Levi, CBRE price deals; new MetroPCS gains; Chesapeake churns on bond redemption lawsuit

By Paul Deckelman and Paul A. Harris

New York, March 11 - CBRE Services Inc. came to market on Monday with an upsized $800 million offering of 10-year notes, high-yield syndicate sources said. The real estate company's deal was heard to have priced too late in the session for any kind of aftermarket.

Earlier in the day, blue-jeans maker Levi Strauss & Co. appeared with a quickly shopped $140 million add-on to its existing 2022 bonds. Traders didn't see that new paper trading around, but did quote the existing issue having moved back up to its pre-deal levels.

Both tranches of Friday's massive offering from MetroPCS Wireless Inc. were seen having moved up from where the telecommunications company's new bonds priced. However, its existing bonds were getting crushed.

Apart from the deals actually priced during Monday's session, primaryside players saw a healthy build in the forward calendar.

In the dollar-denominated market, Western Refining Inc. and Belden Inc. announced new deals, and Ceridian Corp. was also heard by the sources to be shopping a deal around. Western's eight-year offering could price as soon as Tuesday, while Belden and Ceridian began roadshows for their respective transactions.

Out of Europe came word that Switzerland's Sunrise Communications AG had also hit the road to pitch a multi-currency deal that includes a dollar tranche to prospective investors. And Britain's North West Electricity Networks Finance plc unveiled plans for a sterling-denominated bond sale.

Away from the new-issue realm, Chesapeake Energy Corp.'s recently very busy 6.775% notes due 2019 were gyrating around again on the news that the natural gas company had filed suit against the notes' trustee, seeking to force it to accept a company redemption of those notes at par.

Overall, traders said the market, apart from the new deals and Chesapeake, was quiet. Statistical indicators of market performance slipped into mixed territory after two straight sessions of across-the-board gains at the tail end of last week.

CBRE upsizes

News volume intensified during Monday's primary market session, which came with drive-by deals, roadshow starts and deal announcements.

Two issuers raised a combined total of $951 million, as each brought a single tranche of junk.

CBRE Services priced an upsized $800 million issue of 10-year senior notes (Ba1/B+) at par to yield 5% on Monday.

The yield printed at the tight end of yield talk set in the 5 1/8% area.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC, HSBC Securities (USA) Inc., Scotia, Barclays and RBS Securities Inc. were the joint bookrunners for the quick-to-market debt refinancing deal, which was upsized from $500 million.

Levi's oversubscribed

In a deal that was heavily oversubscribed - and driven to market by reverse inquiry - Levi Strauss priced a $140 million add-on to its 6 7/8% senior notes due May 1, 2022 (B2/B+) at 108.00 to yield 5.438%, according to a buyside source.

BofA Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners for the quick-to-market deal.

Proceeds, along with cash on hand and a draw on the company's revolver, will be used to prepay Levi Strauss' senior term loan due 2014.

The San Francisco-based apparel maker priced the original $385 million issue at par on April 24, 2012.

Western Refinancing notes

Western Refining intends to attempt the placement of $350 million of eight-year senior notes (expected ratings B2/BB-), which it hopes to price on Tuesday with a yield in the low-to-mid 6% range, according to a buyside source.

Deutsche Bank Securities Inc., BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and RBS Investment Bank are the joint bookrunners.

Proceeds will be used to fund tender for the company's 11¼% notes due 2017 and for general corporate purposes.

Ceridian starts roadshow

Ceridian began a roadshow on Monday for its $400 million offering of eight-year senior notes.

The deal is expected to price on Friday.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are the joint bookrunners.

The Minneapolis-based provider of human resources, transportation and retail information management services plans to use the proceeds to refinance debt.

Belden brings euro deal

St. Louis-based Belden began a roadshow in Europe on Monday for its €200 million offering of 10-year senior subordinated notes.

Joint bookrunner Deutsche Bank will bill and deliver. Goldman Sachs, J.P. Morgan and Wells Fargo are also joint bookrunners.

Proceeds will be used to repay revolver debt and for general corporate purposes.

Sunrise three-part deal

Mobile Challenger Intermediate Group SA, the parent of Switzerland's Sunrise Communications, began a roadshow on Monday in Europe for its €500 million-equivalent offering of six-year senior PIK toggle notes (/B-/B-).

A roadshow is set to take place on Wednesday and Thursday in the United States.

The notes are being offering in dollar-, euro- and Swiss franc-denominated tranches, with tranche sizes to be determined.

Global coordinator Deutsche Bank will bill and deliver. Goldman Sachs is also a global coordinator.

UBS, BNP Paribas, Credit Suisse and Morgan Stanley are the joint bookrunners.

The Zurich-based integrated telecommunications services provider plans to use the proceeds to refinance preferred equity certificates.

NWEN secured notes

England's North West Electricity plans to sell £180 million secured notes (/BB+/).

The deal is being led by Barclays and HSBC.

The Warrington, England-based electricity distribution network operator plans to use the proceeds to refinance debt.

Levi's notes seen firm

In the secondary market, several traders said that they had not seen any actual dealings in the Levi Strauss 6 7/8% notes due 2022, which priced at 108 on Monday as a quickly shopped $140 million add-on to the San Francisco-based apparel company's existing bonds sold nearly a year ago.

However, a market source at another desk said there was some activity in the outstanding issue late in the session.

He quoted those bonds having gone home at 109¼ bid - about the same level the bonds had traded at last week, before the new deal had surfaced. Round-lot volume in the Levi's paper was over $5 million.

The day's other deal, from Los Angeles-based real estate company CBRE Services, priced too late in the session for any kind of immediate secondary activity.

New MetroPCS moves up

A trader said that MetroPCS' 6¼% notes due 2021 moved up to 101½ bid on Monday, versus the par price at which the Dallas-based pre-paid wireless operator had brought that $1.75 billion issue to market on Friday.

He also saw the other half of that giant-sized transaction - $1.75 billion of 6 5/8% notes due 2023 - at 101¼ bid, also up from par at their pricing.

"PCS was up by a point right from the opening," a second trader said.

He saw both tranches opening at bid levels between 100½ and 1011/2. By the end of the day, he was quoting two-sided markets of 101¼ bid, 101½ offered for the 61/4s and 101 bid, 101 1/8 offered for the 6 5/8s.

Existing MetroPCS pummeled

However, that big new deal also had the effect of pushing the company's existing bonds down substantially.

The company's $1 billion of 6 5/8% notes due 2020 were gyrating around during the day between levels as high as 104 bid and as low as 101, a market source.

By the end of the day, the bonds, which had moved up a half-point on Friday to close at 104, slid nearly 3 points to just over the 101 mark. Round lot volume was a busy $12 million-plus, the trader said.

Last week's deals steady

Going back a little further last week, a trader saw little real movement in the bonds, which came to market on Thursday and then firmed solidly in the secondary.

He quoted the biggest of those transactions - Sealed Air Corp.'s new 5¼% senior secured notes due 2023 - at 101 bid, 101½ offered.

The Elmwood Park., N.J.-based producer of plastic packaging materials had priced a quickly shopped $425 million of the bonds on Thursday at par, and the bonds were seen having moved up more than a point in initial aftermarket dealings.

He saw last week's best-performing new deal - Acadia Healthcare Co. Inc.'s 6 1/8% notes due 2021 - at 102 5/8 bid, 103 5/8 offered.

The Franklin, Tenn.-based provider of behavioral health care services priced its $150 million issue at par, and it quickly firmed to above the 102 bid level, although traders said that there was not too much activity in the smallish offering.

Another good performer from last week - Coinstar Inc.'s 6% notes due 2019 - was quoted at 101¾ bid, 102¼ offered.

The Bellevue, Wash.-based operator of the popular Redbox movie- and video-game-rental kiosks came to market with a $350 million issue of those bonds, pricing them at par after having upsized the transaction from an originally announced $300 million.

And Claire's Stores Inc.'s '6 1/8% senior secured notes due 2020 settled in around 101 1/8 bid, 101 5/8 offered.

The Hoffman Estates, Ill.-based specialty retailer had priced its quickly shopped $210 million of those bonds at par on Thursday, and they were initially seen having moved up to bid levels between 101 3/8 and 101 7/8, although traders said on Friday that they had backed off those peak levels a little.

One of last week's deals seen having gained a little bit of ground on Monday was MasTec Inc.'s 4 7/8% notes due 2023, which picked up about a half-point to finish at 100½ bid on respectable volume of over $6 million.

The Coral Gables, Fla.-based infrastructure construction company had priced that $400 million of bonds at par on Wednesday, after upsizing the deal from $350 million. Traders last week said that the new issue seemed to be having a little struggle to gain traction, sometimes dipping below their issue price before finally coming back.

However, one deal that was continuing to hit a little aftermarket turbulence was Los Angeles-based commercial aircraft leasing company International Lease Finance Corp.'s $1.25 billion two-part deal, which had also priced on Wednesday.

A market source saw its $500 million of 4 5/8% notes due 2021 having eased to 100 1/8 bid from levels as high as 101 3/8 at the end of last week, although he said that meaningful volume - meaning round-lot trades - was light, at only about $2 million or $3 million, versus busy dealings at somewhat higher levels in smaller odd lots.

The split-rated (Ba3/BBB-/BB-) had come to market as a quickly shopped drive-by offering at 99.994 to yield 4 5/8%.

The source also saw the other part of that deal - its $750 million of 3 7/8% notes due 2018 - as unchanged on the day, at 100¼ bid.

ILFC - for now a wholly-owned subsidiary of insurance giant American International Group - priced those bonds at 99.996 to yield 3 7/8%. They were seen having struggled from the get-go, quoted on Friday at bid levels between 99 7/8 and 100, or a little easier.

Chesapeake churns on lawsuit

Away from the new-deal arena, the most notable credit was Chesapeake Energy's 6.775% notes due 2019. Over $34 million of those bonds was seen having traded on Monday, easily tops in Junkbondland.

Those bonds have been active over the past week or so, with traders citing market speculation about whether the Oklahoma City-based natural gas operator would exercise its rights under the bond's indenture to call them for redemption at par plus accrued interest.

Chesapeake sold $1.3 billion of those bonds in February 2012. The indenture contains a provision allowing for such a special call at any time during the period that began on Nov. 15 and which formally ends this coming Friday.

In recent days, the bonds had moved sharply above the par level, trading as high as 104-105 - a sign, the traders said, that the market believes that the company would not call the bonds at par during the special-call period.

Once that special call period ends, Chesapeake can still call the bonds, but it would have to do so at a considerably more expensive make-whole price, which by some estimates could add as much as $400 million more to the cost of taking out the whole issue.

However, late in the day on Friday, Chesapeake announced that it had filed legal action with the federal court in Manhattan, naming the notes' trustee, the Bank Of New York Mellon Trust Corp., NA, as defendant, and seeking a summary judgment from the court, asking that it confirm that a notice to redeem issued on or before March 15 "will be timely and effective to redeem the notes at par."

According to prospectus documents the company filed with the Securities and Exchange Commission at the time it sold the bonds, the indenture says, "We may redeem the notes pursuant to the special early redemption provisions so long as the notice of redemption is given during the early redemption period "

However, some in the marketplace believe that the company, at this point, cannot invoke the special redemption provision any longer, noting that elsewhere in the prospectus, where the redemption procedures are outlined, there is a stipulation that "notices of redemption will be mailed at least 30 but not more than 60 days before the redemption date to each holder of the notes to be redeemed at its registered address."

Belief in the latter provision was seen having underpinned the recent rise in the bonds to well above the par redemption price.

On Monday, in reaction to the news of the filing of Chesapeake's action - effectively seeking to force BNY to accept the early special redemption at par - those bonds, which had gone home late Friday at 105¼ bid, plunged as low as 103½ in initial round-lot dealings.

However, by the end of the day, a market source said that the bonds had risen back up to well over the 105 bid mark in busy round-lot dealings

Market indicators turn mixed

Overall, statistical junk performance indicators turned mixed on Monday, after having been higher across the board for the two previous sessions before that and for the third time in four sessions last week.

The Markit Series 19 CDX North American High Yield index gained a quarter-point on Monday to end at 104 5/32 bid, 104 9/32 offered - its third consecutive gain - after having risen by 3/8 of a point on Friday.

But the KDP High Yield Daily index was marginally lower on Monday, snapping a four-session winning streak. It eased by 1 basis point to end at 75.56, after having gained 4 bps on Friday.

The index's yield was unchanged at 5.53%, after having declined by 2 bps on Friday, its fourth straight narrowing.

However, the widely followed Merrill Lynch High Yield Master II index posted its ninth consecutive advance, rising by 0.078% on Monday, on top of Friday's 0.034% gain.

The latest gain lifted its year-to-date return to 2.368%, a new peak level for 2013 so far, and marked the fifth consecutive session it has reached a new high for the year. The previous high water mark was 2.288%, set on Friday.

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