Canadian high-yield market eyes DirectCash, Postmedia deals; Canadian Gaming notes rise

By Cristal Cody

Prospect News, Aug. 1 - Canada's high-yield market received an infusion of activity on Wednesday as guidance emerged on DirectCash Payments Inc.'s offering of C$125 million of seven-year notes and Postmedia Network Inc. announced plans to sell C$250 million of five-year notes, informed bond sources said.

DirectCash Payments talked its offering of seven-year senior notes to yield 8¼% with pricing forecast for Thursday.

A roadshow will be held in the upcoming week for Postmedia Network's offering of senior secured first-lien notes.

Canadian high-yield bonds traded mostly unchanged on the day, while Great Canadian Gaming Corp.'s notes due 2022 sold in July are up about 2 points, a trader said.

"People are just focusing on these two deals," a source said, noting the market was "pretty quiet."

Corporate bonds were slightly better bid on the day, sources said.

The Markit CDX Series 18 North American investment-grade index firmed 2 basis points to a spread of 106 bps.

The Markit CDX Series 18 North American high-yield index rose to 97.20 from 96.78.

Canadian government bonds closed lower after the U.S. Federal Reserve did not move for additional monetary stimulus following a policy meeting. Canada's 10-year note yield ended 3 bps higher at 1.71%. The 30-year bond yield rose to 2.30% from 2.27%.

DirectCash sets talk

DirectCash Payments' offering of C$125 million of seven-year senior notes (B3/B/) was talked on Wednesday at 8¼%, a bond source said.

The Rule 144A deal is expected to price on Thursday. The company held a roadshow earlier in the week.

BMO Capital Markets Corp. is the bookrunner.

DirectCash plans to price the notes in conjunction with a C$65 million offering of common shares.

Proceeds from the notes and the common shares will be used to reduce the company's outstanding senior and bridge debt from the acquisitions of Customers Ltd. in Australia and InfoCash Holdings Ltd. in the United Kingdom.

Calgary, Alta.-based DirectCash is a provider of ATMs, debit terminals and prepaid products.

Postmedia to price

Another high-yield deal is in the works for the week ahead.

Postmedia Network plans to hold a roadshow in New York on Monday and in Toronto Aug. 7 and Aug. 8 for an offering of C$250 million of senior secured first-lien notes, an informed bond source said on Wednesday.

The five-year notes (Ba3/B+/) will be offered in a private placement in Canada and under Rule 144A and Regulation S.

Scotia Capital Inc. and Morgan Stanley are the bookrunners. Co-managers are BMO Capital Markets, CIBC World Markets Inc. and RBC Capital Markets Corp.

The notes due 2017 are non-callable for three years.

The issue has a 101% change-of-control put and an equity clawback for up to 35% of the original amount in the first three years at par plus the coupon.

The deal includes a Canadian call at 100 basis points over the Government of Canada benchmark and a special call for up to 5% of the original amount per year in the first three years at 103%.

The bonds may be redeemed in 2015 at par plus ¾ coupon, in 2016 at par plus ½ coupon and in 2017 and thereafter at par.

Proceeds will be used to repay debt under the company's existing term loan facility.

Toronto-based Postmedia, a subsidiary of Postmedia Network Canada Corp., is the largest publisher by circulation of English-language daily newspapers in Canada.

Great Canadian Gaming rises

In the secondary market, Great Canadian Gaming's 6 5/8% senior notes due July 25, 2022 were seen higher at 102 bid on Wednesday, a trader said.

The company sold C$450 million of the 10-year notes (B1/BB+/) at par on July 18.

The Richmond, B.C.-based gaming, entertainment and hospitality company has operations in Canada and the United States.

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