Calpine, Navios drive-bys lead $1.46 billion day, Pittsburgh prices; new Freescale gains

By Paul Deckelman and Paul A. Harris

New York, Oct. 29 - Calpine Corp. was heard by high-yield syndicate sources to have come to market on Tuesday with a quickly shopped $490 million offering of 10.25-year secured notes. The power-generation company's issue was one of two drive-by deals and three secured-paper transactions that got done during a session that saw some $1.46 billion of new dollar-denominated, junk-rated paper from domestic or industrialized-country issuers price.

Another quick-to-market borrower was Greek tanker operator Navios Maritime Acquisition Corp., which sailed in with a slightly upsized $610 million offering of eight-year ship mortgage notes.

And Pittsburgh Glass Works LLC, a maker of automotive windshields, priced a $360 million issue of five-year secured paper as a scheduled forward calendar deal.

The latter's bonds were seen by traders to have firmed solidly when they reached the aftermarket, while Calpine's new paper traded only slightly above their issue price. The new Navios bonds were initially unseen in the market.

Among the issues that priced on Monday, the traders said that building products maker USG Corp. and computer chip-maker Freescale Semiconductor Ltd.'s new deals were each doing well in the secondary market. Apparel retailer J. Crew Group Inc.'s offering traded up a little from its par issue price.

Away from the deals that have actually priced, the primaryside sources said that gaming and lodging operator Golden Nugget, Inc. will be shopping a $300 million eight-year issue around, with pricing likely to take place next week.

Away from the new deals, its sector peer Caesars Entertainment Corp.'s bonds were better, even though the casino powerhouse reported unfavorable quarterly results.

Statistical indicators of market performance were higher across the board on Tuesday, after having been mixed on Monday.

Navios ship mortgage notes

The re-energized drive-by market continued to crank out new issuance on Tuesday.

Two of the three deals that priced during the session came as drive-bys.

All three executions were tight, with two deals coming at the tight end of price talk, and the other pricing on top of price talk that was inside of the initial guidance.

Navios Maritime Acquisition Corp. and Navios Acquisition Finance (US) Inc. priced an upsized $610 million issue of eight-year first-priority ship mortgage notes (B3/B) at par to yield 8 1/8%.

The yield printed at the tight end of yield talk that was set in the 8¼% area.

Timing was moved ahead. The deal was expected to remain in the market overnight, when it was announced on Tuesday morning.

Morgan Stanley, JPMorgan and Deutsche Bank were the joint bookrunners for the debt refinancing deal, which was upsized from $600 million.

Calpine secured deal

Calpine also came with a Tuesday drive-by, pricing a $490 million quick-to-market issue of senior secured notes due Jan. 15, 2024 (B1/BB-) at par to yield 5 7/8%.

The yield printed on top of yield talk. Initial guidance was in the 6% area.

Deutsche Bank, UBS, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch, Citigroup, Credit Suisse, Barclays and RBC were the joint bookrunners.

The Houston-based independent power producer plans to use the proceeds, together with cash on hand if necessary, to redeem 10% of each series of its existing notes, other than its 7¼% senior secured notes due 2017.

Pittsburgh Glass at tight end

Pittsburgh Glass Works priced a $360 million issue of five-year senior secured notes (B3/B) at par to yield 8%.

The yield printed at the tight end of the 8% to 8¼% yield talk; that talk was in line with earlier guidance.

Credit Suisse was the sole bookrunner for the debt refinancing deal.

Golden Nugget investor call

Golden Nugget plans to participate in an investor call on Wednesday to discuss its $300 million offering of eight-year senior notes.

A roadshow is set to begin on Thursday.

The deal is expected to price on Oct. 5 or Oct. 6.

Jefferies and Deutsche Bank are the joint bookrunners.

Proceeds will be used to refinance debt and fund the acquisition of the Golden Nugget Lake Charles.

AA's £350 million PIK toggle

In the sterling-denominated high yield primary, British motoring association AA Ltd. announced plans to price a £350 million offering of unrated six-year senior PIK toggle notes on Thursday.

Global coordinator Deutsche Bank will bill and deliver. Royal Bank of Scotland is also a global coordinator.

Barclays and Mizuho Securities are joint bookrunners.

Proceeds will be used to refinance debt of Acromas Mid Co Ltd. and pre-fund the first three interest payments on the notes, following the issue date.

Pittsburgh shows some pop

In the secondary arena, traders saw Pittsburgh Glass Works' new 8% senior secured notes due 2018 trading at stronger levels when the Pennsylvania-based auto glass manufacturer's paper was freed for aftermarket activity.

One quoted the bonds at 101½ bid, 101¾ offered, while a second pegged the issue at 101½ bid, 102½ offered, up from their par issue price earlier.

Calpine climbs a little

The traders also saw Calpine's new 5 7/8% senior secured notes due 2024 up a little from the deal's par issue price.

One located the bonds at 100¼ bid, 100 3/8 offered, while a second saw them at 100¼ bid, 100½ offered.

At yet another shop, a market source said that the bonds had edged up to 100 1/8 bid, 100 5/8 offered.

New Navios notes not seen

Traders said that the new 8 1/8% first-priority ship mortgage notes due 2021 from Navios Maritime Acquisition came to market too late in the session.

However, the Piraeus, Greece-based oil tanker operator's established 8 5/8% ship mortgage notes due 2017 were seen by a market source up about 7/16 point at just over the 105 bid mark. Volume was over $6 million.

Freescale firms in aftermarket

Looking at the issues which had priced during Monday's session - all of them opportunistically timed and quickly shopped drive-by offerings - traders said that Freescale Semiconductor Ltd.'s 6% senior secured notes due 2021 showed strength when they were freed for secondary trading on Tuesday.

One saw them at 101 1/8 bid, 101½ offered, suggesting that "those were probably up a point on the break."

A second trader saw the notes at 101 1/8 bid, 101 3/8 offered, while a third had them at 101 bid, 101¼ offered.

The Austin, Texas-based computer-chip manufacturer had priced $960 million of those notes at par on Monday via its wholly owned indirect subsidiary Freescale Semiconductor Inc. after the offering was massively upsized from an originally announced $500 million, but they came too late in Monday's session for any kind of trading at that time.

J. Crew trades better

Another deal that priced too late in Monday's session for any kind of real initial aftermarket was New York-based apparel retailer J. Crew Group's 7¾%/8½% senior PIK toggle notes due 2019. The company's indirect corporate parent, Chino Intermediate Holdings A, Inc., priced $500 of those 5.5-year notes at par.

When they were freed for trading on Tuesday, one trader pegged them at 100½ bid, 101 offered, while a second had them at 100½ bid, 101¼ offered.

USG holds gains

Traders saw Chicago-based building products manufacturer USG Corp. holding onto the gains that its 5 7/8% notes due 2021 had notched in initial aftermarket trading after the $350 million issue priced at par.

Those bonds had moved up to bid levels between 101 and 101¼ by late Monday afternoon.

On Tuesday, a trader quoted them having actually gotten a bit better, at 101½ bid, 102 offered.

A quiet session

A trader said that he was seeing only "light re-trading in the new bonds" that had priced on Monday and Tuesday.

"Most people were holding them" rather than flipping in and out of them.

A second trader characterized Tuesday's session as extremely quiet, and suggested - tongue firmly planted in cheek - that "maybe a lot of people were out buying their Halloween candy."

"There was a firm tone today," a third trader said, "with new-issue stuff mostly the focus."

Harrah's trades higher

Away from the new deal, one of the few credits trading on any kind of volume were the 10% notes due 2018 issued by Harrah's Operating Inc., the predecessor company to Las Vegas-based gaming giant Caesars Entertainment.

A trader saw those bonds up 1 point at 49½ bid, while calling the rest of the company's bonds unchanged.

A market source at another shop saw those bonds even better, quoting them going home at 50 5/8 bid, a gain of over 2 points on the session. Volume of over $21 million made it one of the busiest issues in Junkbondland on Tuesday.

Market signs turn better

Overall, statistical junk-market performance indicators were higher on Tuesday, after having been mixed on Monday.

The Markit Series 21 CDX North American High Yield index rose by 1/16 point to end at 106 7/8 bid, 107 offered. On Monday, the index had declined by 1/16 point.

The KDP High Yield Daily index gained 4 basis points to close at 74.53. On Monday, it was unchanged, pausing after having risen over the 11 previous sessions.

Its yield came in by 2 bps to 5.66%, its second consecutive tightening. On Monday, the yield had declined by 1 bp.

And the widely followed Merrill Lynch High Yield Master II index put up its 14th consecutive gain, rising by 0.042%, on top of Monday's 0.106% advance.

The latest gain lifted its year-to-date return to 6.231%, its sixth consecutive new high point for 2013, breaking the former mark of 6.186% set on Monday.

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