Upsized Cablevision, also Huntsman, Petroplus and Ferrellgas price; Smithfield seen off

By Paul Deckelman and Paul A. Harris

New York, Sept. 9 - The high-yield primary market shifted into a higher gear on Wednesday, as four deals having a collective face value of some $2.2 billion priced - double the two deals worth a bit more than $1.1 billion which had made their debut on Tuesday. And testifying to the mercurial nature of the junk marketplace, Wednesday's pricings - as had been the case on Tuesday - were all quickly appearing and opportunistically priced drive-by transactions announced earlier that same session, rather than regularly scheduled forward calendar deals.

The big deal of the day was Cablevision Systems Corp.'s $900 million offering of eight-year notes, which was nearly double the size originally announced by the Bethpage, N.Y.-based cable television system operator, newspaper publisher - it owns the suburban New York tabloid Newsday - and sports team and arena owner, whose holdings include pro hockey's New York Rangers and pro basketball's New York Knicks. Cablevision is using the deal proceeds to fund a tender offer for two series of bonds.

Also seen doing an upsized offering for the purpose of taking out existing debt was Overland Park, Kan.-based propane distributor Ferrellgas LP which sold $300 million of eight-year notes.

Market participants also noted deals priced by chemical manufacturer Huntsman International LLC, as well as from Europe-based petroleum refiner Petroplus Finance 3 Ltd. The Huntsman deal was $600 million that had been previously issued and was now being sold into the market.

While those deals were pricing, Midland, Tex.-based energy exploration and production operator Concho Resources Inc. was heard getting ready to hit the road to sell an offering of eight-year notes - yet the latest in a slew of new energy deals to hit the market in the past two days, since the primary arena revived after the Labor Day holiday break. Other issuers from that suddenly hot sector include Ferrellgas, Petroplus and, from Tuesday's session, Plains Exploration & Production Co.

In the secondary sphere, the Ferellgas bonds were seen having moved up more than a point after being freed late in the day, while Petroplus held slightly above its issue level. The Huntsman was seen by a trader to have been "just put away," while the Cablevision near-mega deal appeared too late in the session. There was also some activity, though not very much movement, in Tuesday's new deals for Plains Exploration & Production and Harrah's Operating Co. Inc.

Apart from Harrah's, a trader saw a little bit of strength in the gaming sector, although it was mostly concentrated in the shorter paper of companies like MGM Mirage.

Other than the gaming names, Smithfield Foods Corp., which seemed to have dodged a bullet bond-wise on Tuesday, when junk market denizens ignored the Virginia-based hog producer's wider-than-expected quarterly loss, was unable to do it for two sessions in a row, with several of its issues seen lower and another no better than unchanged.

Cablevision massively upsized

In the primary market four issuers combined to price $2.2 billion of notes on Wednesday.

Cablevision Systems Corp. priced an upsized $900 million of 8 5/8% eight-year senior notes (B1/B+) at 98.596 to yield 8 7/8% on Wednesday.

The yield came at the wide end of the 8¾% area yield talk. The issue price, however, came rich to the discount talk of 2 points. The offering was increased from $500 million.

Bank of America Merrill Lynch, Credit Suisse, Citigroup, Deutsche Bank Securities, Goldman Sachs & Co. and JP Morgan were joint bookrunners for the quick-to-market deal.

The Bethpage, N.Y., cable TV company will use the proceeds to repay or repurchase a portion of CSC Holdings' senior notes due in 2011 and 2012, and for general corporate purposes.

Huntsman 5½% notes sold in market

Credit Suisse and Deutsche Bank priced $600 million of 5½% senior notes due June 30, 2016 (B1/B-/) issued by Huntsman International LLC at 80.00 to yield 9.567% on Wednesday, according to a market source.

The deal priced on top of yield talk and price talk.

Credit Suisse Securities and Deutsche Bank Securities Inc. were joint bookrunners for the quick-to-market issue.

Huntsman issued the notes to the two banks in June as part of the settlement of a lawsuit related to the proposed and unsuccessful leveraged buyout of Huntsman by Hexion Specialty Chemicals.

The settlement also included a $500 million term loan, which is currently being sold down into the market by the two banks, $620 million in cash and a $12 million reimbursement of litigation costs.

Huntsman is a Salt Lake City-based chemical company.

Petroplus prices tight to talk

Petroplus Finance 3 Ltd. priced $400 million of 9 3/8% 10-year notes (B1/BB-) at 98.419 to yield 9 5/8%.

The yield was printed at the tight end of the 9¾% area yield talk. The issue price came slightly cheap to the 1.5 points of original issue discount talk.

Morgan Stanley, Deutsche Bank Securities, UBS Investment Bank BNP Paribas were joint bookrunners for the quick-to-market Rule 144A/Regulation S for life notes deal.

Proceeds will be used to help fund a tender for $500 million of the company's convertible notes.

Ferrellgas upsizes

Ferrellgas, LP and Ferrellgas Finance Corp. priced an upsized $300 million issue of 9 1/8% eight-year senior notes (Ba3/B+) at 98.599 to yield 9 3/8%.

The yield was printed in the middle of the 9¼% to 9½% yield talk, while the issue price came rich to the discount talk specifying approximately 2 points of original issue discount.

J.P. Morgan, Bank of America Merrill Lynch and Wells Fargo Securities ran the books for the quick-to-market debt refinancing deal.

Concho starts marketing Thursday

Meanwhile there were deal announcements.

Concho Resources Inc. will start a roadshow on Thursday for its $250 million offering of eight-year notes (B3/BB-).

The roadshow is set to conclude on Sept. 19.

J.P. Morgan, Bank of America Merrill Lynch, BNP Paribas and Wells Fargo Securities are joint bookrunners for the debt refinancing.

And Standard Pacific Escrow LLC announced that it plans to sell eight-year senior notes via Rule 144A and Regulation S.

The Irvine, Calif., homebuilder will use the proceeds to repurchase outstanding notes.

Ferrellgas cookin' in secondary

When Ferrellgas' new 9 1/8% notes due 2017 were freed for secondary dealings, a trader saw the $300 million issue of bonds - upsized from the originally announced $250 million -- trading up around 99¾ bid. That was well up from the 98.599 level at which the bonds had priced earlier in the day.

He also saw the company's existing 8¾% notes due 2012 quoted at 96½ bid, adding that he "didn't see any trades take place" in the latter credit.

A market source at another shop did see a few trades in the 83/4s, but all were fairly small odd-lot pieces. The bonds hung in most of the day around the same slightly above-par level at which they had finished on Tuesday, before heading a couple of points lower late in the afternoon, into the upper 90s, again on one or two small-sized transactions.

Petroplus up slightly in aftermarket

The first trader meantime saw Zug, Switzerland-based refinery operator Petroplus' new 9 3/8% notes due 2019 at a wide 98 7/8 bid, 99 7/8 offered, versus the 98.419 level at which the $400 million issue had priced earlier in the session to yield 9 5/8%.

Having seen the level, he added that "there was no follow - I don't know of any trades that took place."

Huntsman deal in hiding

The trader further noted that he "didn't see anything" in the way of trading in Huntsman International's new 5½% notes due 2016, $600 million of which priced at 80.

"I think basically that the deal was just put away," he opined. "Whatever accounts are taking it are just putting it away and saying 'thank you very much.'"

Huntsman's established 7 7/8% notes due 2014 were meantime seen up nearly a point, in fairly busy trading, at just under 89 bid.

New Cablevision offering unseen

With Cablevision having announced after the close the pricing of its $900 million of 8 5/8% notes due 2017 - upsized from the originally projected $500 million - the new bonds were not seen having entered the aftermarket.

On the other hand, Cablevision's CSC Holdings Corp. 7 5/8% notes due 2011 - the main bond which Cablevision wants to take out with its tender offer - was up more than 2 points at the end of the day at around 104 3/8, just a little below the 105 level at which the company has set its total consideration for bonds which it accepts for purchase under the offer.

A trader saw the company's 8% notes due 2012 - which are not one of the two issues being tendered for - at 103-1031/4, up from a low of 102½ on Tuesday. He saw its 8 5/8% notes at 103¼ bid, 103¾ offered, "and that was up slightly." But he chalked those somewhat firmer levels up as "nothing of any significance, really."

New Plains slightly firmer

Plains Exploration & Production's new 8 5/8% notes due 2019 were seen by a trader as having opened Wednesday at 98½ bid, 99¼ offered, up from the 98.335 level at which the Houston-based energy operator had priced that $400 million issue, increased from the originally announced $300 million, on Tuesday to yield 8 7/8%. Later in the session, he saw the bonds having tightened slightly from those initial levels to 98 5/8 bid, 99 1/8 offered.

Another trader saw the bonds "in and around" a 98 5/8-99 context, after having traded as low as 98 bid, 98½ offered, "so they're slightly better."

New Harrah's little changed

A trader said that new Harrah's 11¼% senior secured add-on bonds due 2017, which priced at par on Tuesday, were, at best, at 100½ bid, 101 offered.

Another trader saw the new Harrah's issue trading as low as 99½ bid early on, before going home "straddling issue" at par bid, 100¼ offered. Yet another quoted them at par bid, 100 3/8 offered.

Meanwhile, Harrah's existing paper, one of them said, "was status quo, at least on the holding company side."

He said there would be no reason for the bonds to move up, even though the added financing will ostensibly help the Las Vegas-based gaming company's overall health.

"If anything, from what I've heard, it just adds more leverage than anything else, and doesn't extend the maturities a whole heck of a lot."

He said there was "not really any movement" in the shorter bonds issued before Harrah's big 2007 leveraged buyout, "and there seems to be some sellers on the long end," like the 5¾% notes due 2017 and the 6½% notes, "all the pre-LBO stuff," was still trading in the 40s-50s area.

"So there was no great bid, no excitement, not a darn thing at all. That add-on didn't prove to be a whole hell of a lot positive, at least for the secondary market. "

'Very exciting' market ahead

With the primaryside having successfully strung together two respectably busy sessions the first two days back from the Labor Day break - and Wednesday's represented a doubling of Tuesday's - a trader suggested that "this new issue market is going to become very exciting post-Labor Day now. Everybody's going to be doing their [new] credit work now, versus a lot of secondary trading."

In the latter arena, "the market's run so much" - heading into Wednesday's session, its year-to-date return, as measured by the widely followed Merrill Lynch High Yield Master II Index was nearly 41% -- "but there comes a time and a place when [the question is] 'when do you sell?'"

A key determinant, he said, will be whether the economy is really finally pulling out of its downturn, which began about two years ago in the subprime lending industry and then metastasized, picking up speed in the fall of 2008 with the Lehman Brothers collapse. "They say the recession is over and everything is great, and everybody bids up the market. It's fantastic - but who the heck [really] knows?"

In the meantime, "everybody's going to do these drive-bys and new deals and get them in while they can. They have to refinance all of [their] debt."

While the new issue market has managed to place a lot of paper into the hands of investors - year-to-date global issuance of nearly $85 billion is about 38% ahead of a year ago and domestic issuance of almost $73 billion is up a stunning nearly 50% year-over-year - there is no assurance that the junk juggernaut is going to continue to roll on.

"Everybody wants to keep their powder dry to see what new issues do come," the trader said, "but I think that at the end of the day, it depends on where you price these deals. What am I going to have to pay to get this type of yield. At the end of the day, if it's not a hefty price, people want some fancy coupons." A lot of accounts, he added "are going to be credit-savvy, depending upon the ratings and whatnot."

With that caution having been mentioned, he concluded "it's a cool time to be part of the marketplace."

Market indicators add to gains

Back among the established issues without new-deal ramifications, a trader saw the CDX Series 12 High Yield index - which had zoomed by 1½ points on Tuesday - continuing to build on that advance on Wednesday, quoting the index up another 5/8 point to end at 89½ bid, 90 offered.

The KDP High Yield Daily Index, which gained 5 basis points on Tuesday, added another 21 bps on Wednesday to close at 66.65, as its yield tightened by 9 bps to 9.16%.

In the broader market, advancing issues - which led decliners for a fourth consecutive session on Tuesday, by a seven-to-five margin - stayed out front Wednesday, leading by a better-than four-to-three ratio.

Overall market activity, reflected in dollar-volume totals, jumped nearly 27% from Tuesday's post-holiday level.

A trader saw "not a lot going on," saying the market was mostly trading "sideways, up by perhaps ¼ point, on very thin volumes. It was a little muted."

He said that things were not quite back to normal in Junkbondland this week, with "some kids are going back to school, and people are coming off vacations," meaning that here and there, regular market denizens weren't around."

He acknowledged that with the primary sector roaring to life after its extended late-summer hiatus, "people are lining up to bid for the new issues coming. There's a lot of focus on that this week."

Gaming gains, a little

While the big news of the week in the gaming area was the big new Harrah's add-on deal, apart from that, a trader said that gaming was "a little stronger today," such as MGM Mirage.

However, he added the proviso that "the shorter durations is what people are looking at right now." He said that applied generally to the junk market, but notably in gaming, where MGM's 9 3/8% notes due 2010 "are wrapped right around 99-par."

A stock upgrade for Wynn Resorts Ltd., which pushed those shares higher, had little impact on the company's Wynn Las Vegas LLC 6 5/8% notes due 2014, which were "in their same ranges" they had been previously, around 91-93, depending on whether one was looking at the original tranche of bonds or a later add-on tranche, which trades about a point below the original tranche. "So, no - nothing there that I saw."

Pulte pops amid tender results

A market source saw some nice upside in Pulte Homes Inc.'s bonds as the Bloomfield Hills Mich.-based homebuilder announced the results of its just-ended tender offer for up to $1.5 billion of bonds, made in connection with its recent acquisition of rival builder Centex Corp.

The company's 6¼% notes due 2013 were being quoted up as much as 5 points on the session, a market source said, pegging the bonds at just over par. Trading was described as reasonably busy, with over $10 million of the bonds having changed hands by mid-afternoon on Wednesday.

In the tender offer, which ended on Tuesday, Pulte was tendering for some of its own bonds and some of Centex's. Pulte agreed in April to buy the Dallas-based Centex for $1.5 billion in stock to create the largest U.S. homebuilder.

Shareholders of both companies approved the deal on Aug. 18.

Smithfield takes a step backward

A trader said that Smithfield Foods Corp.'s 7¾% notes due 2017 "seemed to have a decent bid, for whatever reason" - even in the wake of the wider loss which the company reported on Tuesday. "It makes no sense," he added. Those bonds stayed around the mid-70s context at which they had traded on Tuesday.

However, he said, "you definitely saw some sellers come out of the woodwork today, after the [Tuesday] numbers," referring to the company's other issues - the 7% notes due 2011 and the 7¾% notes due 2013. He estimated that both of those issues were down between 1 and 1½ points, leaving the 7s at 92½ bid, 93½ offered and the 73/4s at 80½ bid, 81½ offered.

The Smithfield, Va.-based company - thought to be the world's largest hog producer - announced on Tuesday that it had lost $107.7 million, or 75 cents per share in the quarter ended Aug. 2, versus a loss of $13.2 million, or 10 cents per share, in the same period last year. Much of the loss in the latest period was attributable to big charges which the company took - hog production impairment charges of $34.1 million and debt extinguishment charges of $7.4 million. Excluding those one-time factors, the company's loss in the period 56 cents per share - around what Wall Street was expecting.

E*Trade unmoved on exec's exit plan

Elsewhere, traders at two different shops saw they had seen no dealings in E*Trade Financial Corp.'s bonds, despite the news that the problem-plagued New York-based online brokerage and financial services concern's chairman and chief executive officer, Donald Layton, will leave the company by the year's end.

One said he saw the news, "but I don't see a heck of a lot" in terms of trading, quoting the company's 7 3/8% notes due 2013 around an 851/2-86½ neighborhood. "I haven't seen these in a long time," he said. "These things don't trade for anything."

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