Clear Channel add-on trades higher, others fall; Caesars gyrates post-report; Hovnanian down

By Stephanie N. Rotondo

Portland, Ore., June 9 - The secondary high-yield market benefitted from the first positive day in the equity markets in nearly a week, traders reported on Thursday.

However, while there was firmness in the high-yield space again, many credits continued to feel the pressure.

Clear Channel Communications Inc. priced its add-on deal to its 9% notes due 2021 early in the day. The new paper quickly headed for higher ground but, as a result, weighed on the rest of the company's bonds.

Caesars Entertainment Corp. gyrated some throughout the day, following the release of Nevada's gaming results for April. Traders saw the bonds closing unchanged to a point weaker.

Elsewhere, poor earnings out earlier in the week continued to push Hovnanian Enterprises Inc.'s debt lower. New Page Corp. was also on the losing side, though with no news to drive the paper down.

OPTI Canada Inc. has a coupon payment looming, and a trader said the subordinated debt was retreating on speculation that the payment might not be made.

Market indexes end mixed

The market was "a little better today," a trader said. "Things firmed."

However, market indexes were mixed on the day. The KDP High Yield Index widened out to 75.32, with a 6.74% yield. That compared to Wednesday's reading of 75.40, with a 6.70% yield.

But the CDX North American High Yield Index rose a slight bit to end at par bid, par 1/8 offered, according to a market source.

With record-breaking temperatures expected in New York and the Jewish holiday Shavuot taking place, some desks were vacant for at least half of the day.

"It was a little noisier in the morning," another trader said, but by mid-day, "It was like someone set off the whistle. All of a sudden it got really quiet."

Clear Channel discount

Thursday's primary market saw two issuers, each one bringing a single tranche, raising $1 billion.

In the new issue market, Clear Channel priced a $750 million add-on to its 9% priority guarantee notes due March 1, 2021 (Caa1/CCC+) at 93.845 to yield 10%.

The yield printed 12.5 basis points beyond the wide end of the 9¾% to 9 7/8% price talk.

A trader said the 9% notes were "the big bond of the day," as the debt traded up to close at 95¾ bid, 96½ offer.

Another trader said that the 9% notes instantly traded up to 95 and then "sort of crept up" to 96 bid, 96½ offer.

"They had to price it really cheap to get it out the door," he said.

But while the add-on deal was performing well, the rest of the San Antonio-based multimedia company's debt structure slipped.

A trader said the 11% notes due 2016 were "really active" and down about a quarter-point to 903/4. The 10¾% notes due 2016 meantime lost 1½ points, finishing around 911/4.

Citigroup Global Markets was the left bookrunner

Goldman Sachs & Co., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co., RBS Securities Inc. and Wells Fargo Securities LLC were the joint bookrunners.

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

The original $1 billion priced at par on Feb. 15, 2011, so Clear Channel will pay interest on its add-on notes that is 100 bps higher than the print on the original deal.

Stolt-Nielsen five-year deal

Elsewhere, Norway's Stolt-Nielsen Ltd. has priced a $300 million-equivalent issue of five-year notes.

A NOK 1.6 billion tranche priced at par with a coupon that floats at a 475 basis points spread to Nibor.

Those floating-rate notes will be swapped into dollar-denominated fixed-rate notes with a coupon and yield of 6.63%

Floating-rate price talk was Nibor plus 450 to 475 basis points. The floating yield came at the wide end of talk.

Fixed-rate price talk was 6½% to 6¾%, and the yield came in line with that talk.

The issue amount was at the high end of the $200 million to $300 million range, which the company brought to market.

DnB NOR Markets, Nordea Markets and Swedbank First Securities were the joint lead managers.

The integrated shipping firm plans to use the proceeds to fund expansion opportunities and for general corporate purposes.

Solera talks $350 million

Solera Holdings, Inc. talked its $350 million offering of seven-year senior notes (Ba2/BB-/) with a yield in the 6 7/8% area on Thursday, according to an informed source.

The deal is set to price on Friday morning.

Goldman Sachs & Co. is the left bookrunner. Bank of America Merrill Lynch is the joint bookrunner.

Downstream starts roadshow

Downstream Development Authority began a roadshow on Thursday for its $295 million offering of eight-year senior secured notes.

Jefferies & Co. Inc. is the left bookrunner for the debt refinancing deal. Bank of America Merrill Lynch is the joint bookrunner.

Forestar pulls offer

Finally, Forestar Group Inc. announced in a Thursday press release that, as a result of recent deterioration in the capital markets, it and wholly owned subsidiary Forestar (USA) Real Estate Group Inc. have decided not to proceed with their $150 million offering of eight-year senior secured notes.

Goldman Sachs & Co. had the books.

Proceeds were to be used to repay bank debt and provide cash on the balance sheet.

Caesars falls after report

Caesars Entertainment's benchmark 10% notes due 2018 fell as much as a point on the day in the wake of a weak monthly gaming report from the Nevada Gaming Control Board.

A market source deemed the debt a point softer at 88½ bid.

But another trader said the issue "looks unchanged" around 891/2.

A third trader also said the notes were "about unchanged" at 89¼ bid, 89¾ offered.

In April, Nevada casinos took in $806 million, down from $810 million the year before. However, tax revenues increased 7.3% to $42.6 million.

On the Las Vegas Strip, casino intake fell 2.2% to $427.5 million. In March, revenues experienced a double-digit gain.

Caesars is a Las Vegas-based casino operator.

Hovnanian still weak

Hovnanian Enterprises' debt continued to weaken in response to its dismal earnings reported earlier in the week, according to traders.

One trader called the 10 5/8% notes due 2016 over a point lower around 981/4. Another source also pegged the paper around that level.

A third source quoted the notes at 98¼ bid, 98¾ offered, down from 99 bid, 99 3/8 offered previously.

On Tuesday, the Red Bank, N.J.-based homebuilder posted a net loss of $72.7 million, or 69 cents per share, for the three months ended April 30. That compared to a loss of $28.6 million, or 36 cents per share, the year before.

Analysts polled by Bloomberg had anticipated an average loss of 55 cents per share.

Revenue dropped to $255.1 million from $318.6 million, and net orders fell 17% to 1,166 new homes.

Gross margin came to 14.8%, down from 17.3%.

NewPage loses steam

A trader called NewPage's 11 3/8% notes due 2014 "active" during the Thursday session and a half-point lower.

He saw the bonds close around the 95 mark.

Another trader called the issue 94¾ bid, 95¼ offered. He also saw the 10% notes due 2012 "down a couple points" at 38¾ bid, 39½ offered.

There was no news out on the Miamisburg, Ohio-based coated papermaker.

In other forest-products related credits, Sino-Forest Corp.'s 6¼% notes due 2017 fell a point to end around 56, a trader said.

OPTI debt pressured

OPTI Canada's subordinated debt continued to languish around its recent lows, according to a trader.

He placed the 7 7/8% and 8¼% notes due 2014 around the 43 level.

The trader said that Friday was the record date for an upcoming coupon payment on the debt. He said the weakness in the credit was due to "speculation about whether or not the payment will be made."

The coupon is due June 15. The bonds will be callable Dec. 15 at $102.06.

OPTI is a Calgary, Alta.-based oilsands producer.

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