Giant-sized Gaming and Leisure deal prices, firms, Blackboard, Exopack on tap; Frontier gains

By Paul Deckelman and Paul A. Harris

New York, Oct. 23 - The high-yield primary market saw just one new deal price on Wednesday - but it was a big one.

Gaming and Leisure Properties, Inc. did a three-part, $2.05 billion deal that consisted of five-, seven- and 10-year notes. When the casino-oriented real estate investment trust's new GLP Capital LP bonds were freed for secondary dealings, traders saw the notes up modestly, with good demand seen from both high-yield and crossover investors.

Current GLP parent company Penn National Gaming, Inc.'s new eight-year bonds, which priced earlier this week, were quoted up slightly.

With only one deal priced on the day, primaryside players were also talking about deals that are expected to get done on Thursday - educational software provider Blackboard, Inc.'s six-year note offering, and the six-year notes coming from plastic packaging manufacturer Exopack Holding Corp. Syndicate sources heard price talk on both of those pending transactions.

Away from the new deals, traders did not see any overall theme to the market, although they said it seemed generally firmer.

There was busy activity in Frontier Communications Corp., particularly the telephone service provider's 2024 notes, which rose in busy dealings despite a lack of fresh news out.

Statistical indicators of market performance turned mixed on Wednesday, after having been up across the board on Tuesday. The mixed finish was the second in the last three sessions.

Gaming and Leisure beats talk

One issuer raised $2.05 billion with three tranches of notes on Wednesday - and although the deal was widely followed in the high-yield market those notes were actually split rated.

Gaming and Leisure Properties was the issuer that brought $2.05 billion of non-callable senior notes (Ba1/BBB-) via left physical bookrunner BofA Merrill Lynch.

The deal to fund the spinoff of the company from Penn National Gaming included a $550 million tranche of five-year notes which priced at par to yield 4 3/8%. The yield printed 12.5 basis points inside of the 4½% to 4 5/8% yield talk, which was revised tighter from earlier talk in the 4¾% area.

Joint physical bookrunners for the five-year notes were J.P. Morgan and RBS.

Gaming and Leisure also priced a $1 billion tranche of seven-year notes at par to yield 4 7/8%. Again the yield printed 12.5 bps inside of the revised 5% to 5 1/8% yield talk, which was tightened from earlier talk in the 5¼% area.

The joint physical bookrunners for the seven-year notes were RBS and Goldman Sachs.

The company also priced a $500 million tranche of 10-year notes at par to yield 5 3/8%. Once again, the yield printed 12.5 bps inside of the 5½% to 5 5/8% revised yield talk, which had tightened from earlier talk in the 5¾% area.

J.P. Morgan and RBS were the joint physical bookrunners for the 10-year notes tranche.

Credit Agricole, Fifth Third, Goldman Sachs, Nomura, UBS and Wells Fargo were joint bookrunners for all three tranches.

Shopping the secondary

A bond trader saw all three tranches of the new Gaming and Leisure deal firm in the late Wednesday afternoon secondary market.

The 4 3/8% notes due 2018 were the outperforming tranche at par ¾ bid, 101 1/8 offered.

The 5 3/8% notes due 2023 were at par ½ bid, par 7/8 offered.

And the 4 7/8% notes had the tightest bid-offer spread at par 3/8 bid, par 5/8 offered.

It was mostly high-yield accounts and crossover accounts participating in secondary trading, and volumes were heavy, the source said.

"The calendar has been much smaller than people expected a week ago, so people are putting cash to work in the secondary market," the trader said.

A little later another trader said that trading volume in junk was generally strong on Wednesday.

"We saw better sellers today, and the market was quieter than yesterday, but volumes were halfway decent," the source said, adding that the market was generally a little weaker, with the CDX High Yield 21 contract down ¼ point or more.

Talking the deals

Although news volume was muted, much of the week's thin remaining calendar is positioned to clear on Thursday.

Blackboard Inc. talked its $365 million offering of six-year senior notes (Caa1/CCC+/) to yield 7¾% to 8% on Wednesday.

Books close at noon ET Thursday, and the deal is set to price thereafter.

BofA Merrill Lynch is the left bookrunner. Deutsche Bank and Morgan Stanley are the joint bookrunners.

Exopack talked its $325 million offering of six-year senior notes (Caa2/B-) to yield in the 8% area.

That deal is also expected to price on Thursday.

Goldman Sachs, J.P. Morgan, BofA Merrill Lynch, Barclays, Investec and Morgan Stanley are the joint bookrunners.

And in Europe, England's Domestic & General Group Ltd. set price talk for its £500 million three-part notes offer on Wednesday.

A £200 million tranche of seven-year senior secured fixed-rate notes (B2), which become callable in three years at par plus 50% of the coupon, are talked to price with a yield in the 6½% area.

A £150 million tranche of six-year senior secured floating-rate notes (B2), which become callable in one year, are talked to price at 99.5 with a Libor spread of 500 to 525 basis points.

And a £150 million tranche of eight-year senior unsecured notes (B3), which become callable in three years at par plus 50% of the coupon, are talked to price with a yield in the 8% area.

The deal is set to price on Thursday via joint global coordinators Goldman Sachs, Barclays and Credit Suisse.

BNP, Morgan Stanley, SG and UBS are the joint bookrunners.

Gaming and Leisure firms

In the secondary realm, traders saw brisk activity in the big new three-part deal brought to market Wednesday by GLP Capital LP on behalf of Gaming and Leisure Properties, a Wyomissing, Pa.-based gambling industry-oriented real estate investment trust in the process of being spun off by Penn National Gaming.

A trader saw its 4 3/8% notes due 2018 initially trading around 100¼ bid, later moving up to 100 3/8 bid.

A second trader saw those bonds doing even better, trading in a 100¾ to 101¼ bid context.

The new 4 7/8% notes due 2020 were initially quoted around 100¼ to 1003/4, while at another desk, they were seen at 100 3/8 bid, 100¾ offered.

And a trader pegged the 5 3/8% notes due 2023 at 100½ bid, 101 offered.

One of the traders - noting the new deal's BBB- rating from Standard & Poor's - opined that "it's one the edge," attracting considerable interest from high-grade investors as a crossover play as well as from the more traditional junk bond precincts.

New Penn bonds little moved

One of the traders meanwhile quoted Penn National's own new 5 7/8% notes due 2021 trading in a par to 100 3/8 bid context.

A second did not see any markets in the deal.

The casino and horse race track operator, also based in Wyomissing, priced $300 million of those bonds at par on Monday, although traders did not initially see any aftermarket dealings at that time.

Crestwood, Alliant trade well

Looking at Tuesday's new issues, a trader saw Arlington, Va.-based aerospace and defense contractor Alliant Techsystems Inc.'s new 5¼% notes due 2021 flying high, quoting those bonds at 101½ bid, although later in the day, he saw them at 101¼ bid, 101¾ offered.

That quick-to-market $300 million issue priced at par but came too late in Tuesday's session for any aftermarket activity at that time.

Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp.'s 6 1/8% notes due in March 2022 were seen by a trader mostly trading in a 101½ to 102 bid context, though later in the day he saw them at 101¾ bid, 102 offered.

That was about unchanged from the levels seen on Tuesday, after the Houston-based shale energy master limited partnership's quickly-shopped offering came at par, after having been upsized to $600 million from an originally announced $500 million.

Going back a little further, Monday's issue of 6¾% notes due in January 2022 from Ferrellgas LP and Ferrellgas Finance Corp. "traded up," a market source said, seeing the $325 million issue trading in a 101¾ to 102¼ bid context.

Another trader said that he had not seen any activity in the bonds on Wednesday, but had seen them going home Tuesday at 102 bid, 102¼ offered.

The Overland Park, Kans.-based propane distributor priced its drive-by deal on Monday at par, although it came too late in the session for any trading that day.

Monday's other deal besides Ferrellgas and Penn National, William Lyon Homes' 8½% notes due 2020, eased by ½ point on the day, a trader said, pegging those bonds at 106¾ bid, 107¼ offered.

That erased most of the gains notched on Tuesday, when the Newport Beach, Calif.-based homebuilder's notes had gained ¾ point on the session, in line with the market's overall better tone, to go home at 107¼ bid, 107¾ offered.

That quick-to-market $100 million add-on to its existing 2020 notes priced at 106½ on Monday to yield 6.952%, after having been upsized from an originally announced $75 million. The bonds traded around their issue price in initial aftermarket dealings.

Quietly firmer tone seen

A trader said that away from the new deals, "nothing was jumping out on any kind of big volume or getting noticeable" as a result of earnings or other news.

Instead, he said, "you have a couple of the new issues trading, so it's the same stuff that gets hashed out trading throughout the day."

The overall tone, he said was "maybe unchanged to up slightly - but then when you look at the [Markit Series 21 CDX North American High Yield] index, it's been down by ¼ to 3/8 point most of the day, so they're contradicting each other."

But with that overall firmer tone, he added, "stuff is trading kind of situational. It keeps going up - and it's a matter of just how fast."

A second trader agreed that although nothing he saw seemed to have a strong pop, "everything is firmer."

But he said that "it's pretty slow out there - darn slow."

He added that right now, "it's the survival of the fittest."

Frontier bonds firm up

One of the few credits showing both considerable volume and upside movement was Frontier Communications' 7 5/8% notes due 2024. A market source said that more than $20 million of the notes changed hands during the day, putting it near or at the top of the Junkbondland most-actives list.

He saw the issue having firmed smartly, up 1 3/8 points on the day to go out at 104 7/8.

However, there was no fresh news out on the Stamford, Conn.-based telecommunications company and broadband service provider that might explain the sizable activity.

Frontier's 7 1/8% notes due 2019 gained 3/16 to end at 108 5/8 bid, but there were only a small handful of round-lot trades.

Market signs turn mixed

Statistical junk-market performance indicators were meantime seen having turned mixed on Wednesday after having been higher across the board on Tuesday. It was the second mixed session in the last three, with mixed signals also seen on Monday.

The Markit CDX index continued its gyrations, losing 5/16 point on Wednesday to end at 106 13/16 bid, 106 15/16 offered. On Tuesday, it had been up by 13/32 point, after having lost 7/32 point Monday, breaking a string of three consecutive higher sessions and several unchanged sessions before that.

But the KDP High Yield Daily Index notched its ninth straight improvement, rising by 3 basis points to close at 74.30, after having gained 8 bps for a second straight session on Tuesday.

Its yield declined by 2 bps to 5.73%, its ninth consecutive narrowing. On Tuesday, it had come in by 3 bps.

And the widely followed Merrill Lynch High Yield Master II Index made it an even 10 gains in a row on Wednesday, rising by 0.07%. On Tuesday, it had gained 0.142%. The latest gain lifted its year-to-date return to5.938%, its second straight new high point for 2013 so far. On Tuesday, it had firmed to 5.864%, shattering the previous high-water mark of 5.835% that had been recorded on May 9.

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