SM Energy prices; five deals join calendar; Rite Aid drops; Diebold tanks; Sprint up

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 6 – The domestic high-yield primary market was active on Monday with one deal pricing and five more joining the forward calendar.

SM Energy Co. priced a $500 million issue of 8.5-year senior notes (B2/BB-/BB-) at par to yield 6 5/8% in a Monday drive-by.

Verscend Holding Corp. announced a roadshow for a $1.15 billion offering, which will wrap up on Friday.

Marriott Vacations Worldwide Corp. began a roadshow for a $750 million offering, which will run until Wednesday.

WellCare Health Plans, Inc. is in the market with a $700 million offering of eight-year senior notes, which is expected to price on Wednesday.

CURO Group Holdings Corp. plans to start a roadshow on Tuesday for a $675 million offering of seven-year senior secured notes.

And ACI Worldwide, Inc. began a two-day roadshow for a $300 million offering of eight-year senior notes.

Meanwhile, Intelsat Connect Finance SA’s recently priced 9½% notes due 2023 remained the most active of last week’s deals in the secondary space although the notes were largely unchanged on the day.

While Intelsat’s new notes were a close second, Rite Aid Corp.’s 6 1/8% senior notes due 2023 dominated trading activity in the secondary space.

The notes were losing ground in the high-volume activity after the company revised its forward guidance just days before its shareholders vote on the merger with Albertsons Cos.

Diebold Inc.’s 8½% senior notes due 2024 continued their downward spiral on Monday with the notes losing more than 8 points after a 10-point drop last week.

Sprint Corp.’s junk bonds were on the rise on Monday with optimism growing over the company’s merger with T-Mobile as the U.S. Department of Justice begins its review.

SM Energy prices tight

The high-yield drive-through window opened on Monday as SM Energy priced a $500 million quick-to-market issue of 8.5-year senior notes (B2/BB-/BB-) at par to yield 6 5/8%.

The yield printed at the tight end of talk for a yield in the 6¾% area and inside initial talk of 6¾% to 7%.

BofA Merrill Lynch, Wells Fargo, JP Morgan, Barclays, BBVA and RBC were the joint bookrunners for the debt refinancing deal.

Verscend guidance 9¼% to 9½%

The first Monday in August saw a big buildup in the active forward calendar.

Verscend Holding plans to market $1.15 billion of eight-year notes on a roadshow set to wrap up on Friday.

Initial guidance is 9¼% to 9½%.

JP Morgan is managing the acquisition financing deal.

Marriott 6½% area talk

Marriott Vacations Worldwide plans to market a $750 million offering eight-year senior notes on a Monday to Wednesday roadshow.

The deal is in the market with initial guidance in the 6½% area.

BofA Merrill Lynch is managing the acquisition financing deal.

WellCare guidance 5¾% area

WellCare Health Plans is expected to price a $700 million offering of eight-year senior notes (Ba3/BB) on Wednesday.

The acquisition financing deal is in the market with initial guidance in the 5¾% area.

JP Morgan is the lead.

CURO starts Tuesday

CURO Group Holdings plans to start a roadshow on Tuesday in New York for a $675 million offering of seven-year senior secured notes.

The offer is set to price early in the week of Aug. 13.

Jefferies is the left bookrunner for the debt refinancing deal. Credit Suisse is the joint bookrunner.

ACI Monday-Tuesday roadshow

ACI Worldwide began a brief roadshow that will end on Tuesday for a $300 million offering of eight-year senior notes.

Initial price talk has the debt refinancing deal coming to yield in the high 5% area to 6%.

BofA Merrill Lynch and Wells Fargo are the joint bookrunners.

Robust calendar

The above deals take places on an active forward calendar that also contains BMC Software, which is selling $1,825,000,000 equivalent of eight-year senior notes (Caa2/CCC+) via Banff Merger Sub Inc. in dollar-denominated and euro-denominated tranches.

The dollar-denominated paper is in the market with early guidance in the 9¾% area.

The roadshow is scheduled to wrap up on Wednesday.

And Herbalife Nutrition Ltd. was scheduled to start a roadshow on Monday for a $400 million offering of eight-year senior notes.

The offer is set to price late in the week of Aug. 6.

Intelsat active

While most of last week deals faded from focus, Intelsat’s recently priced 9½% notes due 2023 remained among the volume leaders in the secondary space.

While the notes were quoted down about 5/8 point at one stage in the session, sources characterized them as largely unchanged on the day.

The notes were seen at 98 7/8 bid, 99¼ offered early afternoon on Monday. They were at 99¾ bid, 99 7/8 offered on Friday.

The notes traded as low as 99 on Monday. However, they were poised to close the day at 99½, largely unchanged from Friday’s closing levels, according to a market source.

Intelsat priced a $1.25 billion issue of the 9½% notes at 98.25 to yield 10.004% on Aug. 2.

The deal was almost three times oversubscribed during book building and has dominated trading activity in the secondary space since pricing.

More than $44.5 million of the bonds were on the tape by late afternoon Monday.

Rite Aid drops

Rite Aid’s 6 1/8% senior notes due 2023 were down on Monday after the company revised its forward guidance just days before shareholders are scheduled to vote on the retail pharmacy’s merger with Albertsons.

The notes were down 1¼ point to trade at 99 5/8, a market source said.

With about $49 million bonds on the tape, the 6 1/8% notes were the most actively traded issue in the secondary space on Monday.

Rite Aid lowered its 2019 forward guidance prior to the market open Monday.

Adjusted EBITDA was decreased to between $540 million and $590 million from between $615 million and $675 million.

Non-GAAP net loss per share is now expected to be 4 cents to zero while previously the company forecast earnings per share of 2 cents to 6 cents.

The revised guidance was due to the generic drug market and did not reflect the impact of the Albertsons merger, the company said in a press release.

The lowered guidance comes just days before shareholders vote on the proposed merger with Albertsons to create a combined company valued at $24 billion.

Institutional Shareholder Services Inc. recently recommended shareholders vote against the merger, an opinion that was reaffirmed on Monday post-revised guidance.

The vote is schedule for Aug. 9.

Diebold tanks

Diebold’s 8½% senior notes due 2024 took another nosedive on Monday with the notes again down 8¾ point after a 10 point drop last week.

The notes opened Monday around 78 and steadily traded down. They were wrapped around 69 at late afternoon with about $18.5 million of the bonds on the tape.

The continued downward spiral of the notes on Monday was egged on by news the company was using cash to buy back shares, a market source said.

“This could be a good buying opportunity,” the source said. “It depends on how ugly it is.”

The notes dropped 10 points last week after a large second-quarter earnings miss and the announcement the company was in the process of attempting to amend its credit agreement with principal lenders.

Sprint gains

Meanwhile, Sprint’s junk bonds were on the rise as optimism grows over the prospects of regulatory approval for the telecommunications company’s merger with T-Mobile.

Sprint’s 8¾% notes due 2032 were up more than 2 points and 6 7/8% notes due 2028 were up more than 1½ points as the U.S. Department of Justice begins their review of the merger.

The 8¾% notes were seen trading at 110 1/8 with about $33 million of the bonds on the tape, a market source said.

The 6 7/8% notes were seen trading at 98¾ with more than $19 million of the bonds changing hands.

As the review begins, headlines broke about the number of wireless carriers the DoJ considered enough to maintain competition in the market, with Reuters quoting an anonymous source that said at least three.

Indexes gain

Three benchmarks for the high-yield secondary market began the week with gains.

The KDP High Yield Daily index was on the rise after a slight decrease on Friday. The index was up 3 basis points to close Monday at 70.53 with the yield now 5.81%. The index was down 1 bps on Friday.

The Merrill Lynch High Yield index started with week with gains after a solid week of gains last week. The index was up 9.1 bps with the year-to-date return now 1.470%.

The index was up 11.7 bps on Friday.

The CDX High Yield 30 index was up 4 bps to close Monday at 107.14. The index was up 5 bps on Friday.

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