Upsized Toys R Us leads busy $2.1 billion, €2 billion primary; Clearwire slates $1.45 billion

By Paul Deckelman and Paul A. Harris

New York, Nov. 10 -Toys 'R' Us Inc.'s upsized offering of eight-year senior secured notes set the pace during a busy high yield primary session Tuesday which saw eight issuers combined to price a whopping $2.12 billion and €2 billion during the busy pre-Veteran's Day session in high yield.

The surge of issuance continued the rush to issue new debt before the traditional year-end lassitude that makes it tough to do any new financing sets in.

Wayne, N.J.-based specialty retailer Toys 'R' Us' $725 million issue was the big deal among the domestic junk borrowers. Traders saw the new bonds firm by about a point when the deal hit the secondary market.

Also pricing early enough for some aftermarket action was St. Louis-based electronic components company Viasystems Inc., which priced a $220 million offering of five-year senior secured notes. The debt was quoted higher in trading.

The day's other new deals all came in a rush towards the end of the session, too late to trade around. United Rentals (North America) Inc. upsized its 10-year note offering to $500 million from the $400 million originally announced on Monday.

Also upsizing was Houston-based oil and gas exploration and production operator Swift Energy Co., which increased the size of its quickly-shopped 10-year note offering to $225 million from the originally announced $200 million.

Other new credits pricing late in the day were issues from Texas TV broadcaster Belo Corp. and from Triumph Group Inc., weighing in at $275 million and $175 million, respectively.

Fiat SpA drove away with a trunk-full of fresh cash, after the Italian carmaker priced a quickly shopped €1.5 billion issue of five-year notes, while Ford Motor Co.'s European lending arm, FCE Bank plc, tapped the market for €500 million.

Discover Bank meantime sold $700 million of split-rated (Ba1/BBB-/BBB-) 10-year exempt subordinated bank notes, although traders said the issue would likely attract more interest from the high-grade precincts.

Apart from issues which actually priced, Clearwire Corp., a Kirkland, Wash.-based wireless telecommunications company, announced plans to sell at least $1.45 billion of six-year senior secured notes, with the deal taking to the road Tuesday and pricing expected in the middle of next week.

New deals were also announced by Sturtevant, Wis.-based commercial cleaning and sanitation services provider JohnsonDiversey Inc., and by StoneMor Partners LP, a Bristol, Pa.-based deathcare company.

Price talk emerged on two deals which could come to market by the latter part of this week - Antero Resources Finance Corp.'s issue of eight-year notes, upsized to $350 million from $300 million originally, and Barbados-based undersea communications cable operator Columbus International Inc.'s $450 million offering of five-year secured notes.

Away from the primary sphere, traders said that secondary market activity was lackluster and spotty, as trading wound down ahead of Wednesday's Veterans' Day bond market holiday, although here and there were pockets of activity, for instance, in Centennial Communications Corp.'s paper, following the closing of its acquisition by telecom giant AT&T Inc.

Toys 'R' Us upsizes

Toys 'R' Us financing vehicle Giraffe Properties, LLC priced an upsized $725 million issue of 8 7/8% eight-year senior secured notes (Ba2/B+) at 98.573 to yield 8¾% on Tuesday.

The yield printed on top of the price talk while the amount was raised from $650 million.

Bank of America Merrill Lynch, Goldman Sachs & Co., Deutsche Bank Securities Inc. and Wells Fargo Securities were joint bookrunners for the issue.

Proceeds will be used to repay debt and purchase certain properties from Toys 'R' Us Delaware, Inc.

The issuing entity is to be renamed Toys 'R' Us Property Co. II, LLC, a subsidiary of Wayne, N.J.-based toy retailer Toys 'R' Us.

United Rentals upsizes

Meanwhile United Rentals (North America) priced an upsized $500 million issue of 9¼% 10-year senior notes (B3/B) at 98.382 to yield 9½%. The deal was increased from $400 million.

The yield printed on top of yield talk. The issue price came in line with discount talk of 1 to 2 points.

Wells Fargo Securities, Bank of America Merrill Lynch and Morgan Stanley & Co. were joint bookrunners for the debt refinancing and general corporate purposes deal.

Belo at the tight end

Elsewhere Belo Corp. priced a $275 million issue of 8% seven-year senior notes (Ba2/B+) at 98.045 to yield 8 3/8%.

The yield printed at the tight end of the 8½% area yield talk. However. the issue price came toward the cheap end of the 0 to 2 points of discount talk.

J.P. Morgan Securities Inc. and Bank of America Merrill Lynch led the bank debt refinancing deal from the Dallas-based television station operator and broadcaster.

Swift Energy drives through

Swift Energypriced an upsized $225 million issue of 8 7/8% 11-year senior notes (B3/BB-) at 98.389 to yield 9 1/8%, in a quick-to-market Tuesday transaction.

The yield printed at the tight end of the 9 1/8% to 9¼% yield talk. The issue price came in line with the 1 to 2 points of discount talk.

JPMorgan, Goldman, Sachs & Co., RBC Capital Markets and Wells Fargo Securities were joint bookrunners for the debt refinancing deal.

Viasystems in line with talk

Viasystems priced a $220 million issue of 12% five-year senior secured notes (B3/B+) at 96.269 to yield 13%.

The yield priced on top of yield talk. The issue price came in line with the four points of discount talk.

Goldman Sachs & Co. and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to fund the tender for Viasystems' $200 million of 10½% senior subordinated notes due 2011 and to redeem or otherwise repurchase any 2011 notes that remain outstanding after the expiration of the tender.

Triumph at the tight end

Triumph Group priced a $175 million issue of 8% eight-year senior subordinated notes (Ba3/B+) at 98.558 to yield 8¼%.

The yield printed at the tight end of the 8 3/8% area price talk.

Bank of America Merrill Lynch and J.P. Morgan Securities Inc. were joint bookrunners.

Proceeds will be used for general corporate purposes, which may include debt reduction and repayment of the company's revolver without any permanent reductions.

Fiat plays to €7.5 billion-plus book

Meanwhile during the session in Europe, Fiat Finance & Trade priced a €1.5 billion issue of 6 7/8% five-year notes (Ba1/BB+/BB+) at 99.935 to yield 6.9%.

The yield printed at the tight end of the 6.9% to 7.1% price talk.

Banca IMI, Calyon Securities, UBS Investment Bank and UniCredit(HVB) were joint bookrunners.

The deal the from subsidiary of Italian car-maker Fiat SpA played to orders exceeding €7.5 billion, according to a source close to the deal.

FCE Bank sells €500 million

The other major news out of European high yield also came from the automotive finance space.

FCE Bank priced a €500 million issue of 9 3/8% four-year notes (B3/B/B) at 99.643 to yield 9½% on Tuesday.

The yield printed on top of the price talk.

Barclays Capital, BNP Paribas, HSBC and RBS Securities were the lead arrangers.

The issuer is Ford Motor Co.'s European financing unit.

Discover Bank split-rated deal

In the crossover space, Discover Bank priced a $700 million split-rated issue of 8.7% 10-year subordinated bank notes (Ba1/BBB-/BBB-) at 99.742 to yield 8.739%, or Treasuries plus 525 basis points.

Goldman Sachs & Co. ran the books for the general corporate purposes deal.

Columbus International sets talk

Barbados-based Columbus International, Inc. set price talk for its $450 million offering of five-year senior secured notes (B2/B) at 11% to 11½%.

The roadshow wraps up on Nov. 12, and the Rule 144A for life bullet deal is expected to price afterwards.

Citigroup, Standard Bank and RBC Capital markets are joint bookrunners.

Antero upsizes

Elsewhere on the active forward calendar, Antero Resources Finance Corp. upsized to $350 million from $300 million its offering of eight-year senior notes, on Tuesday.

Price talk is expected on Thursday morning. The deal is set to price on Thursday afternoon.

J.P. Morgan Securities Inc., Barclays Capital Inc. and Wells Fargo Securities are joint bookrunners for the bank debt refinancing deal.

Clearwire launches $1.45 billion

The forward calendar for mid-November built up on Tuesday.

Clearwire Communications and Clearwire Finance, Inc. will start a roadshow on Wednesday for a $1.45 billion offering of six-year senior secured notes.

There will be an investor call on Thursday.

The roadshow is slated to conclude on Nov. 17, with the deal expected to price on Nov. 18.

JP Morgan, Bank of America Merrill Lynch, Morgan Stanley and Jefferies & Co. are joint bookrunners for the debt refinancing and general corporate purposes deal.

Stonemor brings $150 million

Finally, Stonemor Operating LLC will run a roadshow until Nov. 18 for its $150 million offering of eight-year senior notes.

Bank of America Merrill Lynch is the bookrunner for the debt refinancing deal from the Bristol, Pa.-based owner/operator of cemeteries.

New Toys paper pops

A trader said that "right out of the box," Toys 'R' Us' new 8½% senior secured notes due 2017 moved up to 99 3/8 bid, from the 98.573 level at which that $725 million deal, upsized from the originally announced $650 million, had priced earlier in the session to yield 8¾%.

He saw them move up, and tighten up, further to 99½ bid, 99 7/8 offered, but said that the new paper "then kind of quieted down from there."

A trader at another desk meantime also pegged the bonds in that same 991/2-plus region going home.

Little vitality in Viasystems issue

A trader saw Viasystems' new 12% senior secured notes due 2015 quoted at 98 bid - well up from the 96.269 level at which the company had priced its $220 million deal earlier in the day, but he added that he "didn't see anything else." The deal's relatively small and illiquid size, he suggested, kept investors out of it.

At another desk, a trader saw the bonds around a 98-98¼ context.

And a trader said that "the only thing" he had seen was an offering at 981/4, adding "I didn't see a bid side."

Other new deals not seen

Market participants said that the other four deals of the day - for Belo Corp., Swift Energy, United Rentals and Triumph Group - priced too late for any appreciable aftermarket action.

A trader said in the late afternoon, though before those deals did price, that "I know guys who wanted to get their allocations [of the new deals] and then get out of there, with the partial holiday on Wednesday," which saw U.S. fixed-income markets shuttered, but equities open. "So they're waiting around for Belo and United Rentals."

Investors singing the allocation blues

The trader said that "people tried to do a few things [with recently priced new issues] early in the morning, couldn't get it done, and then they took to complaining about the number of deals that were announced, and the lousy allocations [of newly priced bonds] that they were getting. It's gotten to the point where nobody wants to play every deal anymore. They are only playing those that they want to own. They are optimistic that they'll get a decent allocation on those."

He said that Triumph Group "is a perfect example of [what happens with] a deal that's small" - just $175 million. "Word got out that it's a pretty good company, more and more people looked at it, and everybody put in for it. People will probably get lousy allocations - unless the underwriter decides to just put it with some key orders.

"You're not going to see much trading in it, one way or the other."

On the other hand, he noted that the Toys 'R' Us deal had been upsized, and added that "I would expect that it will trade fairly well. I think there are crossover buyers in that, as well as good interest out of the traditional high yield investor as well."

Pioneer deal quietly holds steady

A trader said that the Pioneer Natural Resources Co. bond deal that priced on Monday was continuing to trade around the same 99-99¼ area at which the Irving, Tex.-based energy company's upsized $450 million offering of 7½% notes due 2020 had gone home Monday after having priced at 99.142 to yield 7 5/8%.

"It was only a couple of million bonds," he said -- $500 [thousand] to $1 million. It really wasn't anything to write home about."

At another desk, a trader said that the bonds had traded early in the day at 99 3/8 bid, 99 7/8 offered - "and that was the last thing I saw.

"I did not see it later in the day."

General Maritime dead in the water

That trader also saw General Maritime Corp.'s 12% notes due 2017 at 101 bid "first thing this morning - and then that was the last I heard" about the New York-based oil tanker fleet operator's new bonds, $300 million of which priced on Friday at 97.512 to yield 121/2, and which then moved up from there to around 99¼ bid, 100¼ offered later on in that session.

Market indicators stay mostly firm

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index up ½ point at 93¾ bid, 94¼ offered on Tuesday, after having been up 1 point on Monday.

Meanwhile, the KDP High Yield Daily Index rose edged up by 3 bps on Tuesday to end at 69.54, after having gained 10 bps in Monday's dealings. Its yield narrowed by 2 bps to 8.64%, matching the 2 bps tightening seen the previous session.

In the broader market, however, declining issues overtook advancers Tuesday, breaking an eight-session winning streak, although their margin of victory was literally just a handful of issues out of the nearly 1,500 tracked, versus the four-to-three advantage which advancers held over the decliners the previous session.

Overall market activity, as measured by dollar-volume, rose by 32% from Monday's pace.

Despite the numerical rise in activity levels, trader insisted that from where he sat, "it was pretty damn quiet in secondaries today. There were a number of 'offer-wanted' lists" circulating around, he said, as investors were looking to augment their positions.

He continued that it was "kind of a mixed bag today" in Junkbondland on Tuesday,

A second continued that "it was just one of those days, when you got sidetracked on little projects or names here and these but nothing that really jumped out."

Airline equipment paper gains altitude

While new-deal related activity dominated, a trader saw "a little bit of trading" in enhanced equipment trust certificates issued by major airlines, "as that area remains relatively strong."

When asked whether any particular names stood out, he replied that activity in that sector "was pretty much across the board -- it didn't matter whether it was Delta, UAL or any of the other airlines.

"There seemed to be good interest in that space."

Centennial moves higher

Another trader said that Centennial Communications' bonds were "very active," with the company's 10 1/8% notes racking up over $33 million of trades, while the 8 1/8% notes due 2014 saw a similar volume level.

"Those have been trading pretty close around the call price, lately."

On Friday, AT&T completed its $944 million acquisition of the Wall, Pa.-based telecom company, after U.S. regulators gave their final approval.

"AT&T has kind of assumed the debt" of Centennial, the trader said, "because on some of the Centennial issues, you've lost the 'CYCL' symbol" under which Centennial had traded pre-merger, "and it's now changed to "T," of AT&T fame.

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