Upsized DISH DBS drive-by leads nearly $2 billion primary session; Dispensing Dynamics prices

By Paul Deckelman and Paul A. Harris

New York, Dec. 19 - DISH DBS Corp. was heard by high-yield syndicate sources to have priced a sharply upsized $1.5 billion offering of 10-year notes on Wednesday.

The satellite television broadcaster's quick-to-market deal paced another busy session, which saw over $1.9 billion of new purely junk-rated, dollar-denominated paper come to market. That was about equal to Tuesday's new-issuance total, as borrowers continued to do opportunistically timed, quickly shopped deals to take care of their financing needs ahead of the expected year-end lull.

Besides DISH, commercial washroom systems producer Dispensing Dynamics International priced an upsized $130 million offering of five-year secured notes.

There was also a pair of add-on deals to existing bond issues, as U.S. Foodservice, Inc. brought an upsized $175 million issue of its 2019 notes, while Norwegian geophysical services provider Petroleum Geo-Services ASA brought a $150 million tranche of 2018 bonds to market.

Traders saw the new DISH bonds, as well as the U.S. Foodservice and Petro Geo-Services paper, all trade a little higher when they hit the aftermarket.

They also saw some activity in bonds priced on Tuesday from such issuers as Landry's Holdings II Inc., Avaya Inc., Oil States International Inc. and IAC/InterActiveCorp.

Trading in the new issues again was the focus of the secondary market. Statistical performance indicators were mixed.

DISH massively upsizes

On what was roundly forecast to be the last highly active session of 2012, four issuers priced single-tranche deals.

In drive-by action, DISH Network priced a massively upsized $1.5 billion issue of non-callable 10-year senior notes (Ba2/BB-) at par to yield 5%.

The deal was upsized from $1 billion.

The yield printed on top of yield talk as well as initial guidance.

DISH played to a $2.4 billion order book, according to a trader who was looking for the deal to possibly come as tight as 4 7/8%.

Earlier in the session, a high-yield portfolio manager characterized the transaction, then sized at $1 billion, as "a standard DISH transaction" and added that at the 5% guidance it looked like "fair value."

Deutsche Bank ran the books.

The Englewood, Colo.-based satellite broadcasting company plans to use the proceeds, including those resulting from the $500 million upsizing, for general corporate purposes, which may include spectrum-related strategic transactions.

U.S. Foodservice taps 81/2s

Elsewhere in quick-to-market activity on Wednesday, U.S. Foodservice priced an upsized $175 million add-on to its 8½% senior notes due June 30, 2019 (Caa2/CCC+/) at 101.5.

The reoffer price, which came on top of price talk, rendered 8.098% yield to worst and an 8.198% yield maturity.

Again it was Deutsche Bank on the left in a syndicate that also included KKR Capital Markets.

The debt refinancing deal was upsized from $100 million.

The existing U.S. Food 8½% notes closed on Tuesday at 103 bid, 103.50 offered, according to a buyside source, who accurately predicted that the issuer would make a new issue concession of about 2 points with Wednesday's add-on.

Petroleum Geo-Services notes

Norway's Petroleum Geo-Services also did a drive-by tap on Wednesday, pricing a $150 million add-on to its 7 3/8% senior notes due Dec. 15, 2018 (Ba2/BB) at 107.50 to yield 5.868%.

The reoffer price came at the rich end of the 107 to 107.50 price talk.

UBS ran the books for the general corporate purposes deal.

Dispensing Dynamics atop talk

In the only Wednesday deal to have been in longer than a day, Dispensing Dynamics priced a $130 million issue of 12½% five-year senior secured notes at 98 to yield 13.055%.

The coupon and reoffer price both came on top of guidance.

Jefferies was the bookrunner for the deal, which was upsized from $125 million.

Proceeds will be used to refinance debt and fund a dividend to shareholders.

Never say never

The Wednesday session may have closed the book on the 2012 primary market, sources cautiously forecast during the session.

"However," they cautioned, "Never say never."

"You could see a higher-rated, on-the-run name come with a drive-by deal on Thursday," a trader said.

After all, the source reasoned, many of the buyside players are still in place.

What is unlikely to come is the triple-C deal, the trader said.

DISH inches up

The upsized DISH DBS megadeal was heard by syndicate sources to have priced fairly late in the session.

Nonetheless, a trader quoted the satellite broadcaster's new 5% notes slightly higher, at 100 1/8 bid, 100½ offered, versus their par issue price.

Foodservice, Petro-Geo firm

A trader said that U.S. Foodservice's 8½% notes got as good as 103 bid, 103½ offered, "up a couple" from the 101½ level at which the add-on had priced earlier.

He later saw the bonds come off that peak level, but end at 102½ bid, 103 offered, "still up from where it came."

A second trader pegged those bonds at 102¾ bid, 103¾ offered.

However, a market source elsewhere noted that the food services provider's existing bonds had been trading in a 103-to-103½ bid context earlier in the week, before the new-deal news hit the market.

A trader saw Petro-Geo's add-on to its 7 3/8% notes at 108 bid, 108½ offered, versus their 107½ pricing level.

But a second trader said that he had not seen seismic services provider Petro-Geo at all.

The Dispensing Dynamics International five-year secured issue priced too late in the day for any aftermarket levels, a trader said.

Landry's bonds gyrate

Among the deals priced on Tuesday, a trader saw some down and up movement in Landry's Holdings II's upsized $250 million issue.

He quoted the Houston-based restaurant and gaming company's 10¼% notes due 2018 as "actually trading below-issue this morning" at 98¾ bid, "but they bounced some from there," ending at 99½ bid, 99¾ offered.

That quick-to-market deal had priced on Tuesday at 99 to yield 10.509%, after being upsized from the originally shopped $201 million.

A second trader opined, "Generically, everything traded well, even these Landry's."

He said that the issue was "the first one that looked like it was going to be kind of piggish" when it initially retreated, "but they're closing up a half-point from where they priced."

Yet another trader saw the bonds going home at 99½ bid, par offered.

Tuesday deals hang in there

Among the other issues that came to market on Tuesday and then traded around in the aftermarket, a trader saw Avaya's 9% senior secured notes due 2019 in a bid range of 101 to 101 1/8.

A second trader saw the quickly shopped $290 million of the new bonds ending Wednesday at 101¼ bid, 101¾ offered.

Yet another trader said that the Basking Ridge, N.J.-based communications equipment maker's bonds "were up 1 point on the break" and traded "a little north of 101" before going home "wrapped around 101."

In Wednesday's dealings, he said, the bonds were last seen trading at 100 7/8 bid, 101¼ offered.

The company's existing bonds, such as its 9¾% and 10 1/8% subordinated issues both due 2015, "didn't see a ton of volume" on Wednesday.

He only saw one trade in the sub paper, calling the 93/4s down a point from where they had been on Tuesday, when the bonds ended around 89 bid.

"Very light volume, maybe a little softer" was how he characterized those existing bonds.

He also "really didn't see anything" in Avaya's 7% senior secured notes due 2019, which trade in the low 90s.

IAC /InterActiveCorp's new 4¾% notes due 2022 "didn't go a whole lot of anywhere," one of the traders said.

He saw the New York-based media and internet website company's paper at 100¼ to 100½ going out. The $500 million of those notes had priced at par on Tuesday in a quick-to-market transaction and then were quoted around fractionally higher.

EP Energy's 8 1/8%/8 7/8% senior PIK toggle notes due 2017 were quoted on Wednesday at 99¼ bid, 99 5/8 offered, which a trader called a loss of three-quarters of a point.

The Houston-based oil and natural gas exploration and production company priced its quick-to-market $350 million deal at 99 on Tuesday to yield 8¼% cash pay and 9% PIK.

The issuing entities were EP parent company EPE Holdings LLC and its EP Energy Bond Co. subsidiary. Those bonds moved up around a point in initial secondary dealings on Tuesday, before coming off those levels on Wednesday.

Activity quiets down

A trader said that away from the day's new deals, "there was not a ton" of activity in the secondary market.

"It's starting to quiet down a little bit" ahead of the traditional end-of-year, holiday-time lull historically seen in Junkbondland.

A second trader said that the new and recently priced deals "has been the majority" of the activity. "Overall, it's been pretty slow," he noted.

He said that looking at Trace, "the [volume] number looks like a reasonable number in terms of how many trades when through today. I mean, it's not terrible, in terms of volume."

He noted, "If you look at where all of the volume is," the actives list is dominated by credits such as Citigroup's trust preferred certificates, which showed 60 trades on Wednesday, while Venezuelan national oil company Petroleos de Venezuela SA (PDVSA) showed 45 trades.

"A couple of the other big traders were other PDVSA issues. So it wasn't a lot of your traditional high-yield stuff. It was [emerging markets] stuff or some financials that happen to fall into high yield. It doesn't seem like a lot of the stuff you see on a day-to-day basis

Indicators turn mixed

Statistical junk market performance indicators partially retreated on Wednesday, turning mixed after having been higher across the board on Tuesday.

The Markit Series 19 CDX North American High Yield index lost a quarter-point on Wednesday, ending at 101¾ bid, 101 7/8 offered, after having risen for a second straight session on Tuesday with a gain of 9/16 of a point.

The KDP High Yield Daily Index meantime rose by 7 basis points on Wednesday to finish at 75.41, its second consecutive gain. It had improved by 9 bps on Tuesday.

The yield declined for third straight session, by 3 bps, to 5.66%, on top of the 1-bp narrowing seen on Tuesday.

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