Gannett, MEG Energy bring new issues; Hertz lowers outlook, bonds dip; funds gain $3.1 billion

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., Sept. 26 - Seven issuers in the hard-charging dollar-denominated junk market raised a total of $3.62 billion in a combined eight tranches of notes on Thursday.

Gannett Co., Inc. upsized its deal to $1.25 billion in two tranches, one of which priced at par and the other at a discount.

MEG Energy Corp. also upsized. It priced $800 million of notes due 2024 to yield 7%.

Titan International Inc. brought $400 million of seven-year notes to yield 6 7/8%, pricing on top of yield talk.

The secondary high-yield bond market had a firm tone on Thursday, according to market sources.

One trader noted that the focus remained on new issues.

Away from new issues, Cemex SAB de CV's existing bonds moved up on the back of a $1.4 billion two-tranche bond offering completed during the session.

Hertz Global Holdings Inc. was softer as the company cut its full-year outlook, blaming less demand from business travelers.

Caesars Entertainment Corp. continued to be active as the company said it had amended its refinancing plans, raising the amount of first-lien notes and lowering the amount of second-lien notes expected to be sold. The company also said it was shrinking a planned bank loan.

J.C. Penney Co. Inc. was in the news again. News outlets reported that the company's chief executive had said the company had no need to raise cash this year. However, after those reports - and after the market closed - it was learned that the retailer had commenced an 84 million-share stock sale.

Funds take in $3.1 billion

High-yield funds saw $3.1 billion of inflows for the week to Wednesday, according to a market source who was citing a weekly report from Lipper-AMG.

It follows the previous week's $1.4 billion inflow.

For the year so far, inflows have now been seen in 23 weeks, against 16 weeks of outflows, according to a Prospect News analysis of the fund-flow numbers.

Although the positive weeks outnumber the negative ones, cash amounts tell a much different story, as year-to-date flows remain in the red.

For 2013 to date, net flows are negative $2.5 billion, factoring in the latest week's strong positive number, according to the analysis.

Gannett prices $1.25 billion

Gannett priced an upsized $1.25 billion two-part senior notes transaction (Ba1/BB) in a Thursday drive-by, according to a market source.

The overall deal size was increased from $1 billion.

It included a $600 million tranche of 5 1/8% six-year notes that priced at 98.724 to yield 5 3/8% and a $650 million tranche of 6 3/8% 10-year notes that priced at 99.086 to yield 6½%.

Both tranches were upsized from $500 million.

Both yields printed on top of yield talk.

J.P. Morgan Securities LLC, Citigroup Global Markets, Barclays, Mitsubishi, Mizuho, SunTrust Robinson Humphrey and US Bancorp were the joint bookrunners for the quick-to-market transaction.

The McLean, Va.-based media and marketing solutions company plans to use the proceeds to fund the merger with Belo Corp. and for general corporate purposes.

MEG Energy upsizes

MEG Energy priced an upsized $800 million issue of senior notes due March 31, 2024 (B1/BB) at par to yield 7% on Thursday, according to a syndicate source.

The issue was upsized from $750 million.

The yield printed at the wide end of yield talk set in the 6 7/8% area.

Barclays, BMO Securities and Credit Suisse Securities (USA) LLC were the joint bookrunners for the quick-to-market deal.

The Calgary, Alta.-based pure play oil sands company plans to use the proceeds for general corporate purposes including its 2014 capital program.

Titan secured deal

Titan International priced a $400 million issue of seven-year senior secured notes (B1/B) at par to yield 6 7/8% on Thursday, according to a press release issued by the company.

The yield printed on top of yield talk, a market source said.

Goldman Sachs & Co. and Jefferies LLC were the joint bookrunners.

The Quincy, Ill.-based supplier of wheels, tires, assemblies and undercarriage products for off-highway equipment plans to use the proceeds for general corporate purposes, which may include taking out any remaining 2017 notes and financing potential future acquisitions.

Avanti six-year secured notes

Avanti Communications Group plc priced a $375 million issue of six-year senior secured notes (Caa1/B) at par to yield 10% on Thursday, according to a syndicate source.

Jefferies LLC and UBS Investment Bank were the joint global coordinators. Jefferies, UBS and Barclays were the joint bookrunners.

The London-based satellite broadband internet services provider plans to use the proceeds to repay debt and for general corporate purposes.

Sinclair drives by

Sinclair Television Group, Inc., a subsidiary of Sinclair Broadcast Group, Inc., priced an upsized $350 million issue of eight-year senior notes (expected B1/confirmed B) at par to yield 6 3/8% in a Thursday drive-by deal, according to a market source.

The deal was upsized from $300 million.

The yield printed on top of yield talk.

Deutsche Bank Securities Inc., JPMorgan and SunTrust Robinson Humphrey were the joint bookrunners.

The Baltimore-based television broadcasting company plans to use the proceeds, along with proceeds from a proposed amendment to Sinclair Television's existing credit facility and cash on hand, to fund the redemption of Sinclair Television's 9¼% second-lien notes due 2017.

Artesian seven-year deal

Artesyn Technologies, Inc. priced a $250 million issue of seven-year senior secured notes (B3/B) at par to yield 9¾% on Thursday, according to a syndicate source.

The yield printed at the wide end of the 9½% to 9¾% yield talk.

BofA Merrill Lynch was the left bookrunner. Goldman Sachs was the joint bookrunner.

Proceeds, along with cash equity from Platinum Equity, will be used to fund the acquisition of the majority of the capital stock of Artesyn from Emerson Electric Co.

The issuing entity will be Artesyn Escrow, Inc., which will be merged with and into Boca Raton, Fla.-based Artesyn Technologies, a provider of application-specific power conversion products and a manufacturer of microprocessor-based boards and systems.

Clayton Williams atop talk

Clayton Williams Energy, Inc. priced a $250 million add-on to its 7¾% senior notes due April 1, 2019 (B3/B-) at par to yield 7¾% on Thursday, according to an informed source.

The reoffer price came on top of price talk.

The add-on represents a revision to the structure; previously the company had been marketing a $250 million offering of new seven-year non-call-three senior notes.

RBS Securities Inc., JPMorgan, Mitsubishi UFJ Securities USA and Wells Fargo Securities LLC are the joint bookrunners for the add-on.

The Midland, Texas-based oil and gas exploration and production company plans to use the proceeds to repay bank debt.

The original $300 million issue of 7¾% notes priced at par in March 2011.

A previous $50 million add-on priced at 99 to yield 7.919% in April 2011.

Medical Properties prices

The Thursday session also saw action in Europe.

Medical Properties Trust, Inc. priced a €200 million issue of seven-year senior notes (/BB/) at par to yield 5¾% on Thursday, according to a prospectus filed with the Securities and Exchange Commission.

Lead left bookrunner BofA Merrill Lynch will bill and deliver. Deutsche Bank and JPMorgan were joint bookrunners.

Proceeds will be used to finance the acquisition of 11 post-acute facilities in Germany from RHM Klinik-und Altenheimbetriebe GmbH & Co. KG and for general corporate purposes.

The issuing entities are MPT Operating Partnership, LP, the operating partnership of Birmingham, Ala.-based Medical Properties Trust, and the operating partnership's wholly owned subsidiary MPT Finance Corp.

Medical Properties Trust is a real estate investment trust that acquires and develops health-care facilities.

Caesars overhauls refinancing

Caesars Entertainment Resort Properties, LLC overhauled up to $5.25 billion of bond and bank financing currently in the market and set price talk on Thursday, according to a syndicate source.

The bond portion of the financing was increased to a range of $2.25 billion to $2.75 billion from a previous overall size of $1.85 billion.

It includes an upsized $1 billion to $1.5 billion of seven-year first-lien notes (B2/B), non-callable for three years and talked to yield 7¼% to 7½%. The first-lien notes tranche was upsized from $500 million

A downsized $1.25 billion tranche of eight-year second-lien notes (Caa2/CCC+), non-callable for three years, is talked to yield 10¼% to 10½%. The second-lien notes tranche was downsized from $1.35 billion.

The company also downsized its first-lien term loan from $3 billion to a range of $2 billion to $2.5 billion.

Books for the bond offer closed at the close of business on Thursday. Commitments for the term loan are due at noon ET on Friday.

Terms are expected thereafter.

Citigroup Global Markets Inc., BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank, JPMorgan, Goldman Sachs, Macquarie, Morgan Stanley & Co. LLC and UBS are the joint bookrunners for the Rule 144A and Regulation S deal bond.

Proceeds, along with $100 million of proceeds from a 10 million share offering of common stock from Caesars Entertainment Corp., will be used to help refinance about $4.4 billion of CMBS debt and the $450 million senior secured credit facility entered into by Octavius Linq Holding Co. LLC, an indirect subsidiary of Caesars.

Caesars is a Las Vegas-based casino-entertainment company.

Talking the deals

Dealers set the table for a busy Friday.

Howard Hughes Corp. talked its $500 million offering of eight-year senior notes (Ba3/B) to yield in the 6¾% area, an informed source said on Thursday.

Books close at noon ET on Friday, and the deal is set to price thereafter.

Credit Suisse is the bookrunner for the Rule 144A for life offering.

Forum Energy Technologies, Inc. talked its $300 million offering of eight-year senior notes (confirmed Ba3/expected BB) to yield in the 6 3/8% area, a market source said on Thursday.

Books close at 11 a.m. ET on Friday, and the deal is expected to price thereafter.

JPMorgan, Wells Fargo Securities LLC, BofA Merrill Lynch, Citigroup and Deutsche Bank are the joint bookrunners. HSBC Securities (USA) LLC and Comerica are the co-managers.

And Allegion US Holding Co. talked its $300 million offering of eight-year senior notes (expected ratings Ba2/BB+) to yield in the 5¾% area on Thursday, according to a market source.

The deal is set to price on Friday.

Goldman Sachs, JPMorgan, BNP Paribas, BofA Merrill Lynch, Citigroup and Credit Suisse Securities are the joint bookrunners.

Market ends with firm tone

The high-yield bond market was trending higher on Thursday, as evidenced by closely watched market indexes.

The KDP High Yield Daily index moved up to 73.7 with a yield of 6.07%. That compared to the midweek reading of 73.68, with a yield of 6.06%.

The CDX North American High Yield index meantime moved up 1/8 of a point to 106 1/16 bid, 106 7/32 offered.

Cemex rises

Cemex paper was on the rise as the company completed a $1.4 billion two-tranche bond offering and announced a tender offer.

A trader said the 9 7/8% notes due 2019 put on more than a point to close around 1121/2. The 9% notes due 2018 ended the day a point higher around 109.

The Mexican cement manufacturer sold $1 billion of 7¼% senior secured notes due 2021 and $400 million of floating-rate senior secured notes due 2018 on Thursday.

The floating-rate notes were priced at par to yield Libor plus 475 basis points.

The company also began tender offers for any and all of the $825 million 9½% senior secured notes due 2016 and up to €150 million of the €350 million outstanding 9 5/8% senior secured notes due 2017, both issued by Cemex Finance LLC.

Hertz cuts outlook

Hertz Global Holdings saw its bonds "getting hit," a trader said, as the company cut its full-year outlook.

The trader placed the 6¾% notes due 2019 at 1061/2, off almost a point on the day. However, he said the 7 3/8% notes due 2021 were unchanged around 108 3/8.

The rental car company said the downward revision was due to weaker-than-expected demand.

For the year, Hertz is forecasting total earnings of $1.68 to $1.78 per share on revenues of $10.8 billion to $10.9 billion. In February, the company had projected $1.78 to $1.88 per share on revenues of $10.85 billion to $10.95 billion.

Speaking at the MKM Entertainment & Leisure Conference in New York on Thursday, Hertz chief financial officer Mark Frissora said a decline in airline capacity and hotel bookings from business travelers had impacted car rentals. He noted that rentals to leisure travelers were on the rise.

Caesars amends terms

Caesars Entertainment continued to weaken in Thursday trading, a day after the company held an investor lunch to discuss its $1.85 billion bond offering and other refinancing efforts.

One trader called the 10% notes due 2018 down more than a point, trading around 533/4. Another trader, however, said the debt was unchanged, pegging the notes in a 54 to 55 context.

A third market source called the issue up 1½ points at 55¼ bid.

As previously reported, Caesars is looking to refinance about $4.4 billion of CMBS debt and the $450 million senior secured credit facility entered into by Octavius Linq Holding Co. LLC, an indirect subsidiary. As such, the company is looking to sell $1.85 billion of senior secured notes.

The deal was said to include a $500 million tranche of seven-year first-lien notes (B2/B) and a $1.35 billion tranche of eight-year second-lien notes (Caa2/CCC+). Both tranches come with three years of call protection.

However, on Wednesday the Las Vegas-based casino operator said it was upping the amount of first-lien notes to between $1 billion and $1.5 billion and trimming the second-lien notes sale to $1.25 billion.

The company also said it was reducing a planned bank loan to between $2 billion and $2.5 billion from $3 billion.

Caesars also announced on Wednesday that it was selling 10 million shares of common stock. Credit Suisse Securities (USA) is leading the stock sale.

JCPenney rebounds

JCPenney was "topical again," a trader said, as it was reported that Myron Ullman, chief executive officer, had said that the struggling retailer was not looking to raise cash this year.

Ullman's reported comments came on the heels of a Goldman Sachs analyst report that stated the company would likely need more liquidity in the near term.

Despite Ullman's efforts to assure investors, it might have been all for naught: After the bell, the company announced that it was selling 84 million common shares.

But ahead of the stock sale news, JCPenney's debt was experiencing a bit of a rebound, according to traders.

One trader said the 5.65% notes due 2020 rose "almost a point" to 74 5/8. Another trader said the issue was "pretty active," moving up to around 75, versus 73½ previously.

The second trader also saw the 6 3/8% notes due 2036 at 68½ bid, 69 offered, compared to levels around 67 on Wednesday.

A third source placed the 5.65% notes at 75½ bid, up a deuce on the day.

Proceeds from the stock sale will be used for general corporate purposes, the company said.

JCPenney is based in Plano, Texas.

Alcatel continues to buzz

Alcatel-Lucent paper continued to rise as rumors of a possible tie-up with Nokia Corp. continued to swirl around.

A trader said the 6.45% notes due 2029 were a point better at 853/4. Another source also placed the bonds at that level.

Renewed chatter of a possible buyout from Nokia began to circulate on Wednesday. The companies have gone back and forth several times in recent years and the latest buzz - that Nokia is interested in buying Alcatel's wireless unit - comes on the back of Nokia's sale of its handset unit to Microsoft Corp.

Alcatel is a Paris-based telecommunications company.

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