Centene, OneMain/Springleaf, WPX Energy price; Gogo drops; energy sector outperforms

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 9 – The primary market saw a full day of drive-by action on Wednesday with three issuers pricing upsized single-tranche quick-to-market deals.

Centene Corp. priced an upsized $1.8 billion issue of eight-year senior notes (Ba1/BB+) at par to yield 5 3/8%.

OneMain/Springleaf priced an upsized $900 million issue of Springleaf Finance Corp. non-callable eight-year senior notes (B1/B) at par to yield 7 1/8%.

WPX Energy, Inc. priced an upsized $500 million issue of eight-year senior notes (B1/BB-) at par to yield 5¾%.

Calfrac Holdings LP hopped aboard the active forward calendar by launching a roadshow on Wednesday for a $650 million offering of eight-year senior notes (B3/B-).

Meanwhile, Gaming & Leisure Properties, Inc.’s newly priced $1 billion dual-tranche split-rated senior notes (Ba1/BBB-) remained active in the secondary space with each tranche slightly improved.

Energy sector names continued to outperform with California Resources Corp.’s 8% senior notes due 2022 again seeing gains as the price of crude oil topped a new 3.5-year high.

WeWork Cos. Inc.’s recently priced 7 7/8% senior notes due 2025 (Caa1/B+/BB-) continued to weaken in the secondary space with the notes now trading at 93.

Gogo Inc.’s 12½% senior notes due 2022 dropped 3 points in high volume trading after a Moody’s Investors Service downgrade on Tuesday.

Dish Network Corp’s junk bonds were mixed in active trading in the secondary space as investors continue to respond to recent news about the company’s lack of progress in launching a wireless network.

Centene upsized and tight

Centene priced an upsized $1.8 billion issue of eight-year senior notes (Ba1/BB+) at par to yield 5 3/8% in a Wednesday drive-by.

The issue size was upsized from $1.7 billion.

The yield printed at the tight end of the 5 3/8% to 5½% yield talk and inside of initial guidance in the 5¾% area.

Citigroup was the left bookrunner. Barclays, SunTrust and Wells Fargo were the joint bookrunners.

The St. Louis-based managed care and specialty health care services provider plans to use the proceeds to help fund its acquisition of Fidelis Care and to repay debt under its revolving credit facility.

OneMain/Springleaf upsizes

OneMain/Springleaf priced an upsized $900 million issue of Springleaf Finance Corp. non-callable eight-year senior notes (B1/B) at par to yield 7 1/8%.

The issue size was increased from $500 million.

The yield printed in the middle of yield talk in the 7 1/8% area and in-line with initial talk in the low 7% area.

Joint bookrunner Morgan Stanley will bill and deliver. RBC, Barclays, Citigroup, Credit Suisse, Goldman Sachs and SG were also joint bookrunners.

The Evansville, Ind.-based consumer finance company plans to use the proceeds to redeem the remaining $400 million of OneMain Financial Holdings, LLC 7 ¼% senior notes due 2021.

The additional proceeds from the $400 million upsize will be used for general corporate purposes.

WPX Energy upsized and tight

WPX Energy priced an upsized $500 million issue of eight-year senior notes (B1/BB-) at par to yield 5¾%.

The issue size was increased from $400 million.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk and inside of initial talk in the 6% area.

Citigroup was the left bookrunner. BofA Merrill Lynch, Goldman Sachs, MUFG, RBC and Wells Fargo were the joint bookrunners.

The Tulsa-based oil and gas company plans to use the proceeds to tender for its 8¼% senior notes due 2023 and redeem its 7½% senior notes due 2020.

Calfrac starts roadshow

The active forward calendar took aboard one new deal.

Calfrac Holdings started a roadshow on Wednesday in Toronto, New Jersey and New York for a $650 million offering of eight-year senior notes (B3/B-).

The roadshow wraps up Tuesday, and the deal is set to price thereafter.

RBC is the sole bookrunner for the debt refinancing deal.

Gaming & Leisure improves

Wednesday’s drive-by deals priced late in the session and were not seen trading by sources queried. However, Gaming & Leisure’s two tranches of senior notes, which priced Monday, remained active in the secondary space and were seen slightly improved.

The 5¼% notes due 2025 were up about ¼ on Tuesday to trade at par ½. The 5¾% notes due 2028 were seen up about ½ point to trade at par ½, a market source said.

The 5¼% notes were trading at par ¼ and the 5¾% notes at par late afternoon Tuesday.

The $1 billion bullet deal (Ba1/BBB-) came in two $500 million tranches, both of which priced at par in a Monday drive-by.

The deal was priced tightly making significant gains in secondary trading unlikely, a market source said.

Energy outperforms

The energy sector again outperformed on Wednesday as the barrel price of West Texas intermediate crude oil for June delivery reached a new 3.5-year high.

California Resources 8% senior notes gained 1 point to trade up to 90½. They were seen at 90¼ bid, 90¾ offered mid-afternoon, a market source said.

The price of crude oil again shot up to a new recent high of $71.46 a barrel as the market digests the news the United States will pull out of the nuclear deal with Iran.

The prospects of oil-related sanctions hitting Iran and weakening global oil supplies lifted the price of crude oil on Wednesday.

Crude oil and California Resources 8% senior notes, which move in concert with crude oil prices, saw significant gains on speculation the United States would exit the deal.

However, the price of crude oil and California Resources 8% notes dropped on Tuesday after the exit decision was announced.

While the 8% notes were down about ½ point Tuesday, they made up for the previous loses and shot to a new height on Wednesday.

Beta energy names have been the outperformers of the week, a market source said.

WeWork weakens

WeWork’s recently priced 7 7/8% senior notes due 2025 continued to weaken in the secondary market with the notes now trading more than 7 points below their issue price.

The notes were quoted at 92¼ bid, 93 offered on Wednesday with most trades between 92¾ and 93, sources said. They were quoted at 94¼ bid, 95 offered on Tuesday.

WeWork’s notes have steadily traded down since the upsized $702 million issue priced at par on April 25.

The deal was said to be as much as five-times oversubscribed, which sources have questioned given the note’s performance in the secondary space has been called “a disaster.”

Gogo drops

Gogo’s 12½% senior notes due 2022 dropped in high volume trading on Wednesday after a Moody’s Investors Service downgrade.

“It’s not a name I see very often,” a market source said. The notes traded down to 106½, which was about a 3-point drop from Tuesday’s level, the source said.

Gogo stock has been in a freefall since the company pulled its forward guidance for adjusted EBITDA in its first-quarter earnings report on May 4, citing an ongoing business planning process.

The company’s stock is down about 45% since the announcement.

Moody’s Investors Service downgraded Gogo’s corporate family rating to Caa1 from B3 on Tuesday and revised its outlook to negative, Prospect News reported.

The downgrade was due to the company’s weakening credit metrics, operational difficulties and deteriorating liquidity, the agency said.

Gogo priced the 12½% notes with an issue price of 113 in 2017. The inflight broadband connectivity service provider’s convertible bond has also been under pressure.

Dish mixed

Dish junk bonds saw another day of active trading as investors continue to respond to headlines about the satellite broadcast company’s difficulties in launching a wireless network.

“They were active but it was a mixed bag,” a market source said.

While the notes continued to see heavy trading volume, the short duration bonds were largely unchanged from Tuesday’s levels. The short duration bonds dropped ½ point to 1 point on Tuesday.

Dish’s 5 7/8% senior notes due 2024 were seen down another ½ point while the 7¾% senior notes due 2026 were largely unchanged at the 88 level, a market source said. The bonds were down about 4 points on Tuesday.

Dish bonds traded off Tuesday afternoon after Chairman Charlie Ergen announced Dish was still a long way from securing a partner to help launch a wireless network, which has been key to its long-term strategy.

Dish also had an earnings miss in its first quarter earnings report.

Indexes gain

The KDP High Yield index was up on Wednesday with gains that made up for the slight dip it took on Tuesday. The index was up 4 basis points to 70.59 with the yield now 5.82%.

The index was down 1 point on Tuesday after climbing 12 basis points over the previous two trading days.

The Merrill Lynch High Yield index also saw gains on Wednesday that made up for its Tuesday drop. The index was up 3.9 basis points with the negative year-to-date return now 0.185.

The index was down 3.6 basis points on Tuesday.

The CDX High Yield 30 index also saw a slight increase on Wednesday. The notes were up 0.19 basis point to close the day at 106.9 after closing Wednesday at 106.71.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.