Golden Nugget megadeal prices; Ciena at a premium; DISH, DirecTV gain on merger talks

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 12 – Three issuers priced four junk-rated, dollar-denominated tranches to raise a total of $2.88 billion on a big Wednesday in the new issue market.

Meanwhile, the secondary space was firm on inflation news with the Consumer Price Index report coming in largely as expected.

While the market was strong early in the session, the rally petered out into the close and the market ended the day with only nominal gains.

While Treasuries continued to attempt a rebound with the 10-year Treasury yield dropping to 1.711% in intraday activity, it closed the day largely flat at 1.746%.

Ciena Corp.’s 4% senior notes due 2030 (Ba1/BB) were active with the notes trading with a large premium to their issue price.

However, DISH Network Corp. was the major winner of Wednesday’s session with the company’s capital structure up ½ to 3 points.

DirecTV Holdings LLC and DirecTV Financing Co. Inc.’s 5 7/8% senior secured notes due 2027 (Ba3/BB/BBB-) were also posting gains in active trading on news Dish and DirecTV were once again discussing a merger.

Fertitta prices $2.25 billion

Fertitta Entertainment, LLC, formerly known as Golden Nugget, LLC, crossed the finish line with this week's megadeal, a downsized $2.25 billion amount of notes in two tranches.

It included a downsized $1 billion tranche (up from $850 million after earlier downsizing from $1.85 billion) of 4 5/8% seven-year senior secured first-lien notes (B1/B+) that priced at par, in the middle of talk.

The deal also included a downsized $1.25 billion tranche (from $1.85 billion) of 6¾% eight-year senior unsecured notes (Caa2/CCC+) that priced at par, at the wide end of talk.

The overall amount of bonds decreased to $2.25 billion from $3.7 billion, with $1.45 billion of proceeds shifted to the concurrent term loan.

Upon breaking in the secondary market, the Fertitta secured notes were wrapped around the issue price while the unsecured notes were faring better at par ¼ bid, par ¾ offered, according to a bond trader who remarked that while the deal wasn't amazing it was not a flop, either.

Elsewhere Calumet Specialty Products Partners, LP and Calumet Finance Corp. drew a big crowd with an offering of five-year senior notes (B3/B-), not least because initial talk came in the hefty mid-8% area, sources said.

The deal upsized to $325 million from $300 million, priced at par to yield 8 1/8%, inside of talk, on accelerated timing.

It was heard to have played to $1.25 billion of demand, with one of the bigger “real money” players said to have expressed a desire to take down the entire deal, a trader said, adding that medium-sized and smaller accounts were naturally complaining about allocations.

Also NFP Corp. priced a $300 million add-on to its 6 7/8% senior notes due Aug. 15, 2028 (Caa2/CCC+) at 98.75 to yield 7.116% in a drive-by, in the middle of price talk (see related stories in this issue).

Wednesday's action left just one deal on the active forward calendar.

MIWD Holdco II LLC (MI Windows and Doors) is on the road with a $400 million offering of eight-year senior notes (expected Caa1/B/confirmed BB-).

Late Wednesday the deal was heard to be three-times oversubscribed.

Initial talk is in the low 6% area.

The market awaits word on the official talk and timing. However, the deal is expected to price before the end of the week.

Ciena at a premium

Ciena’s 4% senior notes due 2030 were trading with a healthy premium to their issue price in high-volume activity.

The notes were marked at par ¾ bid, 101¼ offered, a source said, a range that they stayed in for the majority of the session.

There was $68 million in reported volume.

In a heavily oversubscribed offering, Ciena priced a $400 million issue of the 4% notes at par on Tuesday.

The yield came at the tight end of yield talk in the 4 1/8% area.

The deal was heard to have played to $1.8 billion in orders.

The merger

DISH’S capital structure was making large gains on news the satellite broadcaster was again in talks with DirecTV over a merger of their pay-TV business units.

The company’s 5 1/8% senior notes due 2029 (B3/B-) saw the largest increase with the notes up more than 3 points.

The 5 1/8% senior notes stood poised to close the day at 92 1/8 with the yield about 6½%.

There was $42 million in reported volume.

The 5¾% notes due 2028 (Ba3/B+) rose 1 point to 101 1/8. There was $35 million in reported volume.

DISH’S 5¼% senior notes due 2026 (Ba3/B+) gained about ½ point to rise to 102. There was $32 million in reported volume.

DirecTV’s 5 7/8% senior notes due 2027 also rose in heavy volume.

DirecTV’s 5 7/8% notes gained about ¾ point to close the day at 102¾. There was about $37 million in activity.

DISH’S and DirecTV’s consolidation would be a credit positive for DISH bondholders due to its cost savings potential, a source said.

DISH’S 5 1/8% senior notes due 2029, which are unsecured, would be the largest benefactor if a deal is reached with the hefty spread between it and DirecTV’s 5 7/8% notes likely to narrow, the source said.

$1.03 billion Tuesday inflows

The cash tide turned for the high-yield ETFs on Tuesday, according to a market source.

The ETFs saw a solid $1.03 billion of inflows on Tuesday, the most recent session for which data was available at press time, the source said, adding that the JNK ETF led the charge with $774 million of Tuesday inflows.

Tuesday's inflows follow $2.67 billion of outflows from the junk ETFs over the three preceding sessions.

Actively managed high-yield funds sustained $124 million of outflows on Tuesday, the market source said.

Indexes

The KDP High Yield Daily index gained 11 points to close Wednesday at 65.29 with the yield 4.14%.

The index gained 6 points on Tuesday after falling 20 points on Monday.

The CDX High Yield 30 index gained 4 basis points to close Wednesday at 108.74.

The index rose 31 bps on Tuesday and 4 bps on Monday.

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