New issue calendar busy with Claire's, CityCenter, Chesapeake deals; Exide paper rebounds

By Stephanie N. Rotondo

Portland, Ore., Feb. 13 - The secondary high-yield market was taking a back seat to the primary on Monday as an onslaught of new issues came to market.

"In general, it was relatively slow, with the focus remaining on new issues," a trader said.

"There's a lot less buyers around than there were in the last few weeks," another trader remarked.

Claire's Stores Inc. priced a $400 million issue of 9% secured notes due 2019 at par. The deal held in at those levels while the bank debt gained some ground.

The proceeds from the sale will be used to repay bank debt.

CityCenter Holdings LLC also brought an add-on to its 7 5/8% notes due 2016. The $240 million offering was in addition to the $900 million sold at par on Jan. 13, 2011.

CityCenter also intends to use proceeds to repay bank debt.

Investors also were waiting for a new deal from Chesapeake Energy Corp. The deal did eventually price - an upsized $1.3 billion issue of 6.775% discounted notes. The company's existing issues also were trading actively, in anticipation of the new deal.

In secondary dealings, Exide Technologies Inc.'s bonds "rebounded a bit from the lows," according to a trader. The bonds fell as much as 5 points on Friday after the company released disappointing earnings.

Momentive Performance Materials Inc.'s debt also was recovering a bit from Friday's lows. The specialty chemical maker's bonds weakened last week on the back of preliminary quarterly results.

Indexes end mixed

Market indicators were mixed on Monday, though sources generally deemed the day firm.

The KDP High Yield Index ended at 74.24, with a 6.68% yield. That compared to 74.32 on Friday, with a 6.67% yield.

The CDX North American High Yield Index meantime inched up over half a point to 97½ bid, 97¾ offered, according to a source.

Chesapeake's $1.3 billion

The primary market saw four issuers bring a combined five tranches of notes, pricing a $2.54 billion face amount of junk on Monday.

Chesapeake Energy price an upsized $1.3 billion issue of 6.775% seven-year senior notes (Ba3/BB+/BB) at 98.75 to yield 7%.

The yield printed on top of yield talk. The issue price came cheap to price talk specifying one point of original issue discount.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. LLC and RBS Securities Inc. were the joint bookrunners for the quick-to-market deal, which was upsized from $1 billion.

The Oklahoma City-based producer of natural gas plans to use the proceeds to repay outstanding borrowings under its revolving credit facility.

Endeavor restructures

Endeavour International Corp. priced $500 million of secured notes (Caa1/CCC) in a restructured two-part transaction.

The deal included a $350 million tranche of 12% first-priority senior secured notes due March 1, 2018, which was priced at 96 to yield 12.975%. The tranche came in line with price talk.

Meanwhile, in a tranche that was not distributed, Endeavor also priced $150 million of 12% second-priority senior secured notes at 96.00 to yield 12.954%.

Citigroup Global Markets Inc. ran the books.

The deal initially hit the market as a $500 million single tranche of senior notes due in 2018.

In addition to the restructuring, there were covenant changes.

The proceeds will be used to fund the acquisition of ConocoPhillips' interest in three producing U.K. oil fields in the Central North Sea and to retire existing term loan debt.

Claire's $400 million deal

Claire's Stores priced a $400 million issue of senior secured first-lien notes (B3/B) at par to yield 9%.

The yield printed at the wide end of the 8 ¾% to 9% price talk.

J.P. Morgan, Credit Suisse and Goldman, Sachs & Co. were the joint bookrunners for the quick-to-market issue.

The Pembroke Pines, Fla.-based specialty retailer plans to use the proceeds to reduce borrowings under its credit facility using proceeds.

CityCenter taps 7 5/8% notes

CityCenter Holdings priced a $240 million add-on to its 7 5/8% senior secured first-lien notes due Jan. 1, 2016 (B1/B) at 104.75 to yield 5.824%.

The reoffer price came at the cheap end of the 104.75 to 105.00 price talk.

Bank of America Merrill Lynch, Barclays Capital, BNP Paribas, SMBC and UBS Securities LLC were the bookrunners for the quick-to-market add-on.

The proceeds, together with cash from the balance sheet, will be used to repay $300 million of the borrowings under CityCenter's $375 million senior credit facility, according to a press release from MGM Resorts International, a 50% owner of the company.

ServiceMaster add-on

ServiceMaster Co. priced a $100 million add-on to its 8% senior notes due Feb. 15, 2020 (B3/B) at 103.0, resulting in a 7.372%.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., Citigroup Global Markets Inc. and Natixis Securities America LLC managed the quick-to-market issue.

The Memphis, Tenn.-based lawn care and pest control company plans to use the proceeds to refinance debt.

The original $500 million priced at par on Feb. 2, 2012.

Creative Casinos downsizes

Creative Casinos, Inc. released details of its downsized, restructured $445 million two-part debt offer.

The Las Vegas-based gaming, lodging and entertainment company is offering a downsized $355 million tranche of seven-year senior secured notes (expected ratings Caa1/CCC+).

The tranche was downsized from $365 million and call structure was modified so that the notes will become callable in three years at par plus ¾ coupon. Previously, the notes were to have four years of call protection.

Jefferies & Co. Inc., Morgan Stanley & Co. and Capital One Southcoast are the joint bookrunners for the seven-year secured notes.

In addition, Creative Casinos is making a downsized $90 offer of 7.5-year senior redeemable perpetual preferred stock, non-callable for two years. The offering was decreased from $103.093 million.

Jefferies and Morgan Stanley are the joint bookrunners for the preferred stock offer.

A global investor call is set for 11 a.m. ET on Tuesday and the offerings are set to price during the middle part of this week.

The proceeds from the Rule 144A and Regulation S with registration rights deal will be used to fund construction of a new casino and hotel located in Lake Charles, La.

The overall two-part transaction size was decreased from $468.1 million.

Claire's hangs around par

Claire's new 9% secured notes due 2019 were hanging around its original issue price, according to traders.

One trader saw the new bonds trading around par, while another quoted the issue at 99 7/8 bid, par 1/8 offered.

Another market source pegged the issue at 99 bid, 99¾ offered.

The Pembroke Pines, Fla.-based retailer's term loan meantime headed higher in trading after the company announced the new offering, the proceeds of which will be used to reduce credit facility borrowings.

The term loan was quoted in the early part of the day by one trader at 95 bid, 97 offered, up from 93 bid, 94 offered, and by a second trader at 95¾ bid, 96½ offered, up from 93½ bid, 94¼ offered.

By late day, a third trader was quoting it at 95 bid, 95¾ offered, up from 93½ bid, 94 offered. He said levels got as high as 95½ bid, 96½ offered, but they came in a little as the day progressed.

But while bank debt traders were seeing optimism, not everyone was following suit.

"Although completion of this offering would be a positive development as it starts to address the large 2014 maturity, interest expense will rise, pressuring the company's already low interest coverage - about 1.6x," wrote Gimme Credit LLC analyst Evan Mann in an afternoon commentary.

CityCenter brings add-on

CityCenter Holdings priced a $240 million add-on to its 7 5/8% notes due 2016 at 1043/4, with a 5.824% yield.

Like the Claire's deal, the new issue was seen hanging around its pricing levels.

One trader placed the notes at 1043/4, while another quoted the paper at 104¾ bid, 105 offered.

A third source called the notes at 104½ bid, 105 offered.

The Las Vegas-based joint venture of MGM Resorts International Inc. and Infinity World Development Corp. originally priced bonds on Jan. 13, 2011. The proceeds from the add-on will be used to repay bank debt.

Chesapeake prices, mixed

Chesapeake Energy brought an upsized offering of 6.775% senior unsecured notes due 2019 after the bell.

The deal was increased to $1.3 billion from $1 billion and was priced at a discount at 983/4, to yield 7%.

Traders saw no markets for the new issue, but one trader did note that the Oklahoma City-based power producer's existing debt was trading active in an otherwise subdued secondary market.

He saw about $45 million of the 5 5/8% notes due 2020 trading at par 1/2, up slightly from Friday levels. The 6 1/8% notes due 2021 also were somewhat active, but over half a point weaker at 981/4.

Another market source called the 9½% notes due 2015, up modestly at 113¼ bid.

The new issue was done as part of a new financial plan that will allow the company to raise the cash it needs to avoid bankruptcy. The company also is conducting asset sales and spin-offs in an effort to raise cash for capital expenditures.

Exide paper rebounds

A trader said Exide Technologies' 8 5/8% notes due 2018 "rebounded a bit from the lows" on Monday.

The paper had fallen on Friday following the release of poor quarterly results.

The trader pegged the notes around 80, up three-quarters of a point.

Another trader said the bonds were "not as active as they were Friday," but deemed them "maybe a smidge better" nonetheless.

He also placed the issue around the 80 mark.

On Monday, Standard & Poor's revised its outlook on the Milton, Ga.-based battery maker to negative.

On Friday, the company reported its fiscal third-quarter earnings on Friday. Profit more than doubled due to a $76.7 million French tax benefit, but revenues unexpectedly declined.

The company blamed the revenue dip on "unseasonably warm" weather.

For the quarter ended Dec. 31, net profit was $68.2 million, or 84 cents per share, versus $31.2 million, or 38 cents per share, the year before. Revenues declined 2% to $784.1 million.

Analysts polled by Thomson Reuters were expecting earnings of 20 cents per share on revenues of $847 million.

Looking forward, Exide said that continued mild weather in North America and Europe would likely impact its results, as would a slowing economy.

Momentive gains momentum

Momentive Performance Materials' debt also "recovered a little bit more," a trader said.

He called the 9% notes due 2021 up 1½ points at 89½ bid, 90 offered.

On Friday, the company released preliminary results for the fourth quarter. For the quarter, the company expects operating income in the range of $14 million to $24 million, down considerably from $161 million in the previous year.

Sales for the quarter are expected to be about $1.2 billion, flat from 2010 fourth quarter sales.

And, segment EBITDA is anticipated in the area of $101 million to $111 million, versus $143 million in the prior year.

"Global macroeconomic volatility and inventory destocking negatively impacted our fourth quarter 2011 results," said Craig O. Morrison, chairman, president and chief executive officer, in a release.

"While we posted strong results in our phenolic specialty resins, North American forest products, formaldehyde and oilfield proppants businesses, weaker demand in Europe and Asia drove softer results across the balance of our portfolio," Morrison added.

Sara Rosenberg contributed to this article

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