GCI, CMS price; market awaits Linn, Delphi; calendar swells with Houghton Mifflin deal

By Paul Deckelman and Paul A. Harris

New York, May 9 - General Communication Inc. was heard by high-yield syndicate sources to have priced a $325 million offering of 10-year notes via its GCI Inc. subsidiary on Monday. The Alaska-based cable and broadband company's new issue firmed more than a point after it was freed for trading.

Michigan power generating company CMS Energy Corp. also came to market. Despite the company's technically high-yield ratings, its $250 million of three-year notes' very low coupon and tight spread made it more likely to be an investment-grade play than a junk story.

Price talk, meantime, emerged on several issues expected to come to market on Tuesday, including automotive components manufacturer Delphi Corp. with a $1.1 billion two-part offering of eight-year and 10-year notes, and oil and gas operator Linn Energy, LLC, coming with a quickly shopped $750 million issue of eight-year paper. Price talk also emerged on another drive-by deal, this one a smallish add-on offering from movie and TV program producer Lions Gate Entertainment Corp.

But the big news on the primaryside was the veritable avalanche of new deals climbing onto the forward calendar, led by textbook publisher Houghton Mifflin Harcourt Publishers Inc.'s $1.35 billion issue of first-lien notes, which could price by the end of the week.

Prospective deals were also being shopped around by Regent Seven Seas Cruises, Longview Fibre Paper & Packaging, Inc. and Baker Corp. International, Inc. European issuers heard to be marketing deals included Jaguar Land Rover plc, Odeon & UCI Cinemas Group, Refresco Group BV and Europcar.

Secondary traders said that deals priced on Friday, such as U.S. Foodservice Inc. and Kansas City Southern de Mexico SA de CV, held to the levels they reached late that session, but they said not much was really going on beyond that, characterizing non-new-deal trading as light - and boring.

General Communication prices

Three issuers brought deals during a Monday session, which saw a phenomenal buildup to the forward calendar.

All three of Monday's transactions were drive-by deals.

Two of the three were run on the high-grade syndicate desks.

The exception from the latter rule came from General Communication, which priced a $325 million issue of 10-year senior notes (expected ratings B2/BB-) at par to yield 6¾%.

The yield printed on top of the price talk, market sources said.

Deutsche Bank Securities Inc. ran the books for the debt refinancing deal.

CMS Energy prices 2¾% notes

That headline is not a misprint.

CMS Energy priced a $250 million issue of 2¾% three-year senior notes (Ba1/BB+/BB+) at a 185 basis points spread to Treasuries on Monday.

The spread came on top of the price talk.

The notes were discounted to 99.942 and yield 2.77%.

Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Bank of America Merrill Lynch were the bookrunners for the general corporate purposes deal, which was run on the high grade desk.

Western Gas brings crossover

Finally, Western Gas Partners, LP priced $500 million of 5.375% 10-year split-rated senior notes on Monday at Treasuries plus 237.5 basis points, on top of price talk.

The notes (B2/BB+/BBB-) were priced at 98.778 to yield 5.535%.

Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC were bookrunners for the debt refinancing and general corporate purposes deal, which was also executed on the investment-grade desk.

Delphi talks $1.1 billion

Delphi set price talk for its $1.1 billion two-part offering of senior notes (Ba3/BB/) on Monday.

The $550 million tranche of eight-year notes, which comes with three years of call protection, is talked with a yield in the 6% area.

Meanwhile, the 10-year notes, which come with five years of call protection, are talked to price with a yield that is 25 basis points behind that of the eight-year notes.

The deal is set to price midday on Tuesday.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the joint bookrunners.

Linn Energy sets talk

Linn Energy, LLC and Linn Energy Finance Corp. talked a $750 million offering of eight-year senior notes (expected ratings B2/B) with a yield in the 6¾% area.

The books close at 10 a.m. ET on Tuesday, and the deal is set to price thereafter.

Citigroup is the left bookrunner. Barclays Capital, BNP Paribas are joint bookrunners.

The Houston-based oil and gas company plans to use the proceeds to fund the Texas Panhandle acquisition, repay revolver debt in full and for general corporate purposes.

Lions Gate talks tap of 101/4s

Lions Gate Entertainment talked a $150 million add-on to its 10¼% senior secured second-priority notes due Nov. 1, 2016 with a 9½% yield

The deal was expected to price during the Monday session. However, no terms were available at press time.

The underwriters include J.P. Morgan Securities LLC, Wells Fargo Securities, Barclays Capital, Mitsubishi and Piper Jaffray & Co..

Proceeds will be used to repay revolver debt and for general corporate purposes.

The original $236 million issue priced at 95.222 to yield 11¼% in October 2009.

Europcar €100 million add-on

EC Finance plc, a special purpose vehicle of French car rental firm Europcar, plans to price a €100 million add-on to its 9¾% senior secured notes due Aug. 1, 2017 (B2//) on Tuesday.

Deutsche Bank AG, Credit Agricole CIB, SG-CIB; Natixis Bleichroeder and Royal Bank of Scotland are the bookrunners.

The Saint Quentin en Yvelines, France-based company plans to use the proceeds to refinance debt and fund fleet purchases.

The original €250 million issue priced at 98.732 to yield 10% in June 2010.

Houghton Mifflin's $1.35 bln

The forward calendar underwent a compendious buildup on Monday.

Houghton Mifflin Harcourt plans to price a $1.35 billion offering of eight-year first-lien notes (//B) on Friday.

J.P. Morgan Securities LLC, Citigroup Global Markets, Credit Suisse Securities (USA) LLC, Wells Fargo Securities are the joint bookrunners.

The Boston-based educational publisher plans to use the proceeds to repay debt.

Longview Fibre on Wednesday

Longview Fibre will begin a roadshow on Wednesday for its $450 million offering of five-year senior secured notes (expected ratings B2/B+)

Bank of America Merrill Lynch and CIBC World Markets are the joint bookrunners.

Proceeds, along with cash on hand, will be used to fund a cash distribution to the company's shareholders.

BakerCorp plans roadshow

BakerCorp plans to start a roadshow on Wednesday for its $240 million offering of eight-year senior notes.

Morgan Stanley & Co. and Deutsche Bank Securities Inc. are the joint bookrunners.

Proceeds will be used to partially fund the acquisition of BakerCorp by Permira.

BakerCorp is a Moon Township, Pa., engineering design and related consulting services provider for public and private sector clients.

Seven Seas starts Tuesday

Regent Seven Seas Cruises will begin a roadshow on Tuesday for its $200 million offering of eight-year second lien senior secured notes (B3/B-).

Deutsche Bank Securities Inc. is the left bookrunner. Barclays Capital and HSBC are joint bookrunners.

The Fort Lauderdale, Fla.-based cruise ship company plans to use the proceeds to repay debt and for general corporate purposes.

Jaguar starts roadshow

Jaguar Land Rover began a global roadshow on Monday for its £1 billion-equivalent three-part offering of senior notes (B1/B+/BB-).

The offering targets tranche sizes of £500 million and $400 million seven-year notes, which come with three years of call protection, and $400 million of 10-year notes coming with five years of call protection.

Citigroup, Credit Suisse, JP Morgan and Standard Chartered Bank are the joint physical bookrunners for the Rule 144A and Regulation S for life deal. Citigroup will bill and deliver.

The Graydon, England automobile manufacturer plans to use the proceeds to refinance debt and for general corporate purposes.

Refresco brings €660 million

Dutch soft drink producer Refresco is expected to release official price talk on Tuesday for its €660 million two-part offering of seven-year high-yield notes.

The deal comes in tranches of fixed-rate notes with three years of call protection and non-callable floating-rate notes.

The initial guidance on the fixed-rate notes is 7¾% to 8%. Guidance on the floating-rate bullet notes is Libor plus 350 to 375 basis points.

Tranche sizes remain to be determined.

Deutsche Bank AG and Credit Suisse are the leads.

Proceeds will be used to refinance debt.

Odeon starts Tuesday

Odeon & UCI will begin a brief roadshow on Tuesday for a £475 million offering of high-yield notes.

Bank of America Merrill Lynch is leading the deal.

The England-based movie theater operator plans to use the proceeds to repay debt, fund acquisitions and for general corporate purposes.

General Communication gains

When the new General Communication 10-year notes were freed for secondary dealings, a trader pegged the Anchorage-based telecom, broadband and cable operator's new deal as having opened at 101¼ bid, 101¾ offered, up from the par level at which the quickly shopped $325 million deal had priced.

A second trader saw the bonds going home at 101 1/8 bid, 101 5/8 offered.

CMS deal seen - slightly

The session's other pricing, from CMS Energy, was said by traders to likely have had little appeal to junk market players, owing to its unusually small coupon - 2¾%, one of the tiniest ever for a purely junk-rated issue.

One or two suggested that this was certainly more of a crossover story, despite the company being nominally a high-yield name.

However, one did quote the bonds as having moved to 101¼ bid, 101½ offered late in the session versus their par issue price.

Friday deals hold their own

Traders saw the issues priced during Friday's session pretty much holding onto the gains they notched in initial aftermarket dealings late in that session.

One saw U.S. Foodservice's 8½% notes due 2019 trading at 101¼ bid, 101½ offered "pretty much most of the day."

That was not far from the 101¼ bid, 101¾ offered level at which the Columbia, Md.-based broadline foodservice distributor's $400 million issue had traded on Friday after the deal had priced at par bid.

Kansas City Southern de Mexico's 6 1/8% notes due 2021 were seen Monday trading at bid levels around 1011/4, a trader said.

The railroad operator's $220 million issue had priced at par on Friday and then had firmed to 101 bid, 101½ offered in the aftermarket.

However, not all of those Friday deals were able to stay up there. A trader saw Miami-based construction equipment rental company Neff Rental LLC's 9 5/8% second-lien senior secured notes due 2016 trade well down from the 101¼ bid, 101¾ offered peak at which the bonds had been quoted after the $200 million issue priced at par on Friday.

In Monday's dealings, he said that he saw a par bid out there, "and then that got hit" and left the bonds at 99 5/8 bid, par offered.

A trader said he had seen no activity in Sensata Technologies Holdings NV's 6½% notes due 2019. The Netherlands-based electrical and electronic components had priced its $700 million issue - upsized from the originally shopped $600 million - at par on Friday, and they had moved up to 100½ bid, 101 offered afterward.

New issues only real trading

A trader said that apart from trading in the new issues, there was "not really" anything going on in the high-yield secondary market, and "actually, volume started out pretty slow for a Monday. I noticed about halfway through the day, the volume was still really low on Trace."

"It's just one of these new issue window periods we're going through," he said, with volume chugging along at a hefty rate - over $8 billion last week and over $7 billion the week before that -" monopolizing the attention of market participants."

The issuers "keep printing and pricing them, and [the buyers] will come," he added.

A second trader said, "We have a boatload of orders and nobody wants to play."

"It doesn't matter what the bid is. People are just, like 'I don't care'," with everyone focused on the new deals.

All in all, he described the session away from trading in the new bonds as "a pretty boring day if you make your living trading in the secondary market. It was a chump change day."

Secondary signs mostly firmer

Buoyed by the continued flows of money coming into the market, however, the secondary remained firm even though it was quiet.

A trader saw the CDX North American Series 16 HY index up one-quarter of a point on Monday to end at 102 15/16 bid, 103 1/16 offered, after having fallen back by one-sixteenth of a point on Friday.

The KDP High Yield Daily Index, meantime, was steady on Monday at 76.29, after having risen by 9 basis points on Friday. Its yield likewise held at 6.38%, after having come in by 4 bps on Friday.

The Merrill Lynch High Yield Master II Index notched its 14th consecutive upturn on Monday, gaining 0.081% on top of Friday's 0.072% advance. That raised its year-to-date return up to 5.867%, a new peak level for the year, from Friday's 5.777%, the previous zenith.

Hawker seen higher

Among the relatively few secondary names seen doing anything, a trader called Hawker Beechcraft Corp. "a name you don't see much - but today, it seemed like it picked up in activity. There seemed to be a lot of activity in the name," particularly in its 8½% notes due 2015, which he was quoting around the 843/4-85½ area, up a half-point.

He said that the company's 8 7/8% notes due 2015, most recently seen trading around the 89 range, "wasn't the one with the volume - that was the 81/2s.

"So there's a different name that's percolating today," he stated.

There was no fresh news seen out on the Wichita, Kan.-based maker of small- to-medium-sized aircraft, which released quarterly numbers a week ago - a mixed bag, showing revenues off versus a year ago and operating losses up in its business and general aviation segment.

The company also recently lost a case filed against it with the International Chamber of Commerce by British aircraft maker Airbus UK, which two years ago had filed a case seeking up to $60 million in damages from Hawker Beechcraft, alleging the U.S. company unilaterally reneged on a previously negotiated contract to buy a certain amount of fuselages, wings, track kits and spare parts from Airbus. The body ordered Hawker Beechcraft to pay Airbus $14.2 million.

Paper names percolate

A trader said that NewPage Corp.'s 10% notes due 2012 were trading in a 58-58½ context, which he called pretty much unchanged from the levels at which the Miamisburg, Ohio-based coated-paper manufacturer's bonds had finished last week.

However, he said that there was "some activity in the 10s, a decent amount."

A source at another desk estimated the volume in the bond at around $14 million, making it one of the busiest Junkbondland names on the day.

The first trader meantime said that Catalyst Paper Corp.'s 7 3/8% notes due 2014 traded between 66 and 68, "so they're hanging down, sort of where they went out at the end of last week."

He saw "very little trading" in the Richmond, B.C.-based papermaker's bonds," but said they were "being quoted at the levels where they ended up last week, which is lower" versus levels before that.

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