CNO Financial prices; Frontier gains; Teva’s downward spiral continues; CRC drops

By Abigail W. Adams

Portland, Me., May 29 – While activity in the domestic high-yield primary market was slow on Wednesday, one deal did clear the forward calendar.

CNO Financial Group Inc. priced an upsized $500 million in 10-year senior notes (Baa3/BB+/BB+) on Wednesday at par to yield 5¼%, according to a market source.

While the forward calendar is thin, Neiman Marcus Group Ltd. LLC remains in the market with its $550 million offering of five-year second-lien notes.

And Go Daddy Operating Co. and GD Finance Co. Inc. are expected to price their $600 million of long eight-year senior notes (B1/B+) on Thursday.

Meanwhile, the secondary space was soft on Wednesday as a risk-off attitude pervaded the market.

However, Frontier Communications Corp.’s capital structure was making gains after news broke that the telecommunications company sold its assets and operations in four states.

Teva Pharmaceutical Industries Ltd.’s junk bonds remained in focus with the notes continuing their downward spiral as the legal woes of the generic drug maker mount.

California Resources Corp.’s bellwether 8% senior notes due 2022 traded down in high-volume activity on Wednesday with crude oil futures volatile.

CNO prices

CNO Financial Group priced an upsized $500 million in 10-year senior notes (Baa3/BB+/BB+) on Wednesday at par to yield 5¼%, according to a market source.

Pricing came tight to talk for a yield of 5¼% to 5½% and in line with early guidance in the low to mid 5% area, sources said.

Goldman Sachs & Co. LLC (lead left), Barclays, KeyBanc Capital Markets LLC and RBC Capital Markets LLC are bookrunners for the registered offering.

Proceeds from the debt refinancing deal will be used to redeem the 4½% notes due 2020 and repay amounts under the revolving credit facility.

Neiman, GoDaddy on deck

While the forward calendar is thin, it is not empty.

Neiman Marcus remains in the market with its $550 million offering of five-year second-lien notes.

Sources were looking for the deal on Wednesday, noting it may get pushed to Thursday’s business. However, it was radio silence with no updates on price talk or timing.

Early guidance for the deal remains a blended 14% coupon comprised of an 8% cash payment and a 6% PIK payment.

GoDaddy is on tap with its $600 million offering of 8.5-year senior notes with pricing expected on Thursday.

Initial talk has the deal coming in the mid 5% area, a market source said.

Frontier gains

Frontier’s capital structure was in focus and making gains following news it was selling its operations and assets in four states.

Frontier’s 10½% senior notes due 2022 gained 3 5/8 points.

The notes traded up to 72 1/8 by the late afternoon with more than $43 million of the bonds on the tape, according to a market source.

The 11% senior notes due 2025 gained 2 points to trade up to 64½ early Wednesday and stood poised to close the day around 64, sources said.

More than $21.5 million of the bonds had changed hands during Wednesday’s session.

The 10½% and 11% notes are the most liquid in Frontier’s capital structure with $2.2 billion and $3.6 billion outstanding.

Frontier announced on Wednesday that it was selling its operations and assets in Washington, Oregon, Idaho and Montana to WaveDivision Capital LLC and Searchlight Capital Partners LLC for $1.352 billion.

The sale was seen as a positive that will increase the company’s liquidity, a source said.

Teva down again

Teva’s junk bonds remained in focus in the secondary space with the notes continuing their downward spiral.

Teva’s 3.15% senior notes due 2026 dropped another 7/8 point to 77¼ on Wednesday, according to a market source.

The notes saw more than $50 million in reported volume by the late afternoon.

The 3.15% notes were down 1 5/8 points on Tuesday.

Teva’s 6% senior notes due 2024 lost 1½ points to trade down to 93½. They were down 1 7/8 points on Tuesday.

The 6 ¾% notes due 2028 dropped 1 point to 92 7/8. They took off 2½ points on Tuesday.

The sell-off in the notes continued after the generic drugmaker settled for $85 million with the state of Oklahoma over its role in the opioid crisis.

The lawsuit brought by the state of Oklahoma is one of thousands targeting drugmakers for their role in the opioid epidemic.

Teva’s liabilities could reach billions, which prompted UBS analysts to downgrade Teva’s equity, Barron’s reported.

Liability in the opioid epidemic is just one of the legal woes the generic drug maker faces, according to a market source. It is also a central player in a lawsuit accusing it of price fixing.

California Resources volatile

California Resources’ 8% senior notes due 2022 continued to trade down in the secondary space alongside crude oil futures.

The 8% notes dropped 2 points outright. They were seen at 73 1/8 bid, 73 5/8 offered and closed Wednesday around 73¼, sources said.

The notes were active with more than $17 million in reported volume during Wednesday’s session.

Crude oil futures were volatile on Wednesday, sinking $2 in intraday trading but paring their losses as the session progressed.

The barrel price of WTI crude oil for July delivery traded as low as $56.88 during Wednesday’s session but closed the day at $58.81, a decrease of 33 cents, or 0.56%.

Trade war worries and concerns about economic growth have pushed crude oil futures lower with the crude oil futures posting their worst weekly decline in recent history last week.

Indexes

Indexes posted losses on Wednesday after opening the week mixed.

The KDP High Yield Daily index dropped 21 basis points to close Wednesday at 69.62 with the yield now 5.94%.

The index was down 4 bps on Tuesday after posting a cumulative loss of 24 bps on the week last week.

The ICE BofAML US High Yield index dropped below the 8% threshold on Wednesday. The index sank 39 bps with the year-to-date return now 7.804%.

The index gained 7 bps on Tuesday after a cumulative loss of 12.7 bps on the week last week.

The index shot past 8% returns in early April, which is where it has largely remained.

The CDX High Yield 30 index dropped 24 bps to close Wednesday at 105.26.

The index was down 27 bps on Tuesday after a cumulative loss of 58 bps on the week last week.

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