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Charter CCO Holdings places two-part $1B high-yield bond offering at talk; terms

Charter Communications’ CCO Holdings this afternoon completed a two-part offering of senior notes to support term loan repayments. Terms were finalized at talk and at the target size of $1 billion, split equally. A Deutsche Bank-helmed bookrunner octet includes Bank of America, Citi, Barclays, Credit Suisse, J.P. Morgan, Morgan Stanley, and UBS, according to sources. Terms:

Issuer Charter CCO Holdings
Ratings BB-/B1
Amount $500 million
Issue senior notes (144A)
Coupon 5.25%
Price 100
Yield 5.25%
Spread T+581
FRN eq. L+565
Maturity March 15, 20201
Call nc3 @par+75% coupon
Trade Feb. 28, 2013
Settle March 14, 2013 (t+10)
Books DB/BAML/CITI/Barc/CS/JPM/MS/UBS
Px talk 5.25% area
Notes
Issuer Charter CCO Holdings
Ratings BB-/B1
Amount $500 million
Issue senior notes (144A)
Coupon 5.75%
Price 100
Yield 5.75%
Spread T+386
FRN eq. L+877
Maturity Sept. 1, 2023
Call nc5
Trade Feb. 28, 2013
Settle March 14, 2013 (t+10)
Books DB/BAML/CITI/Barc/CS/JPM/MS/UBS
Px talk 5.75% area
Notes
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Isle of Capri Casinos high-yield bonds price at par to yield 5.875%; terms

Isle of Capri Casinos this afternoon completed an offering of senior notes via bookrunners Wells Fargo, Credit Suisse, and Deutsche Bank, according to sources. Terms came tight to talk and at the target size, and an early read from the gray market points to, if anything, merely a modest gain on the break, sources add. Note that it’s the fashionable deal structure of late, with the first call premium at par plus 75% coupon to balance the issuer-friendly short schedule. Proceeds will be used to pay down term debt. Terms:

Issuer Isle of Capri Casinos
Ratings B/B3
Amount $350 million
Issue senior notes (144A)
Coupon 5.875%
Price 100
Yield 5.875%
Spread T+444
FRN eq. L+428
Maturity March 15, 2021
Call nc3 @ par+75% coupon
Trade Feb. 28, 2013
Settle March 5, 2013 (t+3)
Books WFS/CS/DB
Co’s. USB, CapOne
Px talk 6% area
Notes first call par+75% coupon.
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High yield mutual funds see 5th straight week of cash withdrawals

Data from EPFR Global show a $211 million cash outflow from U.S.-domiciled high-yield mutual funds and exchange-traded funds in the week ended Feb. 27, by the weekly reporters only. That is the fifth consecutive negative reading, for an outflow of $2 billion over the span, and it drags the year-to-date figure deeper into the red, at negative $478 million.

However, the outflow is again ETF-heavy, which may suggest fast money exiting the asset class via the more-liquid securities and/or hedging against declines in the broad secondary high-yield market. Indeed, in today’s reading there was an $88 million redemption from ETFs, or 42% of the outflow, and if not for heavy ETF outflows, the year-to-date figure would actually be an inflow of $1.1 billion.

In contrast, one year ago at this point in February, the figure was a whopping $12.8 billion of inflows, split almost evenly between the two segments.

Regardless of intent suggested by cash flow amid specifics of the weekly report, the negative reading drags the four-week trailing average down to negative $476 million, from negative $453 million last week and positive $441 million three weeks prior. The current reading is a 13-week low, or the deepest in the calculation since the first week in December as the market was climbing out of the November trough.

In today’s reading, the total assets of the weekly reporter sample were $196.3 billion, versus approximately $196.4 billion last week, which, after stripping out the outflow figure, shows a $129 million expansion during the week, which is essentially unchanged.

In 2012, total assets excluding cash inflows rose 32%, to $191.1 billion, and in 2011, total assets excluding cash inflows rose 18%, to $143.8 billion. – Matt Fuller

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As M&A deals flourish, Freeport-McMoran launches year’s largest high-grade bond offering

Freeport-McMoRan Copper & Gold (FCX) today launched a M&A-driven $6.5 billion offering across four tranches of 144A/Reg S notes to back two large acquisitions, setting the largest offering since AbbVie placed $14.7 billion in early November to back its spin-off from Abbott Laboratories. Spreads were set at T+162.5 for $1.5 billion of five-year notes; at T+187.5 for $1 billion of seven-year notes; at T+200 for $2 billion of 10-year notes; and at T+237.5 for $2 billion of 30-year bonds, all representing the narrow end of guidance ranges, sources said.

Four issuers priced deals totaling $6 billion so far this year, including Vodafone earlier this month, and bank issuers Bank of AmericaJPMorgan Chase, and Goldman Sachs last month. Intel placed $6.175 billion across four tranches on Dec. 4 to back share repurchases.

Infrequent borrower FCX last February placed $3 billion at lower implied spreads and yields backing the redemption of the same amount of high-coupon 8.375% notes due 2017, including 1.4% notes due 2015 at T+80, 2.15% notes due 2017 at T+135, and 3.55% notes due 2022 at T+160. While the 2017 issue traded today at a similar G-Spread of 134 bps, the 2022 issue traded today at G-Spreads in the T+190s, according to MarketAxess.

In early December, the company announced that it would buy Plains Exploration & Production (PXP) and McMoRan Exploration for roughly $20 billion, including assumed debt. Cash and stock considerations total roughly $6.9 billion for PXP, and $2.1 billion for McMoRan, in which FCX and PXP already hold a 36% stake. The financing structure included $9 billion of cash and stock, and $9.5 billion of incremental debt. In January, J.P. Morgan launched a pro rata debt package including a $4 billion, five-year delayed-draw A term loan, a $3 billion, five-year revolver, and a $5.5 billion, 364-day bridge loan. J.P. Morgan committed to provide $9.5 billion of bridge facilities in December.

As reported, active bookrunners for today’s deal are BAML and J.P. Morgan, along with passive bookrunners BNP and Citi. The offering includes a special mandatory-redemption provision for the three longer tranches at 101 if the deal does not close by June 5, though that deadline could be extended by three months, according to reports. The issues, with an expected BBB/Baa3/BBB profile, carry registration rights.

Phoenix, Ariz.-based Freeport-McMoRan Copper & Gold primarily explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, such as rhenium and magnetite.

Ratings agencies affirmed the company’s ratings on the news of the acquisitions, though S&P revised its outlook on the BBB rating to negative, from stable. S&P noted that – after FCX reduced debt by more than $3.5 billion since 2009, to $4.8 billion – adjusted pro forma total debt will rise to roughly $22 billion as a result of the transaction, bumping debt to EBITDA to 2.5 times and funds from operations to debt to 27%, or “levels we would consider to be more consistent with an ‘intermediate’ financial-risk profile.” – John Atkins

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Europe: Avis Budget 2021 high-grade bonds price at par to yield 6%; terms

Avis Budget today placed €250 million of eight-year (non-call three) unsecured notes through Citi (B&D), Credit Agricole CIB, Deutsche Bank, and J.P. Morgan as bookrunners, alongside co-managers Mitsubishi UFJ, Natixis, and UniCredit. The bonds priced to yield 6%, in line with guidance of 6% area. Proceeds, along with $200 million from a new $900 million term loan, will finance the company’s acquisition of Zipcar for $500 million. Bond proceeds will be put into escrow and if the buyout does not complete, funds will be returned to investors at par. Terms:

 

Issuer Avis Budget
Ratings B/B2
Amount €250 million
Issue Unsecured notes
Coupon 6%
Price 100
Yield 6%
Spread n/a
Floating eq. n/a
Maturity March 1, 2021
Call nc3
Trade Feb. 28, 2013
Settle March 7, 2013
Books Citi (B&D), CA, DB, JPM
Co-managers MUFJ, Natixis, UC
Px talk 6% area
Notes Call schedule:
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JC Penney long bonds, CDS hit hard after 4Q report

jc penney logoJ.C. Penney long-tenor bonds, shares and CDS were hit hard this morning as investors dissect the issuer’s disappointing year-end results. The 6.375% bonds due 2036 shed four points, to 74/76, while the 7.4% bonds due 2037 traded four points lower, at 81.25, with recent market quotes off five points, wrapped around 80, according to sources and trade data.

Shares of JCP dropped nearly 20%, to $17.24, and five-year CDS in the name gapped out roughly that same amount, to 16.75/17.75 points upfront, according to Markit. That’s essentially a $265,000 higher upfront payment, at about $1.725 million, in addition to the $500,000 annual payment, to protect $10 million of JCP bonds.

Short paper fared better, with the 6.875% notes due 2015 off just one point, at 99/100, and the 7.95% notes due 2017 lower by two points, at 94.25/95.25, according to sources.

J.C. Penney reported net sales of $12.985 billion in the fiscal 2012 year ended Feb. 2, 2013, for a 25% decline year over year, based on a 25% decline in comparable-store sales and a 33% decline in online sales, according to the company statement. Results turned out a loss of $3.49 per share, which was more than double the consensus mean estimate by S&P Capital IQ for a loss of $1.52 per share.

J.C. Penney reported net sales of $12.985 billion in the fiscal 2012 year ended Feb. 2, 2013, for a 25% decline year over year, based on a 25% decline in comparable-store sales and a 33% decline in online sales, according to the company statement. Results turned out a loss of $3.49 per share, which was more than double the consensus mean estimate by S&P Capital IQ for a loss of $1.52 per share.

J.C. Penney is a fallen-angel issuer last in market three years ago with the $400 million issue of 5.65% non-call notes backing a contribution to the company’s pension plan. Barclays, Bank of America, J.P. Morgan, and Wells Fargo were leads, with pricing at 99.7, to yield 5.7%. Today’s the B-/Caa1 paper is lower by four points, at 80/81, an all-time low, sources said.  – Matt Fuller

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Coca-Cola shops 3-part high-grade bond deal to refi 2013-2015 maturities

As it seeks to refinance intermediate-term debt maturities, the Coca-Cola Co. ended a nearly year-long hiatus from the bond market today, announcing a three-part benchmark offering of SEC-registered notes, split between a two-year floating-rate tranche, along with five- and 10-year, fixed-rate offerings, sources said. Bookrunners for the issue, which has an expected AA-/Aa3/A+ profile, are BNP, Citi, Credit Suisse, and Morgan Stanley.

Notably, the company will use proceeds to repurchase all of the its 5% notes due 2013, 7.375% notes due 2014, and 4.25% notes due 2015, as well as the associated redemption premiums. The combined amount of those notes outstanding as of the end of 2012 was roughly $1.25 billion, filings show.

Initial whispers have surfaced in the LIBOR-minus-one-or-two-basis-points area for the floater, in the T+50 area for the five-year notes, and in the low-to-mid-T+70s area for the 10-year notes. Reoffer yields for the fixed-rate tranches are implied in the 1.27% and 2.6% areas, respectively.

The Atlanta, Ga.-based non-alcoholic-beverage company was last in the market in March 2012, when it placed a $2.75 billion offering, including a $1 billion floater due 2014, pricing five basis points below LIBOR. The deal also included 0.75% notes due 2015, which priced at T+35, or 0.79% – at the time representing the fourth-lowest yield ever recorded at that tenor – and a 1.65% notes due 2018 that were placed at T+80, or 1.69%. The 2018 issue traded yesterday at T+37, or 1.13%, according to MarketAxess.

Standard & Poor’s maintains a stable outlook on the rating. “The stable outlook reflects our expectation that Coke will maintain a conservative financial policy, continue to generate significant free cash flow, and maintain credit measures that are at or near current levels. Specifically, we anticipate that total debt to EBITDA will be 2x or below and FFO to total debt will be above 40%. We expect Coke’s modest financial-risk profile to continue to be supported by its strong liquidity,” the agency said in ratings rationale published in October. – Gayatri Iyer

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RR Donnelley sets $350M bond offering backing tender offer

R.R. Donnelley has announced a $350 million offering of eight-year (non-call life) unsecured notes. Bank of America Merrill Lynch, J.P. Morgan, Mitsubishi, and Wells Fargo are joint bookrunners, while US Bancorp, ING, PNC, Citi, Fifth Third Securities, TD Securities, Loop Capital, Morgan Stanley, and Comerica Securities are co-managers.

An investor call is scheduled for today at 11:30 a.m., with pricing slated for this afternoon.

Proceeds will be used, along with borrowing under the company’s RCF, to fund tender offers for up to $400 million aggregate principal amount of its debt securities, including up to $250 million aggregate principal amount of 6.125% notes due 2017, up to $100 million aggregate principal amount of 8.6% notes due 2016, and up to $50 million aggregate principal amount of 7.25% notes due 2018. If there are any remaining proceeds from the notes, the company intends to use these to repay borrowings under its revolving credit facility and for general corporate purposes. R.R. Donnelley expects to announce that it is commencing these tender offers in a separate press release issued upon commencing the tender offers.

Existing ratings are BB/Ba3.

The SEC-registered notes can be made whole at T+50, and have a change-of-control put at 101.

The company has a well-stocked curve that includes 7.625% notes due 2020 and 8.25% notes due 2019, that are currently quoted at 101.5 and 105.25 respectively to yield 7.35% and 7.16%, according to S&P Capital IQ.

R.R. Donnelley & Sons, a Delaware corporation, is a global provider of integrated communications. – Luke Millar

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Associated Asphalt (GS Partners) high yield bonds price to yield 8.5%

Associated Asphalt Partners late yesterday completed an offering of secured notes via bookrunners Goldman Sachs, KeyBanc, and SunTrust, according to sources. Terms on the GS Capital Partners-controlled company’s debut in the market under Rule 144A for life were finalized tight to talk after a $10 million upsizing, to $185 million, and an early read from the gray market points to a gain of roughly one point on the break, sources note. Proceeds from the B/Caa1 deal will be used to help pay down last year’s buyout-related loans. As reported, proceeds from last year’s loan packaging were used to support a $400 million sale of the Roanoke, Va.-based asphalt reseller to GS Capital Partners from ArcLight Capital, with Associated Asphalt management retaining a 5% stake. Terms:

 

Issuer Associated Asphalt Partners
Ratings B/Caa1
Amount $185 million
Issue secured notes (144A for life)
Coupon 8.5%
Price 100
Yield 8.5%
Spread T+776
FRN eq. L+760
Maturity March 1, 2018
Call nc2 @ par+75% coupon
Trade Feb. 27, 2013
Settle March 8, 2013 (t+7)
Books GS/KEY/STRH
Px talk 8.5-8.75%
Notes upsized by $10 million; first call par+75% coupon.
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More ETF-heavy cash withdrawals from high yield funds this week

Daily data from EPFR Global indicate that cash is still flowing out of the high-yield corporate asset class, and that redemption from exchange-traded funds continues to bolster the totals. Indeed, over the past four days there have been a combined $286 million of withdrawals from the asset class, with 62%, or $177 million, tied to ETF outflows.

Another negative reading today would put tomorrow’s full-week report in the red for a fifth consecutive week, following four weeks of cash outflows totaling $1.8 billion over that span. The full-week report is due after 4:00 p.m. EST tomorrow.

Drilling into the four daily readings, however, there is notable volatility of momentum. For example, yesterday’s report was actually $21 million of ETF inflows against a $125 million mutual fund withdrawal, while the day prior was an ETF outflow of $13 million against an inflow of $50 million to mutual funds. That said, it’s tough to guess how today’s data will present itself.

Last week’s withdrawal was $165 million, and it was 80% ETF outflow. The outflows of recent weeks, especially from ETFs, have dragged the year-to-date reading into the red, at negative $266 million, based on $1.3 billion of mutual fund inflows wiped out by ETF outflows of a larger size, according to EPFR.

Looking back at 2012, despite some outflows to close the year, there were just 14 negative readings. The full-year 2012 inflow figure was $22.64 billion, with 33% tied to ETFs, versus inflows of $13.08 billion in 2011, with 42% tied to ETFs, and $9.06 billion of inflows in 2010, of which squarely 50% was directed to ETFs. – Matt Fuller