Morning Commentary: SRS Distribution begins notes offering for LBO; new Centene bonds improve

By Paul A. Harris

Portland, Ore., May 11 – High yield opened unchanged on Friday amid a handful of earnings reports, according to a New York-based bond trader.

Against a backdrop of modestly higher stock prices, high-yield ETFs were flat to slightly higher.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.05%, or 4 cents, at $85.80 per share.

Among recent issues the new Centene Corp. 5 3/8% senior notes due June 2026 (Ba1/BB+) were up ½ point to 1 point at par ½ bid, 101 offered, the trader said.

The upsized $1.8 billion issue (from $1.7 billion) priced at par on Wednesday.

The Netflix, Inc. 5 7/8% senior bullet notes due November 2028 (Ba3/B+) were wrapped around par on Friday. They priced at par in a $1.9 billion issue on April 23.

Meanwhile the debut issue from WeWork Cos. Inc. continues its downward slope in the high-yield secondary, the trader said.

The WeWork 7 7/8% senior notes due May 2025 were 94 bid, 95 offered on Friday.

The notes were sold at par in an upsized $702 million issue (from $500 million) on April 25.

SRS Distribution roadshow

In the primary market, SRS Distribution, Inc. plans to start a roadshow on Monday for a $380 million offering of eight-year senior notes (Caa2/CCC+) backing the leveraged buyout of the company by Leonard Green & Partners LP.

Barclays is the lead left bookrunner.

Elsewhere Ithaca Energy (North Sea) plc set initial price talk on its $350 million offering of five-year senior notes (Caa1/CCC+) in the mid 9% area.

The deal, which has been on a roadshow in Europe, will be rolled out in front of investors in the United States during the early part of the May 14 week.

And Ocean Yield ASA mandated DNB Markets, Danske Bank, Fearnley Securities, Nordea and SEB to arrange a series of fixed income investor meetings in the Nordic region starting Monday.

DNB will be the global coordinator.

A krone-denominated senior unsecured bond offering with a five-year tenor may follow.

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