Mohegan, Boise, Holly price, GCI slates offering, Deluxe pulled; Sallie Mae up on forecast

By Paul Deckelman and Paul A. Harris

New York, Oct. 21 -Mohegan Tribal Gaming Authority and Idaho-based paper and packaging maker Boise Inc. successfully priced new high yield bond deals on Wednesday, syndicate sources said. When the new paper began trading in the secondary market, each issue was seen having risen.

Also seen up in the aftermarket were Tuesday's new bond offerings from Crown Castle International Inc., Headwaters Inc. and MDC Partners Inc.

A third bond deal - Holly Corp.'s quickly-shopped add-on to the tranche of eight-year bonds which the Dallas-based refinery operator had brought to market back in early June - also priced, late in the day. However, that deal came too late for any meaningful aftermarket action.

But while the Boise, Mohegan and Holly deals were pricing, another prospective offering, for Deluxe Entertainment Services Group Inc., was pulled from the forward calendar, where it had languished for nearly three weeks. The company was instead heard to be looking at other options.

The hole in the junk calendar from Deluxe's departure did not remain long however, being quickly filled as primaryside sources saw Alaska telecom operator General Communication Inc., or GCI, ready to hit the road Thursday to market a $400 million bond deal to prospective buyers.

Price talk meantime emerged on Navios Marine Holdings Inc./Navios Maritime Finance (US) Inc.'s upcoming offering of ship mortgage notes, which could price on Thursday.

Apart from the busy pace of new-deal-related activity, traders saw the split-rated SLM Corp.'s bonds making gains, in line with a rise in the Reston, Va.-based education lender's shares, after Sallie Mae executives said on a conference call that that improving credit markets and a lower rate of charge-offs, may allow it to make more money on loans in 2010.

Tronox Worldwide LLC's bonds appeared to have braked their recent slide and stabilized, although they remain well below the peak levels which they had reached last week.

Boise at tight end of talk

Three issuers sold a combined $600 million face amount of junk on Wednesday - each one bringing a single tranche of notes.

Boise Inc.'s subsidiaries Boise Paper Holdings, LLC and Boise Finance Co. priced a $300 million issue of 9% eight-year senior notes (B3/BB-) at 99.297 to yield 9 1/8%.

The yield printed at the tight end of the 9¼% area yield talk. The issue price came rich to discount talk of up to 2 points.

J.P. Morgan Securities Inc., Barclays Capital Inc. and Bank of America Merrill Lynch were joint bookrunners for the debt refinancing.

Mohegan prices $200 million

Meanwhile Mohegan Tribal Gaming Authority priced a $200 million issue of 11½% eight-year second-lien senior secured notes (B1/B-) at 96.234 to yield 12¼%.

The yield printed at the wide end of the 12% to 12¼% yield talk. The issue price came cheap to the 2 to 3 points discount price talk.

Deutsche Bank Securities Inc., Goldman Sachs & Co., Bank of America Merrill Lynch, Wells Fargo Securities, Calyon Securities and Citigroup Global Markets Inc. were joint bookrunners.

Proceeds will go to repay bank debt.

Holly realizes big savings

Also on Wednesday, Holly Corp. priced a $100 million add-on to its 9 7/8% senior unsecured notes due June 15, 2017 (B1/BB) at 101.50 to yield 9.589% on Wednesday, according to an informed source.

The deal priced at the rich end of the 101.0 to 101.50 price talk.

UBS Securities was the left bookrunner for the acquisition and general corporate purposes deal. Bank of America Merrill Lynch and Goldman Sachs & Co. were joint bookrunners.

The original $200 million issue priced at 94.105 to yield 11% on June 5, 2009.

Hence with Wednesday's tap, the Dallas-based refiner realized more than 1.4% of interest savings versus the print on the original issue.

A look at Thursday

Piraeus, Greece-based Navios Maritime Holdings Inc. set price talk for its $375 million offering of eight-year first-priority ship mortgage notes (Ba3/BB-) at 9 ¼% area on Wednesday.

The deal, via Bank of America Merrill Lynch and JP Morgan, is set to price Thursday afternoon.

Also on tap for Thursday is Navistar International Corp., with a $1 billion offering of 12-year senior unsecured notes (B1/BB-) via Credit Suisse, J.P. Morgan Securities Inc., Bank of America Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Goldman Sachs & Co.

At the close of the Wednesday session no official price talk had been heard on the massive deal from the Warrensville, Ill.-based truck maker.

However preliminary talk was 9%, market sources said.

GCI marketing $400 million

Elsewhere GCI Inc. will begin a roadshow on Thursday for its $400 million offering of 10-year senior notes (B2/existing B-).

The roadshow is scheduled to wrap up on Oct. 28.

Deutsche Bank Securities, Calyon Securities, Morgan Stanley and RBC Securities are joint bookrunners. Proceeds will be used to retire the company's senior credit facility.

Deluxe pulls bond deal

Finally, Deluxe Entertainment Services Group Inc. withdrew its $600 million offering of eight-year first-lien notes, market sources told Prospect News on Wednesday.

The company is seeking to amend its secured bank loan and to do an add-on, one source added.

Market observers said that the deal had been struggling.

Early this month the Hollywood, Calif.-based digital cinema services company introduced covenant changes.

Credit Suisse Securities and J.P. Morgan Securities Inc. were leading the bond deal.

Mohegan moves upward

When the new Mohegan Tribal Gaming Authority 11½% senior secured notes due 2017 were freed for secondary dealings, a trader saw the bonds firm to 97 7/8 bid, 98 1/8 offered on the break - up from the 96.234 level at which the Uncasville, Conn.-based operator had priced the issue earlier in the session.

Another trader said the new bonds "traded up at 98 earlier, but then they came down after that." He saw the paper going out at 97½ bid, 98 offered, though "they did trade at [ninety] eight earlier, a couple of times." While they were left at 971/2-98, "I would think you may well buy them a tad cheaper."

At another desk, a market source saw the issue get as good as 98¼ bid, although it fell back later on.

Yet another trader subsequently quoted the new issue at 97¾ bid, 98¾ offered.

Boise bonds better

A trader said that in "very early" aftermarket activity for Boise's 9% senior notes due 2017, the new bonds had initially moved up to par bid, 101 offered from the 99.297 level at which the issue had priced.

He later saw those bonds trading "inside that same context."

However, another trader later on quoted the bonds at 101 bid, 102 offered.

Headwaters heads higher

Among the bonds which had priced on Tuesday, a trader saw Headwaters' new 11 3/8% senior secured notes due 2014 jump as high as 103¼ bid, 103¾ offered when they were freed for secondary dealings early Wednesday - well up from the 99.067 level at which the South Jordan, Utah-based energy and building-products company had priced its $328.5 million offering, upsized from $280 million originally, to yield 11 5/8%.

However, after trading up to 1031/4, he said, "they hit that [bid] a couple of times, and then it wasn't there any more."

He said the bonds "faded back" to 102¼ bid, 103¼ offered "in a couple of spots."

A market source at another desk pegged the bonds as high as 1031/2, before seeing them come down to 102¼ bid, 102¾ offered.

"Wow," yet another trader exclaimed, in quoting the new bonds above the 102 bid level, "they did pretty good."

Despite having coughed up some of their initial gains, the first trader agreed that the notes "absolutely" notched a good gain on the day above their issue level.

"All of these big coupons," such as Headwaters' 11 3/8%, "have done well."

MDC hold most of gain

Another bond falling into that same attractively fat-coupon category is MDC Partners' 11% senior notes due 2016, which one of the traders opined "did pretty well too," although it did come in slightly from Tuesday's peak trading level.

The Toronto-based marketing and networking communications company's $225 million offering - upsized from the originally announced $200 million - priced Tuesday at 95.336 to yield 12%, and then shot up to levels above par bid, perhaps also propelled by the novelty of the name, which had not been seen in Junkbondland before.

In Wednesday's dealings, a trader quoted them at 100½ bid, 100¾ offered - slightly above the strong levels to which the bonds had jumped in Tuesday's aftermarket dealings.

However, another trader saw them at par bid Wednesday, slightly under the Tuesday closing level he had seen of around 100½ bid, 101 1/8 offered.

"You know what?" he declared rhetorically, answering "Those died today, we didn't see much after that. While there were some odd-lots offered at 1003/4, "that was it. They just kind of died out today for some reason - I don't know why."

New Crown Castles come off high

A trader said that "a lot" of Crown Castle's new 7 1/8% notes due 2019 "traded late last [i.e. Tuesday] night at par, but kind of died out today."

He said that the bonds traded at par "once this morning," but then were left around 99¾ bid, par offered for "most of the day.

"A lot of bonds traded in that context."

A second trader quoted the new bonds at 99½ bid, 100½ offered.

The Houston-based communications antenna tower operator had priced its $500 million issue on Tuesday at 99½ to yield 7.195%.

ViaSat finally visible

A trader said that Carlsbad, Calif.-based satellite services company ViaSat Inc.'s new issue of 8 7/8% notes due 2016 - which had priced on Monday but which several traders said they had not seen after that - had firmed smartly in the secondary.

He quoted the bonds as having traded Tuesday as high as 101¼ bid, 102 offered, and then on Wednesday had come in a little to 101 bid, 101 3/8 offered, although the latter level was "just one picture."

Those levels were still well up from the 98.757 at which the $275 million issue - upsized from $250 million originally - had priced on Monday to yield 9 1/8%.

Deluxe demise puzzles market

The news that Deluxe Entertainment will not be doing its expected $600 million of first-lien notes due 2017 surprised some people in the market, who wondered if there had been any reason given for the deal's withdrawal.

One trader, for instance, wondered "what happened there? I still don't get that." He added that he had "kind of liked that deal" from the Hollywood, Calif.-based digital cinema services company "from what I'd heard about it."

Noting the currently expansive and encouraging state of the high yield bond market - awash with billions of dollars of new liquidity from mutual funds and other sources, with investors eager to put cash to work and jump aboard the junk bond juggernaut -- he speculated that if they couldn't get a deal done under such conditions, "there must be some major problem with the company" that would scare off investors.

A market source suggested as an alternate theory that while the company itself might be sound and attractive, perhaps it entertained an unrealistic view of the type of issue terms it could get potential investors to accept - while those investors were trying to push the envelope to get more favorable terms that wouldn't suit the company's purposes. Earlier in the month, it was reported that Deluxe had been meeting with those investors in an attempt to modify the deal's covenants, though apparently not enough to convince them to get on board.

"That's what I figured as well," another participant said. "It's not as though market conditions are unfavorable for it."

Market indicators again mixed

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index down 5/16 point on Wednesday at 93 7/8 bid, 94 1/8 offered, after having fallen by ¼ point on Tuesday.

However, the KDP High Yield Daily Index rose by 4 basis points on Wednesday to end at 69.94, after having gained 26 bps in Tuesday's dealings. Its yield narrowed by 2 bps, to 8.50% on Tuesday, after having come in by 7 bps the session before.

In the broader market, advancing issues led decliners for a third consecutive session Wednesday, holding about a seven-to-six edge.

Overall market activity, as measured by dollar-volume levels, rose 2% from Tuesday's pace.

"New deals, that's it," a trader said, when asked what the day's focus was.

"The old stuff is weird. It was a pretty boring day."

Sallie Mae bonds solidly higher

A trader said "the big activity was in Sallie Mae," while another saw the education financing company's shorter dated notes doing especially well, quoting them up between 4 and 5 points on the day, helped by optimistic projections from the company.

He also saw its medium-duration bonds ahead by 2 or 3 points, while its longer-term paper was perhaps a point or 2 higher.

"The big movement was in the shorter stuff, up 3 or 4 points, maybe even 5 points in some cases."

He said "there's nothing really certain going on with that stuff - uncertainty abounds in that name - but, because the uncertainty abounds, there's a possibility that everything is going to be all right, maybe there was some good housing starts and everything's bottoming out and is going to go up."

But, he added, "that's why the longer stuff isn't moving quite as quickly - because not everyone is sure what the long term is going to look like for this."

The bonds - split-rated at Ba1/BBB-/BBB- but attractive to some junk investors -- firmed in line with a rise of $1.97, or 22%, in its New York Stock Exchange-traded shares, which finished at $10.87, as company executives outlined their expectations for the coming several quarters --- including earnings next year in excess of $1.50 per share, helped by a decline in loan losses.

McClatchy move is news

A trader saw a 4 point jump in round-lot trading for McClatchy Co.'s 7 1/8% notes due 2011, seeing them go up to 87½ bid versus Monday's levels at 831/2.

However, he said that there was "not a lot of trading, only a few million," in the Miami-based newspaper publisher's issue.

Tronox steadies after slipping

From the distressed-debt precincts, a trader saw Tronox Worldwide' 9½% notes due 2012 ending up in a 56-57 context, "down a lot from last week, although it started to go lower on Friday too.

"That dropped a lot" from the peak levels in the mid-60s seen a week ago, although he saw the bonds about the same as they had been on Tuesday, "still holding in the mid-50s."

Another trader, though, saw the bonds having firmed a little to a 57 level late in the session, and noted that the credit was up from the 54-55 range in which he had seen the bonds on Tuesday. During that session, he said the bonds were "volatile," swinging from a high print around 60 to a low point of 541/2.

He noted that the Tronox bonds , while "back up to 57" from Tuesday's closing lows, were still well down from levels around 61 seen at the start of the week.

He saw "not a lot of trading" in them on Wednesday.

The Oklahoma City-based chemical pigments maker's bonds - trading in the mid 30s in early October - had zoomed over the course of several sessions to around the 65-66 level by the middle of last week, helped by optimistic financial projections. However, after hitting that peak, they first plateaued in the 60s, and then slid down to Tuesday's zenith around 54, before coming back up to Wednesday's levels.

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