Upsized Cablevision, Rosetta price, Essar slates; Mirant, RRI up on merger, DynCorp on buyout

By Paul Deckelman and Paul A. Harris

New York, April 12 - Cablevision Systems Inc. priced $1.25 billion of eight-year and 10-year notes at par on Monday, high yield syndicate sources said, a deal upsized from the originally announced $1 billion. The Bethpage, N.Y.-based cable system operator and professional sports team owner's behemoth of a drive-by deal lumbered into Junkbondland too late in the day for any aftermarket dealings, traders said.

They also saw no secondary activity in another late-breaking deal, for Houston-based energy exploration and production company Rosetta Resources Inc., which priced $200 million of eight-year notes, also at par.

Primaryside players meantime heard that Indian steelmaker Essar Steel Holdings Ltd had begun a roadshow for its $500 million offering of seven-year notes. Also hitting the road with a deal was C&S Group Enterprises LLC, a Keene, N.H.-based wholesale grocery distributor, expected to price a $250 million offering of secured bonds around the end of this week.

In the secondary realm, last week's new issues like ManTech International Corp. were heard to have pretty much held onto the gains they'd notched after their respective pricings.

DynCorp International Inc.'s bonds rose on news that the company - like ManTech a Virginia-based defense contractor - is being taken private by Cerberus Capital Management LP.

And merger and acquisition news was also strengthening the bonds of independent power producers Mirant Corp. and RRI Inc., which announced plans to merge.

Two issuers combined to raise $1.45 billion with a total of three tranches of junk, on Monday.

Cablevision driven by reverse inquiry

Cablevision Systems Corp. priced a massively upsized $1.25 billion two-part senior notes (B1/B+) transaction, in a deal that came heavily driven by reverse inquiry, according to a trader at an East Coast high-yield mutual fund.

The Bethpage, N.Y.-based cable company priced a $750 million issue of eight-year notes at par to yield 7¾%. The eight-year notes priced at the tight end of the 7¾% to 8% price talk.

Cablevision also priced a $500 million issue of 10-year notes at par to yield 8%. The 10-year notes also priced at the tight end of the 8% to 8¼% price talk.

The size as increased from $1 billion.

J.P. Morgan was the left lead bookrunner for the quick-to-market deal. Bank of America Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse, Goldman Sachs, RBS Securities and UBS Investment Bank were joint bookrunners.

Proceeds will be used to fund a tender for the company's 8% senior notes due 2012, and for general corporate purposes.

Rosetta prices atop talk

Meanwhile, Rosetta Resources Inc. priced a $200 million issue of eight-year senior notes (Caa1/B+) at par to yield 9½%.

The yield printed on top of the price talk.

Again, J.P. Morgan was the left bookrunner for the bank debt refinancing.

BNP Paribas and Wells Fargo Securities were joint bookrunners.

C&S starts roadshow

The primary market will continue to be busy as investors scrap to put to work cash that has been flowing into the asset class - about $220 million per week on average since the beginning of the year, according to one market source's reckoning.

Consistent with that expectation, the active forward calendar built purposefully on Monday.

C&S Group Enterprises LLC began a roadshow on Monday for its $250 million offering of seven-year senior secured notes.

The company will host a 12:30 p.m. ET conference call on Tuesday.

Once again, JP Morgan is the left bookrunner for the ABL refinancing deal, which finishes its roadshow on Friday.

Barclays Capital and Bank of America Merrill Lynch are joint bookrunners.

Essar Steel to bring benchmark

The remained of Monday's primary market news came with an emerging markets angle.

India's Essar Steel Holdings Ltd. and Gallop Holding LLC began a roadshow on Monday for their benchmark-sized dollar-denominated offering of seven-year senior unsecured notes (B2/B).

The roadshow wraps up on April 22.

UBS Investment Bank, Bank of America Merrill Lynch, Deutsche Bank Securities and Standard Chartered Bank are joint bookrunners for the deal which is being marketed via Rule 144A and Regulation S, without registration rights.

The notes come with four years of call protection.

Proceeds will be used to refinance existing debt, fund capital expenditures and acquisitions, and for general corporate purposes.

China's Kaisa starts roadshow

Meanwhile, Chinese property developer Kaisa Group Holdings Ltd. began an international roadshow on Monday for a $300 million offering of five-year senior guaranteed notes (B2/B+).

The roadshow for the Rule 144A and Regulation S deal will wrap up on April. 21.

Citigroup, Credit Suisse and UBS Investment Bank are joint bookrunners.

Proceeds will be used to refinance debt, fund land acquisition and property development, and for general corporate purposes.

Cablevision, Rosetta price too late

With both the Cablevision deal and the Rosetta Resources offering having priced vey late in the session -- with terms for Rosetta not emerging until nearly 5 p.m. ET and a half-hour after that for the Cablevision deal - traders saw no aftermarket Monday in either new issue.

Last week's deals hold their own

Among the deals which came to market last week, a trader said that Integra Telecom Holdings, Inc.'s 10¾% senior secured first-lien notes due 2016 "traded up nicely," around 101 3/8 bid, 101¾ offered. A second trader meantime quoted the new bonds at 101 bid, 102 offered.

Integra, a Portland, Ore.-based telecommunications company, priced $475 million of the notes - slightly downsized from the originally announced $500 million - at par on Friday to yield 10¾%.

ManTech International's 7¼% notes due 2018 traded at 101 3/8 bid, 101 5/8 offered; the Fairfax, Va.-based defense contractor's $200 million of the notes priced on Thursday at par, moved as high as 102 bid before coming off those peak levels to settle in around 101¾ bid, 102 offered, and eased further on Monday.

However, Lamar Media Corp.'s $400 million of 7 7/8% senior subordinated notes due 2018 stayed in a 101½ bid, 102 offered context. The Baton Rouge, La.-based outdoor advertising company's deal priced last Thursday at par, and had firmed to above 101 bid in last week's aftermarket dealings.

Senior Housing Properties Trust's 6¾% notes due 2020 were offered at 99 - a trader said that "it's kind of interesting, I've never really seen a bid on those, I just see them offered." The Newton, Mass.-based real estate investment trust, which invests in senior-care facilities, priced $200 million of the split-rated (Ba1/BBB-) bonds - upsized from the originally envisioned $150 million - last Tuesday at 98.926 to yield 6.9%.

Market indicators continue strengthening

Among bonds not connected with the new-deal market, a trader saw the CDX Series 14 index up by ¼ point on the session Monday, pegging it at 99 7/8 bid, 100 1/8 offered, after having also gained ¼ point in Friday's dealings.

The KDP High Yield Daily Index meantime gained 7 basis points on Monday to end at 72.28, after having firmed by 4 bps on Friday, while its yield tightened by 3 bps to 7.74%, after having narrowed by 1 bp on Friday.

Advancing issues led decliners on Monday, maintaining around a seven-to-six advantage.

Overall market activity, represented by dollar-volume levels, was down about 9% on Monday from levels seen the previous session.

A trader characterized Monday's session as "pretty quiet. Everyone pretty much spent the day waiting around for Cablevision to price."

A second trader agreed that "it was pretty fair to say that anticipation of the Cablevision mega-deal sucked all of the oxygen out of the market."

Apart from the expectations about the big new deal and whatever other developments the primary market yielded, such as the C&S Group's plans to sell bonds, the first trader said that "it was a terrible day - really boring."

For instance, he said, while the new Western Express bonds were busy on Friday, the day they were priced, by Monday, "it was like it never announced. It was dead quiet."

DynCorp climbs on deal

A trader saw DynCorp International's 9½% senior subordinated notes due 2013 begin the day trading at 102 bid and then later in the day, at 102 7/8, aided by the news that the Falls Church, Va.-based defense contractor is to be acquired by private equity giant Cerberus in a transaction valued at $1.5 billion, including debt assumption.

"The theory is that those are probably going to be called." He noted that back on March 31 - the last time when a round lot of at least $1 million traded - the bonds were at 101 7/8 bid, 102 offered, "so today, they were up a good point on the session."

He further noted that the bonds "are currently callable at 102 3/8, so they're not going to go much higher than where they are now." He noted that the company's New York Stock Exchange-traded shares were up $5.66 on Monday, or 48.17%, to end at $17.41. Volume was 37.3 million shares - an astounding 71 times the usual turnover.

Mirant, RRI rise on merger plans

Also on the M&A front, the news that Atlanta-based Mirant Corp. and Houston-based competitor RRI Energy announced today that they have entered into a definitive agreement to create GenOn Energy, which will be one of the largest independent power producers in the United States gave a boost to both companies' bonds.

Mirant's 8½% notes due 2021, issued by its Mirant Americas Generation subsidiary, was seen by a market source to have jumped more than six points on the day to 97½ bid. More than $31 million of the bonds had traded just by mid-afternoon, the source said, and that figure was almost certain to have increased by the close.

The source also saw RRI's bonds better in the wake of the day's announcement. Its 7 5/8% notes due 2014 was up nearly 2 points at just over 99 bid in brisk dealings, while its 7 7/8% notes due 2017 were seen as 4 point winners, ending at just over 96.

At another desk, the latter bonds were seen having done even better, climbing to just under 98 bid, in active trading. Mirant North America's 7 3/8% notes due 2013 gained more than 2 points to end at 1021/2. Yet another source, in turn, saw those 7 3/8s up nearly 3 points at just under 103.

Financials seen firm

Away from merger-driven news, a trader said that Radian Group Inc.'s bonds "continued to move up," gaining a point on Monday versus the previous week's levels. He saw its 5 3/8% notes due 2013 at 87 bid, 89 offered while the Philadelphia-based mortgage and municipal bond insurance company's 5 3/8% notes due 2018 were "right around" 79-81.

"There was no real activity, but both were quoted up a point," a rise which he said was in line with recent firming on the equity side of Radian and such peers as PMI and MBIA Inc.

GM gyrates higher

A trader said that General Motors Corp.'s bonds "were moving back up," quoting its benchmark 8 3/8% bonds due 2033 as having risen a point to 36¾ bid, on "decent-sized trading."

Another trader also pegged the GM benchmarks up a point at 36½ bid, 37½ offered. The Detroit-based top U.S. automaker's paper had slid last week down into the middle 30s from around 37 at the start of that week, following GM's midweek announcement of a $4.3 billion loss for the 2009 fiscal period running from its July 10 emergence from Chapter 11 until the end of the year.

A trader meantime said that GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 "were quoted a little higher, but were not active." He saw them around 92 bid, 93 offered. Another trader saw the Dearborn, Mich.-based Number-Two U.S. carmaker's long bonds a half-point higher at 36½ bid, 37½ offered.

Also in that same sector, a trader said that Cooper-Standard Automotive's 8 3/8% notes due 2014 were ending around a 72ish context, but said that there was "not much activity" in the Novi, Mich.-based components company's paper.

Retail still rolling

A trader said that Bon-Ton Department Stores Inc.'s 10¼% notes due 2014 were up a point, around 101-102, continuing to ride the momentum from last week generated after the York, Pa.-based retailer announced on Thursday evening that in the five-week period that ended April 3, same-store sales - that is, sales at stores open at least one year, considered a key retailing industry economic performance metric - showed an 11.4% gain over March 2009 levels.

Bon-Ton said that overall sales, including those generated at stores open less than a year, rose 11.2% to $272.4 million, versus a year-earlier figure of $245 million. Sales were strongest in shoes, children's clothing, sportswear and accessories.

The trader also saw Claire's Stores Inc.'s 9 5/8% notes due 2015 trading in an 87-89 range, and said that the Pembroke Pines, Fla.-based specialty retailer's bonds "have also been moving up steadily" over the past week or so," following its March 31 release of fourth-quarter numbers which showed net sales of $410.7 million for the 2009 fourth period, an increase of $17.7 million, or 4.5% versus a year earlier. Although this was mostly due to foreign currency translations from the company's overseas operations, even without that, sales would have still shown a rise of 0.5% year-over year. North American same-store sales rose 1.2% from a year earlier for the quarter, and, including a bigger rise abroad, consolidated same-stores were up 2.1%.

Adjusted EBITDA in the 2009 fourth quarter was $93.4 million, up from $76.4 million a year earlier.

Builders are better

A trader said that homebuilding names such as Hovnanian Enterprises Inc. and Beazer Homes USA Inc. "seemed better today," quoting Red Bank, N.J.-based Hovnanian's 6¼% notes due 2016 at 81 bid, 83 offered.

"We didn't see much volume in it, but last week, they were in the 70s," he said, estimating that in Monday's dealings, they had moved up about a point.

He meantime saw Atlanta-based Beazer's 8 1/8% notes due 2016 unchanged at 90 bid, 92 offered, but noted that "they had been quoted up in the last week as well."

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