Upsized Continental Resources, GM Financial mega-deals, Belden drive by; DaVita up next

By Paul Deckelman and Paul A. Harris

New York, Aug. 13 - Living up to predictions that the high-yield market still had some new-issuance left in it after last week's tremendous pricing parade, Junkbondland picked up Monday right where it left off, pricing nearly $3 billion more of new paper in several quickly-shopped drive-by deals.

All three issues were upsized from their originally announced amounts.

Energy operator Continental Resources Inc. did a $1.2 billion add-on to the 10-year notes that it priced back in early March.

General Motors Financial Co. Inc., which took the place in the automotive giant's world formerly occupied by the old GMAC, priced $1 billion of five-year notes after doubling the size of that deal.

And electrical cable and wire manufacturer Belden Inc. came to market with a $700 million 10-year subordinated bond issue.

The Belden and GM Financial notes moved modestly higher when they were freed to trade.

There also were two euro-denominated pricings from Belgian cable operator Telenet and Central European Media Enterprises Ltd.

Back in the dollar-denominated market, syndicate sources said Tuesday was shaping up to be a busy day; health care operator DaVita Inc. is expected to price a $1 billion deal, while price talk emerged on smaller offerings from Graton Economic Development Authority and Legend Acquisition Sub Inc. that could also come to market Tuesday.

Chemical maker Tronox Ltd. was seen hitting the road with a $650 million eight-year offering that is expected to price after presentations to investors Tuesday and Wednesday.

Traders said there was not much secondary market activity going on, away from trading in the new issues.

Statistical market-performance indicators remained mixed.

Continental massively upsizes

The primary market saw $2.93 billion of drive-by business Monday as three issuers completed single-tranche deals.

Continental Resources priced a massively upsized $1.2 billion add-on to its 5% senior notes due Sept. 15, 2022 (Ba2/expected BB+) at 102.375.

The deal played to orders in excess of $2 billion, according to an informed source.

The reoffer price, which came toward the rich end of the 102 to 102.50 price talk, rendered a 4.701% yield-to-maturity and a 4.624% yield-to-worst.

Bank of America Merrill Lynch, J.P. Morgan, RBS, Mitsubishi, U.S. Bancorp, Wells Fargo, Capital One Southcoast, Citigroup, Lloyds, TD and UBS were the joint bookrunners for the deal, which was upsized from $700 million.

The proceeds will be used to repay bank debt and for general corporate purposes.

The original $800 million issue priced at par on March 5, 2012.

GM Finance prints at 4¾%

General Motors Finance priced a $1 billion issue of non-callable five-year notes (/BB-/BB) at par to yield 4¾%.

The deal, which was run on the investment-grade desk, was announced at benchmark size.

The yield printed on top of yield talk.

Citigroup, Credit Suisse and Deutsche Bank were the bookrunners for the general corporate purposes deal.

Belden upsizes

Belden priced an upsized $700 million issue of 10-year senior subordinated notes (Ba2/B+) at par to yield 5½%.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Wells Fargo, J.P. Morgan and Goldman Sachs were the joint bookrunners for the issue, which was upsized from $550 million.

The St. Louis-based signal transmission company plans to use the proceeds to fund a portion of its pending tender offers for any and all of its outstanding 7% senior subordinated notes due 2017 and 9¼% senior subordinated notes due 2019. The remaining proceeds will be used for working capital for general corporate purposes.

Telenet upsizes, restructures

The euro-denominated junk market also reactivated Monday with two drive-by issuers raising €776 million in a combined three tranches.

Telenet Finance V Luxembourg SCA priced an upsized, restructured €700 million two-part senior secured notes transaction (Ba3//BB).

The Belgian telecommunications company priced a €450 million tranche of 10-year notes at par to yield 6¼%. The yield printed at the tight end of price talk set in the 6 3/8% area. The tranche size came in the middle of the €400 million to €500 million range.

Meanwhile, in a tranche that was added subsequent to the announcement of the deal, Telenet priced a €250 million issue of 12-year notes at par to yield 6¾% at the wide end of price talk, which had the 12-year notes yielding from 37.5 bps to 50 bps more than the 10-year notes. The tranche size came in the middle of the €200 million to €300 million range.

The overall deal size was increased to €700 million from €500 million.

Joint bookrunner JP Morgan will bill and deliver. BNP Paribas and Goldman Sachs International also were joint bookrunners.

The proceeds will be used to repurchase shares and for general corporate purposes.

Also CET 21 SPOL SRO, the Czech subsidiary of Central European Media Enterprises Ltd., priced a €70 million add-on to is 9% senior secured notes due Nov. 1, 2017 (Ba3/B-) at 108.25 to yield 7.074%.

The yield printed rich to the 108 price talk.

JP Morgan ran the books for the quick-to-market debt refinancing and general corporate purposes deal.

The flurry of activity took one London-based syndicate banker by surprise because there are a lot of empty chairs on the European buyside.

That will change, come September, the banker said, noting that the euro-denominated new issue pipeline for autumn is believed to be substantial.

DaVita $1 billion for Tuesday

Looking ahead, DaVita plans to price a $1 billion offering of 10-year senior notes Tuesday.

J.P. Morgan, Barclays, Bank of America Merrill Lynch, Credit Suiss, Goldman Sachs, Morgan Stanley, SunTrust and Wells Fargo are the joint bookrunners for the hefty acquisition deal.

Elswhere, price talk surfaced on a pair of deals also expected to price Tuesday.

Graton Resort & Casino talked its $450 million offering of seven-year senior secured notes with a yield in the 9¾% area.

Bank of America Merrill Lynch, Wells Fargo, Deutsche Bank and Credit Suisse are the joint bookrunners.

Also M*Modal Inc. talked its $250 million offering of eight-year senior notes (Caa1/B-) to yield 10¼% to 10½%.

Bank of America Merrill Lynch and RBC are the joint bookrunners.

Tronox starts Tuesday

Tronox Finance LLC, a unit of Tronox, plans to start a brief roadshow Tuesday in New York City for its $650 million offering of eight-year senior notes (expected ratings B1/BB-).

The roadshow moves to Boston on Wednesday and the deal is set to price thereafter.

Goldman Sachs, Credit Suisse and UBS are the joint bookrunners.

About $400 million of the proceeds will be used to return shareholder capital, including share buybacks. The remainder of the proceeds will be used for general corporate purposes and possible returns of capital to shareholders from time to time.

Belden bonds better

When the new Belden's 5½% senior subordinated notes due 2022 were freed for secondary dealings, a trader pegged the St. Louis-based electrical cable and wire maker's paper in a context of 1001/2- to 101-bid.

A second trader said he "saw some sellers" around the 100 7/8 level.

"The Beldens traded up to around 101 and then they kind of faded, going out trading in a 1001/4- to 100 3/8-bid area," yet another trader said.

GM Financial gyrates

A trader said that he saw GM Financial's new 4¾% notes due 2017 at par bid on the break, right at their issue price without any offered levels. Later, he located those bonds a little higher at 100¼ bid.

A second trader, however, did see two-sided markets around 100½ bid, 101¼ offered.

At another desk, a trader saw the Fort Worth, Texas-based automotive lender's notes trading between 100½ and 100¾ on the bid side.

But another market source saw the $1 billion of bonds get up to levels between 100 5/8 and 101 5/8.

Continental comes too late

One or two traders said they did not see any aftermarket dealings in Continental Resources' 5% notes due 2022, owing to the lateness of the hour at which the Oklahoma City-based energy exploration and production company priced its upsized $1.2 billion add-on deal.

One of the traders said that apart from the trading in the Belden and GM Financial bonds, "It's been a pretty lackluster day."

As if to underscore that, another trader said that he had sold "just a very small lot" of H&E Equipment Inc.'s 7% notes due 2022, quoting the bonds at 101½ bid, 102¼ offered.

The Baton Rouge, La.-based heavy equipment sales and rental company priced $530 million of those notes at par Friday, upsized from the originally announced $480 million. They went as good as 101¾ bid, 102¼ offered in initial aftermarket dealings later on in that session.

Going back a little further last week, though, traders did see some markets in a few of the issues, although not much changed from the levels at which they ended last week.

A trader saw Sprint Nextel Corp.'s 7% notes due 2020 locked around the 100 5/8 level, while a second quoted those bonds at 100 3/8 bid, 100 5/8 offered.

The Overland Park, Kan.-based wireless carrier priced a quickly shopped $1.5 billion offering of those bond at par Thursday and they were quoted moving up to 100½ bid, 101 offered.

Energy Future Intermediate Holding Co.'s 6 7/8% senior secured first-lien notes due 2017 were seen by a trader at 100¾ bid, 101 3/8 offered, up from the par level at which the Dallas-based electric utility company priced that $250 million tranche in a quick-to-market deal Thursday. He also saw its 11¾% senior secured second-lien notes due 2022 at 103¼ bid, 104 1/8 offered; the company priced an upsized $600 million add-on to its existing $1.15 billion of those notes, also on Thursday, at 102.25 to yield 11.295%

Community Health Systems Inc.'s upsized $1.6 billion of 5 1/8% senior secured notes due 2018, which priced last Wednesday in a drive-by offering at par after upsizing from $1.2 billion and then promptly jumping to above the 102 mark, were seen by several traders Monday continuing to hold those lofty levels.

And in one of the few recent deals that seemed to move substantially Monday, a trader saw the Service Master Co.'s 6 1/8% notes due 2020 at 100¾ bid, 101½ offered. That was up from Friday's levels of around 99½ bid, par offered and up from the par level at which the Memphis-based residential cleaning and lawn care service provider priced its $1 billion deal. It was massively upsized from an originally announced $300 million in a quick-to-market transaction Wednesday.

Sleepy secondary seen

A trader said there was little happening in the secondary market outside of the trading in new-deal paper. "Nothing jump was jumping out at you," he declared.

"There wasn't much going on," a second trader declared.

However, here and there, traders saw action going on in a few off-the-run names.

For instance, one said that Visant Corp.'s 10% notes due 2017 lost about 2 points in morning trading after the Armonk, N.Y.-based marketing company reported weak second-quarter numbers.

Another market source saw those bonds decline even further, falling nearly 3 points on the session to just under the 99 level, although there were only a couple of round-lot trades on the day.

Visant, which produces and sells class rings, school yearbooks, related academic products, fragrances, cosmetics and personal care samples for the direct-marketing sector - reported second-quarter earnings of $56.6 million, down from $60.6 million a year earlier.

The first trader also saw the Shingle Springs Tribal Gaming Authority's 9 3/8% notes due 2015 quoted up about 4 points to about the 80 bid level in the wake of apparently favorable numbers reported last week. The Authority, an arm of the Shingle Springs Band of Miwok Indians, runs the Red Hawk casino in El Dorado County, Calif., near Sacramento.

Indicators mixed on session

Statistical indicators of junk-market performance meantime remained mixed on the day.

The Markit Group CDX North American Series 18 High Yield Index lost 3 1/6 point on Monday to finish around 97¾ bid, 97 15/16 offered, after edging up by about 1/16 point on Friday.

The KDP High Yield Daily Index posted a second straight loss Monday, falling 12 basis points to end at 73.85, after dipping by 3 bps on Friday.

Its yield rose for a second straight session, tacking on 5 bps to end at 6.19%, after rising by 4 bps on Friday.

However, the widely followed Merrill Lynch U.S. High Yield Master II Index moved up Monday, breaking a two-session losing streak. It rose by 0.049%, in contrast to Friday's 0.086% retreat.

That lifted its year-to-date return to 9.833%, up from Friday's 9.733% reading, though still off from its peak level for the year of 9.838%, set last Wednesday.

Its yield-to-worst declined to 6.838% from Friday's 6.849%, although it remains marginally above its low yield for the year of 6.808%, also set Wednesday.

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