Upsized MDC, Headwaters price, Crown Castle too; Universal, Navistar slate deals; Freescale up

By Paul Deckelman and Paul A. Harris

New York, Oct. 20 - MDC Partners Inc. and Headwaters Inc. each successfully priced upsized high-yield bond offerings on Tuesday, syndicate sources said. Traders saw the new bonds from MDC having moved up solidly when they were freed for secondary market dealings.

Given the lateness of the hour of its pricing, there was no aftermarket activity in Headwaters' new deal, nor was there any trading Tuesday in Crown Castle International Corp.'s quickly-shopped offering of 10-year notes, which also priced fairly late in the session. The latter deal, unlike MDC and Headwaters, was not upsized from its originally announced amount.

Among recently priced deals, traders saw continued strength in the new issues priced Monday by Rite Aid Corp. and Terra Capital Inc. However, they saw no trace in the secondary market of another Monday pricing, that from ViaSat Inc.

Also on the new deal front, Universal City Development Partners Ltd. and affiliate UCDP Finance Inc. announced plans for a $625 million two-part offering of senior notes and senior subordinated notes, the proceeds of which will be used, along with new bank borrowings, to take out the company's three issues of existing Universal Orlando notes slated to come due in 2010.

Navistar International Corp. announced plans late in the day for a $1 billion offering of 12-year straight junk bonds, expected to price on Thursday, and a $500 million issue of subordinated convertible debt.

Pre-deal market price talk meantime emerged on Mohegan Tribal Gaming Authority's pending $200 million of eight-year notes.

Among established issues not connected with the new-deal market, Freescale Semiconductor bonds were up, perhaps helped by the news about the Austin, Tex.-based computer chip maker's development deal with another firm working on technology for the popular Kindle e-book readers.

On the downside, Tronox Worldwide LLC's bonds were once again on the downside, continuing to retreat from the peak levels they'd hit last week after an amazing upside surge.

New deals above $1 billion

Tuesday's junk issuance topped $1.05 billion, as three issuers each crossed the finish line with a single tranche of notes.

The session came replete with a drive-by deal from Crown Castle International which priced with the lowest yield seen on a high-yield bond since early June 2008, according to one syndicate source.

Crown Castle: low-yield bonds

Crown Castle priced a $500 million issue of 7 1/8% 10-year senior notes (B1/B+) at 99.50 to yield 7.195% on Tuesday.

The deal priced at the tight end of the 7¼% area price talk.

Barclays Capital, RBS Securities, Bank of America Merrill Lynch, Calyon Securities, Deutsche Bank Securities, Morgan Stanley and TD Securities were joint bookrunners for the quick-to-market deal.

Proceeds will be used for general corporate purposes, which may include the repayment or repurchase of certain outstanding debt of its subsidiaries.

Crown Castle's 7.195% yield was the lowest the market has seen since Airgas, Inc. priced a $400 million issue of senior subordinated notes due Oct. 1, 2018 at par to yield 7 1/8% on June 5, 2008, a syndicate official commented. Prospect News data supports the claim, if emerging markets transactions are excluded.

Headwaters tight to talk

Meanwhile Headwaters priced an upsized $328.25 million issue of 11 3/8% five-year senior secured notes (expected B2/confirmed B+) at 99.067 to yield 11 5/8%.

The yield printed at the tight end of the 11¾% area yield talk. The issue price came rich to the 2 to 3 points of original issue discount talk.

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

MDC Partners upsizes

Elsewhere MDC Partners priced an upsized $225 million issue of 11% seven-year senior unsecured notes (B2/BB-) at 95.336 to yield 12%.

The debt refinancing and general corporate purposes deal, which was upsized from $200 million, priced on top of both coupon talk and yield talk.

Goldman Sachs & Co. ran the books.

Mohegan sets price talk

Mohegan Tribal Gaming set price talk for its $200 million offering of eight-year senior secured second-lien notes at 12% to 12¼% with 2 to 3 points of original issue discount.

Pricing is expected on Wednesday morning.

There were also covenant changes, according to a market source.

Deutsche Bank Securities Inc., Goldman Sachs & Co., Bank of America Merrill Lynch, Wells Fargo Securities, Calyon Securities and Citigroup Global Markets Inc. are joint bookrunners for the debt refinancing deal.

Navistar to bring $1 billion

Navistar International plans to market a $1 billion offering of 12-year senior unsecured notes on Wednesday, and price the deal Thursday.

Credit Suisse, JP Morgan, Bank of America Merrill Lynch, Citigroup, Deutsche Bank Securities and Goldman Sachs & Co. are joint bookrunners.

The notes will be non-callable for five years. However $50 million of the issue will be callable each year at 103 during the call protected period.

Proceeds will be used to refinance term loan debt and for general corporate purposes.

The company is in the market with a concurrent $500 million offering of convertibles, via JP Morgan.

Universal City starts Monday

Universal City Development Partners Ltd. will start a brief roadshow on Monday for its $625 million two-part notes offering.

The roadshow is scheduled to end on Oct. 29. The deal is expected to price on Oct. 30.

The offering will be comprised of $400 million of six-year senior notes which come with three years of call protection, and $225 million of seven-year senior subordinated notes which come with four years of call protection.

JP Morgan, Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities, Goldman Sachs & Co. and Morgan Stanley are joint bookrunners for the debt refinancing and general corporate purposes deal.

Campofrio starts roadshow

Spain's Campofrio Food Group began a roadshow on Monday for €500 million offering of seven-year senior notes (B1).

The deal is expected to price before the end of the week.

Deutsche Bank and RBS are the leads for the deal from the Madrid-based processed meat company.

New MDC bonds move up

A trader said that "it seems like a lot of the [market's] focus is on these new issues" - and when the new MDC Partners notes were freed for secondary dealings, he saw those bonds "up smartly."

He saw the issue move up to 100¼ bid, 101¼ offered from the 95.336 level at which the bonds had priced.

"It was a nice trade for a small issue."

He theorized that the Toronto-based marketing and networking communications company is "a new name, pretty much, in the [high yield] universe," with the company only having outstanding bank debt and convertible bonds, "and a new name in the advertising space. People see a new name, and feel they can diversify a little and that gave it a nice little pop."

Existing Crown Castle bonds busy

The new offerings from Crown Castle and from Headwaters priced too late in the session for any meaningful aftermarket activity.

But Houston-based communications operator Crown Castle's existing 9% notes due 2015 were among the most active high yield issues on the day, with over $20 million changing hands around and slightly above the 107 bid level, essentially unchanged from where those bonds have recently been. The trader saw the '15s at 107¼ bid, 107¾ offered.

New Rite Aid bonds continue rise

A trader saw the new Rite Aid 10¼% senior secured notes due 2019 at 101 3/8 bid, 101 7/8 offered during the morning.

"Right out of the box this morning" he said, "the bonds went to 1011/2-102, and almost all of the activity was [in that range]."

He said that "throughout the day, it was pretty solid, trading right inside that 1011/2-102 context."

The Camp Hill, Pa.-based Number-Three U.S. drugstore chain operator had priced $270 million of the bonds, upsized from the originally announced $250 million, on Monday at 99.242 to yield 10 3/8%, to complete its efforts to take out all of its remaining 2010 debt, and those bonds had pushed up to par bid, 101 offered in Monday's initial trading.

A second trader on Tuesday said that the new issue "was wrapped around 102," going home, quoting them at 101¾ bid, 102¼ offered.

New Terra bonds trade firmly

That trader also saw Terra Capital's new 7¾ notes due 2019 trading at 100¼ bid, 100¾ offered - pretty much in line with the levels to which the Sioux City, Iowa-based chemical fertilizer company's $600 million issue had moved up to on Monday after earlier pricing at 98.298 to yield 8%.

Another trader saw the new bonds opening at 102½ bid on Tuesday, but said levels were hard to come by because "it just became Trace-able," and had no prior history. "Nothing was reported."

No sign seen of ViaSat

Several traders said they had seen absolutely no secondary dealings in ViaSat's new 8 7/8% senior notes due 2016. The Carlsbad, Calif.-based satellite services company priced $275 million of the bonds - upsized from the originally announced $250 million - late Monday at 98.757 to yield 9 1/8%.

However, the bonds were a no-show in Tuesday's secondary dealings, where a trader said he had "not ruin across it.

"That sounds like one of those [smallish] issues that gets put away quickly, and it will probably be a while before we see it" - if at all.

Recent Delta deal gains altitude

Among other recently priced offerings a trader was quoting Delta Air Lines Inc.'s 9½% first-lien notes due 2014 at 103 bid, up a point on the session.

The Atlanta-based Number-Three U.S. air carrier's $750 million of those notes - upsized from $500 million originally - priced at 98.563 back on Sept. 23, to yield 9 7/8%. The new bonds had firmed smartly from there, pushing to levels well above par and staying there.

That issue was part of a $1.35 billion two-part offering from Delta, which also priced $600 million of 11¾% second-lien notes due 2015 that same session at 95.288 to yield 13%.

Deluxe deal still a no-show

One of the traders meantime asked "what's going on" with Deluxe Entertainment Services Group Inc.'s planned $600 million of first lien notes due 2017.

He noted that the Hollywood, Calif.-based digital cinema services company's prospective deal had first surfaced literally weeks ago - on Oct. 1, to be precise - had moved onto the forward calendar - and has sat there ever since. Syndicate sources said that the company offered covenant changes to would-be investors to try and move the deal along, but it still has not come to market.

"My guess would be in this environment, with some issues being announced in the morning and priced by lunchtime, it looks like [Deluxe] is having a tough time getting this deal sold, if it hasn't been priced yet."

He speculated further that "if it's this hard getting the deal done in this environment, how will it trade once the thing is priced? That's another issue, because sometimes you see it if it's a tough deal to get done, it's not the most stellar [secondary] performance right out of the box."

Market indicators seen mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down ¼ point on Tuesday at 94¼ bid, 94¾ offered, after having risen by ½ point on Monday.

However, the KDP High Yield Daily Index rose by 26 basis points on Tuesday to end at 69.90, after having gained 14 bps in Monday's dealings. Its yield narrowed by 7 bps to 8.52% on Tuesday, after having come in by 4 bps the session before.

In the broader market, advancing issues led decliners for a second consecutive session, holding a roughly four-to-three advantage.

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

A trader said that the newly priced issues "were grabbing a lot of interest," along with the primary forward calendar, "as it builds."

"Outside of that, we kind of disassociated from equities - even though the stock market was down, we continued to see [junk bond] stuff kind of creeping higher. It feels like people are reluctant to sell going into earnings, and down the road, into the year-end. It feels like a lot of cash is still on the sidelines and what transactions people are doing is taking a little profit here and there, and putting cash to work in new issues and recent issues."

Freescale flies upward

Among the secondary market issues not impacted by new-deal concerns, several market sources reported impressive gains in Freescale Semiconductor's paper.

Its 10 1/8% notes due 2016, one of the day's more active issues, were seen having risen more than 5 points on the session to around the 74-75 level.

Meanwhile, Freescale's 8 7/8% notes due 2014 gained more than 2 points on the day to end at the mid 84 area.

Freescale's bonds may have been aided by the news that Freescale and another high-tech firm, E-Ink, have joined forces in a development deal which could lower the costs of manufacturing such electronic book readers as Amazon.com's Kindle and Sony's competing reader. Both companies are already suppliers of technology - Freescale's processors and E-Ink's Vizplex display system.

How lucrative the partnership turns out to be is anyone's guess - but the two companies, in announcing their alliance, said that beyond just the electronic book readers, "the collaboration is also expected to spark innovation for emerging product categories such as eNewspapers, tablet PCs, laptop secondary displays, eNotebooks, and eDictionaries."

Tronox travails continue

A trader said it looks like "the party's over" for Tronox Worldwide's 9½% notes due 2012. He said that during the morning, the bonds had traded in a 54½ to 57 context - well under the upper 50s levels seen Monday. Those Monday levels, in turn, were themselves were in considerably from last week's peak levels in the mid-60s, which had represented a nearly 30-point jump from the upper 30s, where the bonds had traded before the Oct. 7 release of positive financial projections by the troubled Oklahoma City based chemical pigments maker set off the surge.

The trader said he had heard the bonds offered around 58 around mid-day; at 1 p.m. ET, he said, the bonds were trading around 55-561/2, on "pretty good size." He saw a total of about $15 million having traded, mostly between 54 1/8 on the low end and 57½ on the high side.

CIT circulates around

A trader saw CIT Group Inc.'s 4¼% notes due 2010 firm to a 67-68 context late in the session, up from the wide 661/2-70 range those bonds had held on Monday although volume had fallen by around half to $4 million on Tuesday. He noted that a week ago, $12 million of those bonds had traded between 61½ and 64.

But at another shop, a market source quoted CIT's 4¾% notes due 2010 down a point at 65½ bid.

CIT's debt has been roiled over the controversy surrounding the company's offer to exchange new longer-maturity debt for its existing bonds as part of a refinancing effort, which has sparked criticism from some quarters, including key bondholder Carl Icahn, who has put forward his own recapitalization plan.

Another market source saw the New York-based commercial lender's bonds as something of a mixed bag, with its 6% bonds due 2036 down a deuce on the day at around 59½ bid, but its CIT Group Funding Corp. of Canada's 4.65% notes due 2010 up by around the same amount at 891/2.

Elsewhere among the financials, Residential Capital LLC's 9 5/8% notes due 2015 were quoted down nearly 3 points on the session at just below the 75 mark, while the mortgage lender's 8 7/8% notes due 2015 also lost 3 points to end at 63.

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