Arch prices $2 billion; Clear Channel falls on add-on; Chrysler down; OPTI subs take a dive

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., June 8 - The high-yield primary remained vigorously active on Wednesday, disregarding the negative sentiment which has overtaken the stock market as well as much of the leveraged debt markets.

Leading the day was Arch Coal, Inc., with a $2 billion two-part senior notes offering.

Meanwhile the secondary high yield market was once again weaker on Wednesday, following in the footsteps of the equity markets.

Clear Channel Communications Inc. announced it would bring an add-on to its 9% notes due 2021. The news resulted in softness in the company's debt, including in the existing 9% notes, as investors pushed paper around to make room for more.

Meanwhile, a trader said that a relatively recent issue from Chrysler Group LLC/CG Co-issuer Group Inc. was leading the pack downward. He speculated that the market was using the issue as its go-to market short, given the tranche's size.

In even junkier credits, OPTI Canada Inc.'s subordinated issues took a hit, falling about 2 points or more on the day. However, there was no news out to cause the decline.

Sino-Forest Corp. meantime managed to regain a bit of ground, though a trader did note that activity in the name was starting to wane.

After Tuesday's closing bell, Hovnanian Enterprises Inc. reported earnings that were well below expectations. The homebuilder's bonds inched lower in midweek trading.

Arch Coal prices $2 billion

In the primary, a trio of issuers, each bringing a single tranche, raised $2.45 billion, and the forward calendar continued to grow.

Arch Coal priced a $2 billion two-part senior notes transaction (B1/B+) on Wednesday.

The St. Louis-based coal producer priced a $1 billion tranche of eight-year notes at par to yield 7%, and a $1 billion tranche of 10-year notes at par to yield 7¼%.

Both tranches saw the yield printing on top of price talk.

Morgan Stanley & Co., Inc., PNC Capital Markets, Bank of America Merrill Lynch, RBS Securities Inc. and Citigroup Global Markets Inc. were the joint bookrunners.

The St. Louis-based coal producer plans to use the proceeds to partially fund its acquisition of International Coal Group Inc. and related transactions, including the redemption, payment of cash resulting from the conversion of, or other retirement of outstanding International Coal debt.

Teleflex restructures, prices

Teleflex Inc. priced a restructured $250 million issue of eight-year senior subordinated notes (B1/BB-) at par to yield 6 7/8%.

The yield printed on top of the price talk.

In a restructuring of the deal, the tenor of the notes was decreased to eight years from 10 years, and call protection was decreased to four years from five years.

Bank of America Merrill Lynch, Goldman Sachs & Co. and J.P. Morgan Securities LLC are the bookrunners.

The Limerick, Pa.-based medical device company plans to use the proceeds to prepay $125 million of its existing credit facilities and for general corporate purposes, which may include capital expenditures, acquisitions and additional debt repayment.

Basic Energy upsizes

In drive-by action, Basic Energy Services, Inc. priced an upsized $200 million fungible add-on to its 7¾% senior notes due Feb. 15, 2019 (B3/B-) at 101.0 to yield 7.527%.

The re-offer price came on top of price talk.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC were the joint bookrunners for the quick-to-market deal, which was upsized from $175 million.

Proceeds will be used to help fund the acquisition of the Maverick Cos. If the acquisition is not consummated, the proceeds will be used to redeem a portion of the 7 1/8% senior notes due 2016.

The original $275 million issue priced at par on Feb. 3.

Telenet increases deal

In Europe, Telenet Finance IV Luxembourg SCA priced an upsized €400 million issue of 10-year senior secured floating-rate notes (Ba3/BB+) at par to yield Euribor plus 387.5 basis points.

The deal was originally planned at €300 million

The yield printed at the tight end of price talk that was set in the Euribor plus 400 bps area.

JPMorgan and Credit Suisse were the joint bookrunners for the debt refinancing. JPMorgan will bill and deliver.

Clear Channel plans tap

Clear Channel Communications, Inc. talked a $750 million add-on to its 9% priority guarantee notes due March 1, 2021 (Caa1/CCC) to yield 9¾% to 9 7/8%.

The deal was rolled out on Wednesday morning, and the order books were scheduled to close at 3 p.m. ET Wednesday.

Citigroup Global Markets is 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 are 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.

Solera holds investor call

The roadshow calendar continued to build on Wednesday.

Solera Holdings, Inc. held an investor call for a $350 million offering of seven-year senior notes (/BB-/).

The deal was also presented on Wednesday to investors in New York City. Further presentations are scheduled for Thursday in Boston.

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

Essar/Aegis to market deal

India's Essar Services Mauritius along with Aegis Ltd. will begin a roadshow on Thursday in Asia for their $300 million offering of five-year senior notes (/BB-/BB-).

A roadshow is set to get underway in the United States on Tuesday.

The deal is set to price at the end of the June 13 week.

Deutsche Bank Securities Inc., UBS Investment Bank and Standard Chartered Bank are the joint physical bookrunners.

The Mumbai, India provider of outsourcing services plans to use the proceeds to repay debt and for general corporate purposes.

Goodman starts roadshow

Goodman Networks Inc. began a roadshow on Wednesday for a $225 million offering of seven-year senior secured notes.

Jefferies & Co. Inc. is the bookrunner.

The Plano, Tex.-based telecommunications services company plans to use the proceeds to fund a management buyout, repay existing debt and for general corporate purposes.

Market indexes head lower

In the secondary, traders were "watching the market get weaker," one trader remarked, and market indexes evidenced that fact.

The KDP High Yield Index slipped to 75.40, with a 6.7% yield, from 75.66, with a 6.59% yield, previously.

The CDX North American High Yield Index meantime dropped nearly a point to 99 7/8 bid, par 1/8 offered.

Another day of declines in the equity markets, as well as worldwide economic concerns, helped to push the market lower. Also playing a role was the beginning of the Jewish holiday Shavuot, which left some desks empty during Wednesday's session.

Clear Channel dips with add-on

Clear Channel Communications announced a $750 million add-on deal to its 9% notes due 2021 Wednesday. As a result, the company's bonds - including the 9% notes - declined.

A trader said the 9% notes fell to 96½ from previous levels around "98 and change." The 11% notes due 2016 were also down, to 91 from 92.

He said that the weakness was due in part to players jockeying positions around in the wake of the add-on, and in part because of pricing activities on the new deal.

Another trader called Clear Channel debt a point weaker, the 11% notes at 91 and the 5½% note due 2014 at 90.

Upon issuance of the add-on, the issue will total $1.75 billion principal amount. Proceeds will be used to refinance debt and for general corporate purposes.

Clear Channel is a San Antonio-based multimedia company.

Chrysler a 'market short'

A trader said Chrysler Group's recent 8% notes due 2019 were "leading the market down."

He quoted the paper at 96½ bid, 97 offered.

"It seems to be being used as a market short," he said, noting that it was because of the $1.5 billion size of the issue. He also remarked that the notes were fairly new to the marketplace, pricing on May 19.

Not long after pricing, the debt traded up as high as 101, the trader said.

Also in the autosphere, Ford Motor Co.'s 7.45% notes due 2031 were seen falling almost a point to 112½ bid, 113½ offered.

Gap slips, Macy's steady

In the retail space, a trader said Gap Stores Inc. was the "market leader in volume."

The trader saw the 5.95% notes due 2021 falling a point to 963/4.

The slip in Gap's bonds came as the company's chief executive, Glenn Murphy, told CNBC that the retailer was facing the worst inflationary pressure in 30 years.

Meanwhile, the trader said that it was Macy's Retail Holdings Inc. - "strangely enough" - that "continued to do better.

"They're about unchanged with the market drop," he said.

He pegged the 6 3/8% notes due 2037 at 107, the 5.90% notes due 2016 at 113¾ and the 5¾% notes due 2014 at 1103/4.

OPTI takes a hit

OPTI Canada's subordinated paper "got beat up pretty good," according to a trader.

He quoted the 7 7/8% and 8¼% notes due 2014 at 42 bid, 43 offered.

Another trader called the 7 7/8% notes down 2½ points to 43.

There was no news out on the Calgary, Alta.-based oilsands producer that would have caused declines in the debt. However, CIBC Markets Inc. analyst Andrew Potter reportedly urged investors to avoid the company's stock, given uncertainty's surrounding the company's strategic alternatives review. Potter opined that OPTI could elect to do a debt-for-equity swap that would value the stock at as little as 30 cents.

The stock (Toronto: OPC) slipped a Canadian cent to C$0.17.

Sino-Forest recoups a bit

A trader said that trading volume in Sino-Forest was weakening, even as the bonds regained a couple of points.

"It has been all over the place," the trader said. "It seemed like there was definitely a slow-down in volume in those."

He saw the 10¼% notes due 2014 trading around "64-ish," up from the low-60s previously.

Another trader said the 10¼% notes were the most active Sino-Forest issue, seeing the bonds gain over 2 points to close around 641/4.

The Hong Kong- and Ontario-based tree farming company said Wednesday that the Ontario Securities Commission has opened an investigation into the trading activities of the company's stock in the wake of a controversial research report published by Muddy Waters Research.

Sino has also requested that the Toronto Stock Exchange and the Investment Industry Regulatory Organization of Canada investigate the trading of the company's shares by Muddy Waters, LLC and its principal Carson Block and anyone associated with them in advance of the issuance of the report.

It will also request an investigation by the Singapore Exchange Ltd. in respect to the trading of the company's bonds.

Late last week, Muddy Waters issued a report alleging that the company's statements regarding its land holdings in China did not match Chinese city records and that its stated production figures may be inaccurate. Sino-Forest has refuted the claims, going so far as to post supporting documentation on its website.

On Tuesday, Moody's Investors Service said it was considering cutting its rating on the company.

Hovnanian falls on numbers

Hovnanian Enterprises' debt "has been under pressure," according to a trader.

"They came out with some numbers that were pretty weak," he said. He called the bonds down 2 to 3 points, the 8 5/8% notes due 2017 around 65 and the 11 7/8% notes due 2015 at 76½ bid, 78 offered.

The Red Bank, N.J.-based homebuilder posted a net loss of $72.7 million, or 69 cents per share, for the three months ending 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%.

Broad market softens

Elsewhere in the market, Caesars Entertainment Corp.'s 10% notes due 2018 dipped a deuce to 891/2, a trader said.

The trader also saw MGM Resorts International's 7½% notes due 2016 slipping nearly 2 points to end around 96.

In the financial realm, First Data Corp.'s 11¼% notes due 2016 lost 1½ points, closing around 98.

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