High-yield space ends mixed as holidays, vacations weigh on activity; upsized First Data does well

By Stephanie N. Rotondo and Paul A. Harris

March 26 - The high-yield market continued to crawl on with lackluster trading, and even the primary arena was on the quiet side.

"There's not even a lot of new issue stuff going on," a trader remarked.

First Data Corp. did price a deal, an $815 million offering of 10 5/8% notes due 2021. The new issue did reasonably well during the session, as did the company's older issues.

Meanwhile, a trader said that Navistar International Corp.'s bonds were "volatile" in Tuesday trading, though the debt ultimately ended the day essentially unchanged. The action came as the company priced a $700 million term loan.

Overall, the bond market was deemed to be more or less unchanged on the day.

"Everything was trading in a range, up a half to down a half," a trader said.

The KDP High Yield index eased some, falling to 75.64, while its yield widened to 5.5%. That compared to Monday's reading of 75.67 with a 5.48% yield.

The CDX North American High Yield index, however, was up slightly to 104¼ bid, 104 3/8 offered.

First Data upsizes

First Data priced Tuesday's sole dollar-denominated Yankee deal, an upsized $815 million issue of eight-year senior notes (Caa1/B-) at par to yield 10 5/8%.

The quick-to-market deal was augmented from $500 million, and the yield printed on top of yield talk.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities LLC were the joint physical bookrunners.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and HSBC Securities (USA) Inc. are joint bookrunners.

The Atlanta-based electronic commerce and payment processing company plans to use the proceeds to repurchase a portion of the company's 9 7/8% notes due 2015.

IVS at the tight end

Activity was more vigorous in the euro-denominated market.

Italy's International Vending Services priced a €200 million issue of seven-year senior secured notes (/BB-/) at par to yield 7 1/8% on Tuesday, according to a market source.

The yield printed at the tight end of yield talk that was set in the 7¼% area.

Joint bookrunner BNP Paribas will bill and deliver. Banca IMI was also a joint bookrunner.

The vending machine company plans to use the proceeds to refinance debt and for general corporate purposes.

Rexel upsizes

Rexel SA priced an upsized €150 million add-on to its 5 1/8% notes (Ba3/BB/BB) due June 15, 2020 at 101 to yield 4.955%.

The deal was upsized from €100 million, and the reoffer price came at the rich end of price talk that was set in the 100.75 area.

BNP Paribas Securities Corp. was the global coordinator and will bill and deliver.

Credit Agricole Securities (USA) Inc., HSBC Securities (USA) Inc., ING Financial Markets LLC, Natixis Securities North America Inc. and SG Americas Securities LLC were joint lead bookrunners.

BofA Merrill Lynch, Barclays and Credit Mutuel-CIC are joint bookrunners.

The Paris-based producer of electrical products priced the original €500 million deal at 99.982 to yield 5 1/8% last week.

Smart Technologies pulls deal

Smart Technologies, Inc. announced in a Tuesday press release that it has withdrawn its downsized, restructured $200 million offering of senior secured notes from the market.

"The company opportunistically sought to refinance certain of its indebtedness due in August 2014 with long-term fixed-rate capital and was not pursuing the offering to fund short-term requirements," the release stated.

"The company had approximately $146 million of cash and cash equivalents at Dec. 31, 2012."

As reported, late last week the company downsized the deal to $200 million from $250 million.

The tenor of the notes was decreased to six years from seven years. Call protection was increased to four years from three years, while a special call provision, which would have allowed the issuer to redeem 10% of the notes annually at 103 during the non-call period, was withdrawn.

The notes were talked to price with a 10% coupon at 92 area to yield 12%.

The issuer also agreed to a $5 million repurchase offer at par semiannually, which would have been exercised at the discretion of the bondholder.

Deutsche Bank Securities Inc. was the left bookrunner. RBC Capital Markets was a joint bookrunner.

To replace proceeds resulting from the downsizing, the company announced that it had made plans to raise $50 million with a sale/leaseback facility provided by a third-party lender.

The Calgary, Alta.-based provider of technology services had planned to use the proceeds, together with cash on hand, to repay its term loan and for general corporate purposes.

First Data deal upsizes

First Data brought an upsized offering of 10 5/8% notes due 2021 on Tuesday.

The deal was originally slated to be $500 million, but was upped to $815 million.

A trader saw the new issue ending the day at par ¾ bid, 101 offered.

Proceeds from the sale will be used for a redemption of the 9 7/8% notes due 2015. A market source saw that issue rising fractionally to 103¼ bid.

Another trader said the 11¼% notes due 2016 were among the day's most active securities, trading up to par 7/8.

First Data is an Atlanta-based provider of credit card payment processing services.

Navistar prices new loan

Navistar International brought a $700 million term loan to market on Tuesday.

The bank debt was priced at Libor plus 450 bps.

On the back of that deal, the company's bonds were "volatile," according to a trader.

The trader said the 8¼% notes due 2021 ultimately finished the day "unchanged to maybe up a half" at 102 bid, 102½ offered.

Another trader saw the debt trading at "102 and change."

"So that was a little better," he said, noting that the paper had been trading at 102 previously.

Proceeds from the new bank debt will be used in combination with an issuance of up to $300 million of new unsecured debt to refinance a portion of the company's existing $1 billion term loan B due July 16, 2014.

Navistar is a Lisle, Ill.-based manufacturer and seller of commercial and military trucks, buses and diesel engines and a provider of service parts for trucks and trailers.

J.C. Penney dips

Late Monday, news outlets were reporting that BMO Nesbitt Burns analyst Wayne Hood was predicting a bankruptcy filing for Plano, Texas-based retailer J.C. Penney Co. Inc.

Come Tuesday, the company's bonds were on the decline.

One trader called the 7 1/8% notes due 2023 down nearly a point at 943/4. Another trader quoted the issue at 94½ bid, 95 offered.

In a research report published on Monday, Hood downgraded the company to underperform, stating that there were four paths he envisioned, three of which were not good.

The most optimistic scenario would require the struggling retailer to regain its lost market share and to stop burning through cash. If that could be achieved, he wrote, then there remains a chance for a successful turnaround.

A less-optimistic route would be that the company would experience more modest sales increases, but losses would mount over the next five years.

Both the final two scenarios involve a bankruptcy filing in the next year, either voluntarily or forced.

Caesars puts on a couple

A trader said that Caesars Entertainment Corp.'s 10% notes due 2018 were among the day's busiest securities, with at least $10 million of the bonds trading.

He called the issue up almost half a point at 68 5/8.

He also saw the 5¾% notes due 2017 jump 2½ points to 671/2, though he noted that the gain was "just on a single trade."

There was no fresh news out on the Las Vegas-based casino operator.

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