiary of San Antonio-based CC Media Holdings Inc.

Arcellor up despite downgrade

Steelmaker ArcellorMittal saw its ratings cut by Moody's on Tuesday, following a similar move by Standard & Poor's back in August.

Despite the downward revision, the company's bonds were mostly higher on the day and deemed the most actively traded in the high-yield bond market.

A trader said the 6¼% notes due 2022 were the "most active," with at least $35 million changing hands. The paper was up half a point at 98.

The 4½% notes due 2017 were also up, gaining nearly a point to end at 971/2, on about $26 million traded.

And, the 6 1/8% notes due 2018 saw about $23 million bonds turn over. However, that issue was down almost 2 points to 981/2.

"Somebody was speculating that these were pretty much out of the investment-grade guys' hands already," a trader noted.

The move higher could, therefore, have been due to more high-yield folks trying to get their hands on the securities.

Still, the trader noted that there was "not much of a swing in prices," leaving him to opine that Moody's actions were "widely anticipated."

Moody's attributed its decision to the belief that the steel industry will face challenges in the near term, noting that Arcellor's most recent quarterly report was the worst since the second quarter of 2009.

TXU rises as issues explained

Energy Future Holdings - or TXU, as it is more commonly referred to - got a boost after the company released new details on a tax liability issue that it noted in its recent quarterly update.

"All those bonds were flying today," a trader said, though he pointed out that volume in the name was low. He called the structure up 3 to 10 points overall, seeing the 11¼% notes due 2017 rising over 9 points to 85.

The 10 7/8% notes due 2017 were up almost 7 points to 843/4, while the 5.55% notes due 2014 gained 5 points, ending at 60.

Another trader said the 6½% notes due 2024 were "better," trading at levels around 44, versus previous levels in the low 40s. He called the 10% notes due 2020 "up almost 2 points" at 1071/2.

In an 8-K filed with the Securities and Exchange Commission on Tuesday, the Dallas-based utility provider explained that a $19 billion excess loss account and a $4 billion deferred intercompany gain disclosed in its recent 10-K "were created in connection with financing transactions and internal restructurings that involved Texas Competitive Electric Holdings and its assets but not Energy Future Intermediate Holding or Oncor Holdings."

A firmer market

Also in the high-yield space, a trader said Petróleos de Venezuela SA's 8½% notes due 2017 fell a point to close at 90, while the 9¾% notes due 2035 earned point, closing at 853/4.

The trader also said that Supervalu Inc.'s 8% notes due 2016 remained active, but the bonds were holding steady at 961/2.

Another trader pegged the notes at 96½ bid, 97 offered.

And, American Axle & Manufacturing Inc.'s 6 5/8% notes due 2022 finished the session over half a point higher at 99 1/8.

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