Cott, Netflix, Colt price deals, Netflix jumps in trading; Belo slates offering; Navistar eases

By Paul Deckelman and Paul A. Harris

New York, Nov. 3 - Cott Beverages Inc., Netflix Inc. and Colt Defense LLC were heard by high yield syndicate sources to have each successfully priced new deals on Tuesday. The Cott and Colt deals were each upsized.

Netflix did not upsize, but was seen having jumped several points from its issue price in preliminary aftermarket trading, although the Los Gatos, Calif.-based DVD rental company's new bonds later came a little off those initial levels, while still holding onto most of their early gains.

Also on the new-deal front, Belo Corp. announced plans to sell between $250 million and $275 million of seven-year notes. North American Energy Partners will be doing a Canadian-dollar deal, while British bookmaker William Hill plc is betting investors will go for its sterling bonds

Price talk emerged on another familiar U.K. name, cable and phone operator Virgin Media Inc.

General Maritime Corp. was heard to have done a little tinkering with the terms of its $300 million eight-year deal, extending the call protection for an additional year.

Traders saw fairly lackluster dealings in the secondary market, even in some of the recently priced note offerings. Navistar International Inc.'s mega-deal continued to struggle, losing at least another point on the session.

CIT Group Inc.'s bonds remained a fixture of the market, even though volume was reduced from previous sessions and the bonds pretty much traded within the same context they've held ever since the troubled New York-based lender filed for Chapter 11.

Overall cash high-yield bonds ended the Tuesday session unchanged to down 1/8 point, according to an asset manager from the Midwest, whose portfolio includes junk bonds.

In the primary market three issuers priced a combined $665 million on Tuesday, each one bringing a single tranche.

Colt Defense upsizes

Colt Defense LLC and Colt Finance Corp. priced an upsized $250 million issue of 8¾% eight-year senior notes (B2/B) at 98.591 to yield 9%.

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

J.P. Morgan and Morgan Stanley were joint bookrunners for the debt refinancing deal.

Cott tight to talk

Also pricing an upsized deal on Tuesday was Cott Beverages Inc.

The Tampa, Fla.-based non-alcoholic beverage company priced a $215 million issue of 8 3/8% eight-year senior unsecured notes (Caa1/B) at 98.575 to yield 8 5/8%.

The yield printed at the tight end of the 8¾% area yield talk. The issue price came within the context of the 1 to 2 points of discount talk.

Barclays Capital Inc. was the left bookrunner for the deal which was upsized from $200 million. Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. were joint bookrunners.

Proceeds, together with cash and borrowings from the company's ABL facility, will be used to retire the company's outstanding 8% senior subordinated notes due 2011.

The notes traded Tuesday afternoon at 99½ bid, par offered, according to a buy-side source.

Later they were 99 5/8 bid, par offered, according to a source close to the deal who commented that Cott saw a solid book of orders.

Netflix plays to big book

Meanwhile Netflix Inc. priced a $200 million issue of eight-year senior unsecured notes (Ba2/BB-) at par to yield 8½% on Tuesday.

The yield printed on top of yield talk. The issue price came rich to the discount talk of up to 2 points.

J.P. Morgan ran the books for the debt refinancing and general corporate purposes deal.

The par-pricing deal was seen trading as high as 102½ bid in the secondary market, according to a buy-side source who had the new Netflix 8½% notes due 2017 going out at 101½ bid, 102½ offered.

The buzz on the deal was that it played to an order book 10-times oversubscribed.

Real demand

Later on a syndicate banker professed a certain amount of disdain for talk of such massive order book sizes, arguing that such amounts do not represent "allocatable demand," and are vestiges of a hot market.

For example, the banker said, a $1 billion hedge fund might put in an order for $50 million of bonds, knowing it would never receive an allocation anywhere near that large.

Hence, the syndicate banker reasoned, massive book sizes stem from a considerable number of padded orders from small accounts, and as a result are not all that useful in assessing the true amount of demand for a deal.

Virgin talks £500 million

Elsewhere Tuesday, Virgin Media Finance plc set price talk for its £500 million equivalent two-part offering of 10-year senior unsecured notes (B2/B).

The New York City-based telecommunications firm talked the proposed dollar-denominated notes at 8¾% area, and talked the sterling-denominated notes at 9¼% area.

The deal is set to price on Wednesday, at the New York City open.

Deutsche Bank, BNP Paribas, Calyon Securities, Goldman Sachs, HSBC, JP Morgan, RBS Securities and UBS Investment Bank are the underwriters for the debt refinancing.

Meanwhile General Maritime Corp. restructured its $300 million offering of eight-year senior unsecured notes (B3/B) by adding a year of call protection, increasing the non-call period to four years from three years.

The J.P. Morgan and Goldman Sachs deal is set to price on Thursday.

And Norwegian Cruise Line is expected to price its $450 million offering of seven-year senior secured notes (B3/B+) on Wednesday morning, according to an informed source.

Initially the deal was expected to price Tuesday.

Price talk of 11% area with 2 to 3 points of original issue discount surfaced on Monday.

Deutsche Bank Securities, Barclays Capital, Citigroup and J.P. Morgan are joint bookrunners for the debt refinancing deal.

William Hill plans bearer bonds

Finally, London-based betting and company, William Hill plc is now in the market with a £200 million to £250 million offering of senior unsecured bearer bonds (Ba1/BB+), according to an informed source.

Barclays Capital and RBS Securities are leading the Regulation S offering.

Bond shortage

In the secondary market trader said that "it was painful trying to trade some of this stuff for a while, simply because the allocations were so bollixed up that you'd see something and it wouldn't be there, and guys are running around, trying to hit whatever bid they can.

"There just weren't that many tradable bonds."

New Netflix nets gains

A trader said that Netflix, Inc.'s new 8½% senior notes due 2017 got as good as the 102½ area, "but then dropped back to around the 101-101½ area.

That was still up significantly from par, where the company priced its $200 million of paper to yield 8½%.

Another trader said that around midday, the new Netflix paper hit 101¾ "in a couple of spots - but we never really saw anything after that."

Cott rises modestly

A trader said that Cott Beverage's new 8 3/8% notes due 2017 had "a little flurry of trading " - which took the bonds up "right out of the box" to around 99¼ bid, 99¾ offered, up about a point on the day.

Another trader said the bonds were initially offered at 100¼ bid. However, they then dropped back, first to 99½ bid, par offered, then to 99½ bid, all on "small volume."

Slow start for Colt

A trader said that he "had not seen much trade at all" in the new Colt Defense 8¾% notes due 2017, which priced at 98.591 to yield 9%. He saw the bonds quoted around 981/2-99, but observed that "there just hasn't been a lot of trading."

A second trader said that late in the day, "most of the activity in the last hour has been in Colt."

He saw the Hartford, Conn.-based military small-arms producer's new bonds get as good as 99¾ after their pricing, but then saw them gradually come down - first to 99½ bid, "then the bid got hit," and the issue ended at 98¾ bid, 98 7/8 offered.

RSC Rentals little seen

A trader said that RSC Equipment Inc.'s $200 million of 10¼% notes due 2019 "traded about three times, and then was put away. I just haven't seen it today."

The Scottsdale, Ariz.-based construction and industrial equipment rental company's $200 million of notes priced at 98.447 late in Monday's session to yield 10½%.

Another trader quoted the bonds initially at 98 5/8 bid, 99 1/8 offered, but said they "quieted down," and finished at 98 bid, 98¾ offered.

Navistar is nowhere

A market source said that Navistar International's recently priced 8¼% notes due 2021 "continue to drift," quoting them down by "another points," at 96¼ bid, 96¾ offered.

The Warrenville, Ill.-based bus and truck manufacturer's $1 billion issue priced at 96.328 on Oct. 22 to yield 495 bps over Treasuries.

Market indicators mostly off again

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 91½ bid, 92 offered, after having eased by ¼ point on Monday.

Meanwhile, the KDP High Yield Daily Index dropped by 18 basis points on Tuesday to end at 69.14, after having fallen by 12 bps in Monday's dealings. Its yield widened by 5 bps to 8.77%, continuing the trend seen on Monday, when it fell by 12 bps.

In the broader market, though, advancing issues held their lead over decliners for a fourth consecutive session on Tuesday, although as had been the case the previous three days, they were in front only a relatively narrow margin of several dozen issues out of more than 1,500 tracked.

Overall market activity, as measured by dollar-volume levels, was up nearly 5% from Monday's pace.

A trader, sensing the quiet mood in the market, opined that "companies that reported [earnings], like Chesapeake [Energy Corp.], and Cablevision Systems Corp., there just wasn't trading activity in any of the names."

He did some selling among long-dated bonds of retailer, like J.C. Penney and Macy's - but all on small size, more portfolio cleanup than anything else.

"There were very few bid lists, or offer-wanted lists. It was really just a heavy-lifting day - there wasn't a lot of activity, and everybody was competing for the same trades, it seemed. "

Another trader said "nothing jumped out that was too terribly exciting."

CIT busy, though unmoved

A trader said that activity in CIT was "just the usual - you're seeing pieces trade here and there."

He said that the company's 5.20% notes due 2010 traded in a 68-69ish context - about the same as on Monday - and got as tight as 68-68½ late in the day, with "some pretty good volume" of at least $17 million of the notes having traded.

He said that its CIT Group Funding Co. of Canada 5.60% notes due 2011 had "good volume," and most of it was inside of 951/2-961/2. He said that the Trace bond-tracking system showed $23.5 million of the bonds having traded, "so add a couple of million [dollars of trades which don't show up on Trace] to that."

Another market source meantime saw the Canadian bonds up by as much as 4 points on the day to end around 95 bid, in brisk trading

A trader called the bonds "one of the busier issues," but added that "it was still very quiet, in comparison to where it had been."

The New York-based company filed for bankruptcy over the weekend and, in a press release announcing the filing, said it was hoping for a quick emergence. According to a release issued Tuesday, it seems that the company will get its wish, as a hearing to consider confirming the company's plan of reorganization was scheduled for Dec. 8.

The bankruptcy judge overseeing the case also allowed some unusual requests at the company's first-day motion hearings. The judge granted a request to allow the company to use intercompany loans in an effort to keep its customers funded.

Stephanie Rotondo contributed to this report

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