Calpine, Univision drive by with big deals; MarkWest, Rural/Metro slate; Tutor bonds even

By Paul Deckelman and Paul A. Harris

New York, Oct. 18 - Calpine Corp. and Univision Communications Inc. each brought a big, opportunistically timed and quickly priced bond deal to market on Wednesday, high-yield syndicate sources said on Monday.

San Jose, Calif.-based independent power generating company Calpine ended up increasing the size of its offering by 33%, to a massive $2 billion. Those 101/4-year senior secured notes priced at par, with aftermarket dealings centered around that level.

Spanish-language broadcaster Univision priced $750 million of 10-year notes, also at par. Those bonds, however, came to market too late in the session for any kind of secondary action.

Tutor Perini Corp., whose $300 million issue of eight-year bonds came too late in the day on Friday for any kind of aftermarket action, were freed to trade Monday, but the bonds did not venture far at all from their slightly below-par issue price.

Meanwhile Friday's two other issues - Air Medical Group Holdings Inc./AMGH Merger Sub Inc.'s $545 million of eight-year senior secured notes and Texas Competitive Electric Holdings Co. LLC/TCEH Finance Inc.'s upsized $350 million of 101/2-year secured notes - remained around the aftermarket levels to which they moved after pricing.

Away from deals already priced, several new prospective borrowers launched issues: natural gas operator MarkWest Energy Partners, LP, ambulance and fire services provider Rural/Metro Corp. and American Achievement Corp., a supplier of school yearbooks and class rings. MarkWest's $500 million transaction is expected to price Tuesday.

Outside of the new-deal arena, traders said volume was, as one put it, "situational," with no names really standing out, but the overall tone remaining firm.

Calpine massively upsizes

In the dollar-denominated high-yield primary, a trio of issuers, each pricing a single tranche of notes, raised $3.05 billion on Monday.

Calpine priced a significantly upsized $2 billion issue of first-lien senior secured notes due Feb. 15, 2021 (B1/B+) at par to yield 7½%.

The yield printed on top of the price talk.

The quick-to-market issue was upsized to $2 billion from $1.5 billion after having been introduced to the market as a benchmark-sized offer on Monday morning.

Morgan Stanley, Bank of America Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank Securities, Goldman Sachs & Co., J.P. Morgan Securities LLC, RBC Capital Markets and UBS Investment Bank were the joint bookrunners.

The Houston-based power company will use the proceeds to repay a portion of its term loan.

Univision brings $750 million

Meanwhile Univision priced a $750 million issue of 10-year senior secured notes (existing ratings B2/B-) at par to yield 7 7/8%, again on top of the price talk.

Deutsche Bank Securities, Bank of America Merrill Lynch, Credit Suisse, Wells Fargo Securities and Barclays Capital were the joint bookrunners for the quick-to-market deal.

The Los Angeles-based Spanish-language media company will use the proceeds to repay bank debt.

Glorious Property returns

Finally, Hong Kong-based Glorious Property Holdings Ltd. priced $300 million of five-year notes (B1) at par to yield 13% via Standard Chartered Bank.

Proceeds will be used for general corporate purposes and to fund existing and new property projects.

This follows the company's April postponement of a dollar-denominated issue of global bonds. That delay was blamed on an abundance of competition in the market, as well as the contagion effect from the Greek debt crisis.

Abengoa sets talk

Looking ahead, Spanish multinational conglomerate Abengoa SA talked its $600 million offering of non-callable seven-year senior notes with a 9% yield.

The deal is expected to price on Tuesday or Wednesday.

Credit Suisse, Bank of America Merrill Lynch, Citigroup and Deutsche Bank Securities are the joint bookrunners.

Proceeds will be used for general corporate purposes and capital expenditures for a project pipeline.

MarkWest plans investor call

MarkWest Energy Partners and MarkWest Energy Finance Corp. will host an investor call at 10 a.m. ET on Tuesday for a $500 million offering of 10-year senior notes (B1/BB-).

The deal is set to price on Tuesday afternoon.

Wells Fargo Securities, Bank of America Merrill Lynch, Barclays Capital, Morgan Stanley and RBC Capital Markets are joint bookrunners for the debt refinancing, working capital and general corporate purposes deal.

Fortescue roadshows $2.04 billion

Elsewhere, Australia's Fortescue Metals Group Ltd. began a global roadshow on Monday for its $2.04 billion offering of five-year senior unsecured notes (B1/B/BB+).

The deal is expected to price on Oct. 28 following roadshow stops in Asia, Europe and the United States.

JP Morgan Securities LLC and the Royal Bank of Scotland are joint bookrunners for the debt refinancing.

Siemens Enterprise starts roadshow

London-based Siemens Enterprise Communications began a roadshow on Monday for its €200 million offering of five-year first-lien senior secured notes (B3/B-).

The deal is set to price during the middle part of the Oct. 25 week.

Jefferies & Co. is the left lead bookrunner. UBS Investment Bank and Wells Fargo Securities are joint bookrunners.

Proceeds will be used for general corporate purposes, with a portion of the proceeds to be used to refinance debt and retire certain contractual obligations.

Calpine trades near issue

When Calpine's new 7½% first-lien senior secured notes due 2021 were freed for trading, a trader saw those bonds straddling their par issue price, at 99¾ bid, 100¼ offered.

A trader at another desk saw the new bonds at par bid, 100½ offered initially, but then saw them tighten a little to par bid, 100¼ offered.

The Univision Communications 7 7/8% notes due 2020, as noted, appeared too late in the day for any aftermarket activity.

New Tutor Perini little moved

Tutor Perini's new $300 million of 7 5/8% notes due 2018 began trading on Monday - the Sylmar, Calif.-based civil and building construction company's new deal priced too late on Friday for dealings - but the bonds didn't travel far from the 99.258 level at which they had priced to yield 7¾%.

A trader said that "earlier this morning, you had bonds go into the issue price bid," which he said left the securities as low as 98 7/8 bid, 99 3/8 offered. A little later on, bid levels had crept back up to 99 3/8, which got hit, leaving the bonds around their issue price.

"They're kind of struggling to hang on around the issue price," he declared.

A second trader saw the bonds at 99 3/8 bid, 99½ offered.

Air Medical still flying high

The big success story of Friday's session, Air Medical Group's 9¼% senior secured notes due 2018, held onto the sizable gains they notched after pricing and even extended them a little.

A trader saw the West Plains, Mo.-based emergency air ambulance services provider's bonds still hovering like one of its med-evac helicopters - the new issue's ticker symbol is, appropriately, "CHOPR" - around 3 points above Friday's par issue price at 103 bid, 103 3/8 offered.

The bonds actually gained a little altitude from Friday's initial aftermarket level around 102¾ bid, 103 offered.

Another trader saw "a tight market" Monday at 103 bid, 103¼ offered.

Texas Competitive below issue

As for Texas Competitive Electric Holdings' new 15% senior secured second-lien notes due 2021, a trader just saw the bonds offered at 98, with no bids seen.

At another desk, a trader said that the bonds - issued by a unit of Energy Future Holdings Corp., the Dallas-based power producer and utility operator formerly known as TXU Corp. - "didn't do as well" as other issues which came last week and traded up.

He saw the bonds trading as low as 98 bid, and then traded into a 99 bid, "so that's up" relative to last Friday, when the bonds were seen having fallen to the 98 level after the upsized $350 million issue had priced at par. "That thing didn't do well off the break anyway," he added

Market indicators turn mixed

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index unchanged Monday at 99 7/16 bid, 99 9/16 offered, after having eased by ¼ point on Friday.

The KDP High Yield Daily index meantime retreated by 8 basis points Tuesday to end at 74.14, after having eased by 2 bps on Friday. Its yield rose by 4 bps to 7.33%, after having tightened by 1 bp on Friday for a second straight session.

However, the Merrill Lynch High Yield Master II index rose by 0.082% on Monday, bouncing back solidly after having fallen by 0.014% Friday and 0.04% on Thursday. That sent its year-to-date return up to 13.604%, versus Friday's 13.511%. It was also a new peak 2010 cumulative return level, eclipsing the old mark of 13.572%, set last Wednesday.

Advancing issues crept back in front of decliners on Monday, after having fallen behind them on Friday for the first time after 14 consecutive sessions on the upside, dating back to mid-September. However, the margin of difference was literally just a handful of issues, even fewer than had been the case on Friday.

Overall activity, represented by dollar-volume levels, fell by 18% on Monday, following a 15% decline on Friday from the previous session.

A trader said that "it was relatively quiet today. Volume overall was largely situational. "

While he said there was "some decent volume in the high yield world," he added that "no one bond really stood out. We traded a few things here and there - but just average 'go-go' bonds. Nothing really caught a huge bid and nothing really caught a real offering."

"We're not complaining - things are good - but we would want to see a little more dislocation in the marketplace, a lot more volatility." From the prospective of traders, he said, "that would make life a lot easier.

"When you've only got better bids in the market place and people are lifting offerings, spreads just keep grinding and grinding tighter."

Traders have complained over the past few days that there seems to be little outstanding paper actually for sale in Junkbondland these days, and this trader declared that "if I've got something for sale, it's being lifted. I don't care even care what type of credit it is - if it's within a reasonable context of the market, most likely the bonds traded up."

Noting that "we saw more money come into the marketplace last week" - Lipper/FMI reported its AMG Data Services saw a $240 million cash inflow into the high yield mutual funds, their sixth consecutive weekly rise - he added that "there can only be so much money chasing yield, till it gets to a point that there's got to be some value in the equity markets or there's got to be some value someplace else."

And speaking of the equity markets, he added that "everyone is really focused right now on Apple [Inc.] stock right now, because their numbers were absolutely stellar."

Lender Processing a loser on mortgage mess

A trader noted the recent fall in the bonds of Lender Processing Services, Inc., a Jacksonville, Fla.-based provider of documentation and processing services to the mortgage industry, in line with that industry's current troubles over allegations that major banks may have improperly handled thousands of foreclosures by having documents signed or notarized by people who had not reviewed them and were not in possession of all of the facts.

"Foreclosuregate," as it has been dubbed in some quarters of the media, has put the big banks and others involved in the mortgage and foreclosure process squarely in the public eye and made them a target of official scrutiny by various state attorneys general.

The trader noted that Lender Processing's 8 1/8% notes due 2016 were trading around 109 bid a month ago, before the disclosure of massive problems in the foreclosures. After that, "we saw it come in maybe 1 or 2 points, which didn't seem huge - but by late last week, they had fallen to around 104½ bid. 105½ offered.

Then late Friday, he said, "a pretty big trade took place down around par.

"It looked like someone got out of a large position and took them down to par level."

On Monday, while some smallish trades during the day had inched the bonds' levels back to around 102-103, another large trade late in the day dragged that paper back down to around par.

"I would venture to say that it has something to do with the mortgage mess," he opined.

Also among financials impacted by the mortgage problems, a trader saw MBIA Inc.'s 14% surplus notes due 2014 at 54 bid, 56 offered, which he said was "maybe 1 point higher."

Those bonds had risen smartly from a 49-50 context over several sessions last week, in line with sharp gains in the Armonk, N.Y.-based mortgage and bond insurer's shares linked to the banks' mortgage and foreclosure-related problems. MBIA is currently suing several major banks, including the Countrywide Financial unit of Bank of America, over loans which it said failed to meet their promised quality - but which were securitized anyway into bonds which MBIA insured and took a loss on.

IPO news boosts Harrah's

Harrah's Entertainment Inc.'s debt "stopped going down," a trader said, on news the company was planning an initial public offering.

"They started trading off a bit on Friday, but this kind of revived it," the trader said. He saw the 10% notes due 2018 closing around 861/2, which compared to Friday's market of 84½ bid, 85 offered.

The 10¾% notes due 2016 meantime gained about 1½ points, closing around the 89 level.

Another source pegged the 10% notes at 85¾ bid, though another source also saw the paper around that 86½ mark.

The Las Vegas-based casino operator filed an IPO plan that allowed for the sale of as much as $575 million in stock. The company would use proceeds from the IPO to fund projects in Las Vegas and Ohio, including the completion of its 660-room Octavius Tower at Caesars Las Vegas.

Harrah's was taken private in January 2008 by Leon Black's Apollo Management LP and David Bonderman's TPG Inc. Shares currently owned by John Paulson's Paulson & Co. - bought in June in exchange for debt the firm held - would be included as part of the IPO.

ATP calm after recent gyrations

A trader said that ATP Oil & Gas Corp.'s 11 7/8% second-lien senior-secured notes due 2015 "seemed pretty steady" in a 91-92 context, ending the day at 92 bid, which he said was unchanged from Friday. He said there was "some trading in it."

The Houston-based exploration and production company's bonds had initially risen solidly at the start of last week, helped by the announced early end of the federal government-imposed moratorium on new deepwater drilling, although they retreated around mid-week, in line with a fall in the company's shares that was brought about by a combination of unsubstantiated rumors a senior company executive would have some negative things to say at an investor conference - which in fact did not happen - as well as some hedge-fund selling.

Auto names spin their wheels

A trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 were trading between 34½ bid and 35 bid, with 35 as their last level, on "not a whole lot of volume." He called that unchanged from Friday.

At another desk, a trader saw those GM benchmarks ending down 3/8 point at 34½ bid, 35½ offered, while seeing GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 - which had recently cruised as high as the 112 area - at 109½ bid, 110½ offered, down ¼ point on the session.

Clear Channel gets busy

A trader said that Clear Channel Communications Inc. "had a lot of activity today," seeing the San Antonio, Tex.-based media company's 11% senior PIK toggle notes due 2016 around 75 bid, while its 10¾% cash-pay seniors due 2016 were around 77.

'He said that "there was good size in those things trading today," pegging the company's bonds between ½ and 1 full point lower versus Friday's levels.

Clear Channel, he said, "seemed to be among the most active" credits, although he had not seen any fresh news on the company that might explain investors' sudden interest in it.

Sbarro gets socked

From deep in distressed-debt territory came word that Sbarro Inc.'s 10 3/8% notes due 2015 were getting clobbered.

A market source saw those bonds down more than 5 points on the session, quoting them at 55 bid.

A trader at another shop, however, said that he had not seen any real activity in the bonds, noting that he had "not heard them in a long time."

However, yet another trader said that he didn't see anything happening in the Melville, N.Y.-based Italian-style fast food restaurants on Monday - there was no fresh news out on them - but he said that on Friday, those bonds began the session being quoted offered at 61 and looking for a bid. They ended up trading way down around the 42 bid level due to one trade very late in the day.

"It could have been one of those 'show me a bid' things," he said, immediately followed by that low bid getting hit.

He noted that looking only at round-lot transactions, back in August the company's bonds were being quoted at 77 bid; then by the end of September, they were down around the 60 level. "Then, the next [large-sized] trade was on Friday at 42."

"Those were good-sized trades - $1 million-plus, and they're going to multiple sellers, multiple buyers, all happening at that price."

-Stephanie N. Rotondo and Christine Van Dusen contributed to this report

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