Ceva launches offering; California Resources, SFR Group in focus; Endo sees gains; HCA active

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 9 – The domestic and European primary market remained quiet on Monday in the return from the holiday week.

Tribal gaming concern Enterprise Development Authority is still believed to be in the market with a $440 million offering.

CEVA Logistics announced plans on Monday to price $350 million of new senior secured notes as part of a refinancing effort.

July is typically a light month for new issuance with the market usually only seeing $15 billion price, a market source said.

However, with the market barely seeing $15 billion in new deals price in June and volume down 23% year-over-year, it is unclear what one of the lightest months of the year will look like in 2018, the source said.

While Monday remained a quiet day for the primary market, the secondary market was returning to action with a marked increase in trading volume compared to last week.

The market was in general up on Monday with most high beta names seeing gains, sources said.

California Resources Corp.’s 8% senior notes due 2022 were the most actively traded name in the secondary space with the notes seeing gains alongside the barrel price of West Texas intermediate crude oil for August delivery.

SFR Group’s 6% senior notes due 2022 were also in focus and were a “touch better” on Monday after parent organization Altice reaffirmed the company would not be sold and launched a refinancing package, a market source said.

Endo International plc’s junk bonds were also active and seeing gains in the secondary space with previously settled litigation less than expected and the company’s subsidiary commencing the distribution of a generic treatment for gout.

HCA Inc.’s junk bonds were also active and making gains in the secondary space alongside the broader market.

CEVA Logistics secured deal

The primary market generated very little news on Monday.

One deal remains on the dollar-denominated active forward calendar.

Tribal gaming concern Enterprise Development Authority is believed to still be in the market with a $440 million offering of five-year senior secured notes (S&P: expected B-), a capital expenditures deal via Wells Fargo.

The latest pricing circulating the market has the deal coming around 13%, a trader said on Monday.

Meanwhile, CEVA Logistics announced in a Monday press release that it intends to use proceeds from approximately $350 million of new senior secured notes as part of a debt refinancing effort.

The refinancing also includes a $400 million term loan being managed by global coordinators Credit Suisse Securities (USA) LLC and HSBC, set to launch at a bank meeting on Tuesday, with commitments due July 24.

California Resources in focus

California Resources 8% senior notes due 2022 were the most actively traded issue in the secondary space on Monday with more than $32 million of the bonds on the tape by late afternoon.

The notes were seen up ¾ point to close the day at 91. “Oil’s up a little and those are just going to follow suit,” a market source said.

The price of crude oil was again zeroing in on $74 a barrel on Monday and settled at $73.85.

SFR not for sale

SFR Group’s 6% senior notes due 2022 were also in focus in the secondary space on Monday with about $28 million of the bonds on the tape by late afternoon.

The notes were seen up about ½ point to trade at 102. The 6% notes traded as low as 101.8 on Monday but most trades were on a 102 handle, a market source said.

SFR Group’s junk bonds have risen and fallen alongside rumors the French telecommunications company was being eyed for a takeover.

Parent company Altice recently reaffirmed that SFR Group was not for sale and launched a refinancing package, a market source said.

SFR Group’s 7 3/8% senior notes due 2026 were also on the rise on Monday, gaining about 1 point to close the day at 99 3/8.

The 7 3/8% notes “had a little meltdown,” last week with the notes weakening on news Paris-based telecommunications conglomerate Bouygues was cleared to make a bid for the company. However, the notes quickly returned to their previous level on the announcement SFR Group was not for sale.

The notes rose to a new level on Monday.

Endo gains

Endo International’s junk bonds were also active and seeing gains in the secondary space on Monday.

The Malvern, Pa.-based generics and specialty pharmaceutical company’s 6% senior notes due 2023 were up about ¾ point to close the day 83.

More than $17 million of the bonds changed hands during Monday’s session.

Endo’s 6% senior notes due 2025 were up about 1¼ point to close the day at 79¾, a market source said.

In June, the company announced a master settlement agreement which resolved all liability claims related to the company’s testosterone replacement therapy products.

The legal settlements may have been better than expected, a market source said.

The company also announced last week subsidiary Par Pharma had begun distribution of a generic version of Takeda Pharmaceutical’s Colcrys medication for the treatment of prophylaxis and gout.

HCA active

HCA’s junk bonds also saw some activity with the notes making gains alongside the broader market.

The company’s 5 7/8% senior notes due 2026 were among the most active in the structure with the notes up about ½ point to 5/8 point, a market source said.

The 5 7/8% notes were set to close Monday at 101¾. There were about $13 million of the bonds on the tape by late afternoon.

HCA’s 5½% notes due 2047 were also active with about $13 million of the bonds on the tape. They were seen trading up to 91 5/8.

HCA’s structure was up in general about ¼ to ½ point, a market source said. HCA is a high beta name.

Like most high beta names on Monday, the notes were seeing gains alongside the broader market, the source said.

Indexes gain

Three benchmarks for the high-yield secondary market opened the week with gains after closing out last week on a positive note.

The KDP High Yield index was up 3 basis points to close Monday at 70.22 with the yield now 5.95%.

The index broke an eight consecutive trading day streak of losses on July 6 with the index closing last week up 3 basis points.

The Merrill Lynch High Yield index further solidified its place in positive territory on Monday.

The index was up 25.5 bps with the year-to-date return now 0.322.

After spending most of last week in negative territory, the index flipped back to the positive last Friday with an 8 bps gain.

The CDX High Yield 30 index was up 28 bps to close Monday at 106.71. The index also saw large gains last Friday with a 37 bps rise.

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