Centene megadeal, Live Nation drive by; Live Nation firmer; energy names off as oil declines

By Paul Deckelman and Paul A. Harris

New York, Oct. 26 – The high-yield primary market saw a pair of new deals get done on Wednesday – both of them opportunistically timed and quickly shopped drive-by offerings rather than regularly scheduled forward calendar transactions.

The big deal of the day came from health-care services provider Centene Corp., which upsized its already announced offering of 8.25-year notes to $1.2 billion.

Earlier in the session, concert promoter and live-event ticket provider Live Nation Entertainment, Inc. did a $575 million offering of eight-year notes.

Traders said the new Live Event paper was modestly firmer when it hit the aftermarket.

The traders meantime reported that activity in recently priced new deals accounted for much of the trading activity during the session, including Tuesday’s offering from Rackspace Hosting Inc. and Monday’s deals from Netflix, Inc. and United Rentals, Inc.

Away from the deals that have already priced, syndicate sources said that potato products producer Lamb Weston Holdings, Inc. would be hitting the road Thursday to start marketing a planned $1.67 billion two-part note offering to potential investors.

Away from the new-deal world, traders said that energy-related names such as California Resources Corp., Weatherford International, Sanchez Energy Corp. and Noble Corp. plc were among the notable losers, hurt by the continued slide in world crude oil prices.

Statistical market performance measures turned lower across the board on Wednesday, after having been mixed on Tuesday and higher all around on Monday.

Centene upsizes

The dollar-denominated primary market saw a pair of single-tranche drive-by deals price on Wednesday.

One was upsized.

Both came with four-handle yields and priced at the tight ends of talk.

Centene priced an upsized $1.2 billion issue of 8.25-year senior notes (Ba2/BB) at par to yield 4¾%.

The yield printed at the tight end of the 4¾% to 4 7/8% yield talk.

Barclays was the lead left bookrunner. Citigroup Global Markets Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC were the joint bookrunners.

The St. Louis-based managed care and specialty health-care services provider plans to use the proceeds to redeem its 5¾% senior notes due 2017 and to redeem the Health Net, Inc. 6 3/8% senior notes due 2017, to repay amounts outstanding under Centene's revolver and for general corporate purposes.

Live Nation prices tight

Live Nation priced a $575 million issue of eight-year senior notes (B3/B+) at par to yield 4 7/8%.

The yield printed at the tight end of yield talk in the 5% area and tight to initial guidance in the low 5% area.

The deal was playing to $1 billion of orders late Wednesday morning, a trader said, adding that the book size likely grew subsequent to that time.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Goldman Sachs & Co., HSBC Securities (USA) LLC, Mizuho Securities, Morgan Stanley & Co. LLC, Scotia Capital, SunTrust Robinson Humphrey and Wells Fargo were the joint bookrunners.

The Los Angeles-based provider of live music concerts and live entertainment ticketing sales and marketing services plans to use the proceeds, together with borrowings under its amended credit facility, to pay off its existing credit facility and 7% senior notes due 2020 and for general corporate purposes.

Lamb Weston starts Thursday

Lamb Weston plans to start a roadshow on Thursday in New York City for a $1,666,000,000 two-part offering of senior notes.

The deal is coming in tranches of eight-year notes and 10-year notes, with tranche sizes to be determined.

Goldman Sachs, BofA Merrill Lynch, JPMorgan and Wells Fargo are the joint bookrunners.

The Omaha-based supplier of frozen potato products plans to use the proceeds to partially fund a cash payment to ConAgra Foods related to ConAgra's spinoff of Lamb Weston.

Nearer at hand is an active calendar of deals expected to clear before the weekend.

AMC Entertainment Holdings, Inc. is marketing $535 million of 10-year notes (guidance low 6% area) and £300 million of eight-year notes.

Tutor Perini Corp. plans to sell $500 million of eight-year senior notes. Initial guidance is 6% to 6 3/8%.

And Cooper-Standard Holdings Inc. is in the market with $400 million of 10-year senior notes. Initial guidance is 5¾% to 6%.

SNAI prices €570 million

The European primary market also generated a healthy news volume on Wednesday.

SNAI SpA priced €570 million of five-year senior secured notes (B2/B) in two tranches.

A €320 million tranche of fixed-rate notes priced at par to yield 6 3/8%, on top of yield talk.

A €250 million tranche of three-month Euribor plus 600 basis points floating-rate notes priced at 99, with both the spread and the reoffer price coming on top of talk.

Deutsche Bank ran the books for the debt refinancing deal.

Elsewhere HomeVi SAS, the holding company for France-based DomusVI, set price talk in a restructured €328 million five-year secured notes offer.

A €128 million tap of its 6 7/8% senior secured notes due 2021 is talked at 105.75 to 106.

In a tranche added subsequent to the launch of the deal, a $200 million tranche of floating-rate notes is talked at par with a 425 bps spread to Euribor.

The offer was launched as a single add-on tranche.

Goldman Sachs International is the lead.

WIND pricing this week

Crystal Almond Sarl, the parent of WIND Hellas Telecommunications SA, is marketing a €250 million offering of senior secured notes due 2021 on a roadshow that is set to wrap up on Friday.

JPMorgan is running the books.

The Athens-based telecommunications services provider plans to use the proceeds to refinance its existing senior secured facility and for the general corporate purposes of WIND Hellas, including capital expenditure investments.

Jerrold PIK toggle deal

Jerrold Holdings Ltd. plans to start a roadshow on Thursday for the Bracken MidCo 1 plc £220 million offering of five-year senior PIK toggle notes.

Credit Suisse is leading the deal, which is set to price during the week ahead.

Proceeds will be used to help finance the purchase of equity interests in Jerrold held by Equistone and Standard Life Investments, to repurchase 30,000 D shares held by certain members Jerrold's management, to lend £25.1 million to Jerrold for repayment of certain shareholder debt, to make certain payments related to Jerrold's staff incentive plan and to pay other expenses related to the transactions.

Live Nation notes firmer

In the secondary arena, a market source said that new or recently priced issues were “the main focus, in terms of volume and what was moving around.”

For instance, traders reported that Live Nation’s new 4 7/8% notes due 2024 had gained modestly when the concert promoter’s new paper moved into the aftermarket.

One trader pegged the new issue at 100¾ bid, up from the par level at which the deal had priced.

A second quoted the bonds in a 100½-to-101 bid context, while a third located them between 100¾ and 101 bid.

The traders meantime did not immediately report any initial aftermarket dealings in the new Centene 4¾% notes due 2025.

They noted that the health-care services company’s upsized megadeal priced later in the session than the Live Nation offering had.

Rackspace trades well

A trader said that Rackspace Holdings’ 8 5/8% notes due 2024 “hung in there” despite a generally easier market on Wednesday, trading around the 101 bid mark.

He saw the bonds at the end of the day in a 100¾-to-101¼ bid range.

A second trader saw the San Antonio, Texas-based managed cloud company’s notes at 101¼ bid late in the session.

The company had priced its regularly scheduled $1.2 billion transaction at par on Tuesday.

Netflix around issue price

Netflix’s 4 3/8% notes due 2026 “sold back off,” a trader said, seeing the Los Gatos, Calif.-based movie and television program distribution company’s paper trading around the par level at which that offering had priced on Monday.

A second trader put the bonds in a par-to-100¼ bid context.

A third saw them down ¼ point at 99¾ bid, par offered.

The company priced its quickly shopped $1.2 billion deal at par on Monday after the offering was upsized from the originally announced $800 million.

United Rentals rebounds

A trader said that United Rentals’ 5½% notes due 2027 “came back a little” after some weakness early in the session.

He saw the notes going out around 100½ bid.

A second trader located the notes in a 100½-to-100 7/8 bid context, although he said that was down ¼ on the day from Tuesday’s close.

The Stamford, Conn.-based equipment rental company priced $750 million of the notes at par in a quick-to-market transaction on Monday.

Energy on the slide

Away from the new deals, traders said that energy company bonds, and those of oilfield-service companies, were off on Wednesday in line with a third straight session of declining world crude oil prices.

A trader said that exploration and production operator California Resources’ 8% notes due 2022 plunged by 2½ points on the day to 71¾ bid.

Sanchez Energy’s 6 1/8% notes due 2023 were also down more than a deuce at 88 bid.

Among the drillers, Weatherford International’s 6½% long bonds due 2036 were seen down as much as 5½ points on the day at 77¾ bid, while sector peer Noble’s 4 5/8% notes due 2021 lost 2½ points, ending at 84 7/8 bid.

West Texas Intermediate crude for December delivery lost 78 cents a barrel in Wednesday trading on the New York Mercantile Exchange, settling at $49.18, its fourth loss in the last five sessions.

Indicators head south

Statistical market performance measures turned lower across the board on Wednesday, after having been mixed on Tuesday and higher all around on Monday. It was only the second times in the last 10 sessions that the indicators were universally weaker.

The KDP High Yield index fell by 9 bps on Wednesday to end at 71.69, its second straight loss. On Tuesday, the index had dropped by 6 bps. Those losses followed seven session in a row on the upside.

Its yield rose for a second consecutive session, widening by 3 bps to 5.29%, after having increased by 1 bp on Tuesday. Those wider levels followed six straight days of narrowings.

The Markit Series 27 CDX index edged down by 1/16 point to end at 104 3/32 bid, 104 1/8 offered, after having dropped by 11/32 point on Tuesday. Those losses follow two straight days of gains before that.

And the Merrill Lynch High Yield index retreated by 0.237%, its first loss after two consecutive gains before that, including Tuesday’s narrow 0.005% victory.

Wednesday’s downturn cut the index’s year-to-date return to 16.492%, down from Tuesday’s finish at 2.768% – the index’s second consecutive new 2016 peak cumulative level.

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