New Netflix mostly unchanged; Genworth up on sale; AT&T merger backlash benefits communications

By Colin Hanner and Paul A. Harris

Chicago, Oct. 24 – It was a tale of new issues in the high yield market during Monday’s session that dominated discussion in the high yield market.

Netflix Inc. plans to add to its long-term debt with a $1 billion offering of 10-year notes at par to yield 4 3/8%. The movie and television streaming service released its third quarter figures on Oct. 17 and posted global revenue of $2.2 billion and the addition of 3.57 million subscribers during the period.

The company currently has $2.37 billion in long-term debt, as of late September, and the new issues would put the company’s debt over $3 billion in total.

In a press release, the company said it will use the senior notes for general corporate purposes, “which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.”

Moody’s Investors Services assigned a B1 rating to the new senior unsecured bonds.

Traders said activity was moderate after the news came out during Monday’s session.

Two traders said the 5½% notes due 2022 were up 5/8 point to 109 7/8, and one of the traders said the 5 7/8% notes were largely unchanged with a 112 handle.

The Stamford, Conn.-based rental company, United Rentals, Inc., announced an offering of $750 million senior notes due 2027, which the company intends to use to redeem $850 million of its 7 5/8% notes due 2022.

A market source said the 6 1/8% notes due 2023 remained unchanged at 105¼. Another market source said the company’s 5½% notes due 2025 were down ¼ point to 103¼.

Alliance Data Systems Corp. announced a proposed offering of $400 million of senior notes due 2021. The company intends to use the net proceeds of the notes to repay a portion of the outstanding indebtedness under its revolving credit facility, according to a press release.

Its 6 3/8% due 2020 were “unchanged at 102,” a trader said.

Netflix upsizes

In Monday's primary market session Netflix Inc. priced an upsized $1 billion issue of 10-year senior notes (B1/B+) at par to yield 4 3/8% on Monday, according to a market source.

The yield printed on top of yield talk.

In a structural change, call protection was extended to the life of the bond, from the previously contemplated non-call-five structure.

Morgan Stanley, JP Morgan and Goldman Sachs & Co. were the joint bookrunners.

The Los Gatos, Calif.-based distributor of movies, television shows and other content to subscribers plans to use the proceeds for general corporate purposes.

United Rentals prices tight

United Rentals (North America), Inc. priced a $750 million issue of 10.5-year senior notes due (B1/BB-) at par to yield 5½% on Monday, according to a prospectus filed by the issuer.

The yield printed at the tight end of the 5½% to 5 5/8% yield talk.

Morgan Stanley & Co., BofA Merrill Lynch, Wells Fargo Securities LLC, Citigroup Global Markets, Scotia Capital, MUFG, Barclays, Deutsche Bank Securities Inc. and JP Morgan Securities LLC were the joint bookrunners.

The Stamford, Conn. equipment rental company plans to use the proceeds to redeem its 7 5/8% senior notes due 2022.

Alliance Data upsizes

Alliance Data Systems Corp. priced an upsized $500 million issue of 5 7/8% senior notes on Monday, according to a company press release.

The issue size was increased from $400 million.

The Plano, Texas-based provider of data-driven marketing and loyalty solutions plans to use the proceeds pay down its revolver and for general corporate purposes.

Tutor Perini roadshow

Tutor Perini Corp. began a roadshow on Monday in New York and New Jersey for $500 million of eight-year senior notes, according to a syndicate source.

The roadshow continues in New York on Tuesday, moves to Boston on Wednesday and to Los Angeles on Thursday.

Goldman Sachs & Co. is the left bookrunner for the Rule 144A and Regulation S offer. SunTrust Robinson Humphrey, BMO Securities and KeyBanc Capital Markets are the joint bookrunners.

The notes come with three years of call protection.

The Sylmar, Calif.-based civil and building construction company plans to use the proceeds, together with borrowings under its revolver, to redeem its existing senior notes, and pay its existing term loan and revolver.

Cooper-Standard 10-year deal

Cooper-Standard Holdings Inc. is expected to price a $400 million offering of 10-year senior notes (B2/B) this week, according to a market source.

BofA Merrill Lynch is leading the Rule 144A and Regulation S offer.

The notes come with five years of call protection.

The Novi, Mich.-based supplier of systems and components for the automotive industry plans to use the proceeds, together with cash on hand, to repay its non-extended term loans outstanding under the amended and restated term loan facility.

DomusVi taps 6 7/8% notes

HomeVi SAS, the holding company for France-based DomusVI, announced in a Monday press release that it intends to make a €322 million tap of its 6 7/8% senior secured notes due 2021, via Rule 144A and Regulation S.

The company, which provides services to elderly people in France and in Spain, plans to use the proceeds as part of the financing for the contemplated acquisition of the SARquavitae group, an elderly care services provider in Spain.

The acquisition is expected to close in the first quarter of 2017.

Enterprise secured deal

Enterprise Inns plc announced in a Monday press release that it intends to sell at least £150 million of fixed-rate secured bonds due 2022.

The company is tendering for £350,479,000 of its 6½% secured bonds due in 2018 and will only go forward with the new bond offer if it receives orders for at least £150 million of the notes due 2022.

BNP Paribas and Lloyds Bank plc are acting as dealer managers. Deutsche Bank AG, London Branch is acting as tender agent.

The deadline for the tender is Oct. 28.

Enterprise Inns is a leased and tenanted pub company based in Solihull, England.

SNAI five-year secured

SNAI SpA announced in a Monday press release that its board of directors has approved the sale of €570 million of senior secured notes due 2021 for purposes of refinancing debt.

Proceeds, together with cash, will be used to finance a tender offer for the €320 million of senior secured notes due 2018, €160 million senior subordinated notes due 2018 and €110 million senior secured notes due 2018.

The prospective issuer is a Milan-based gaming company.

Selling out

Genworth Financial Inc., an insurance company, agreed to sell itself to conglomerate China Oceanwide for $2.7 billion on Monday.

Movement was said to be “very active” in 7 5/8% notes due 2021 during the day, and the notes traded as high as 104, according to a market source.

On the up

Beauty, household and cosmetic company Avon Products, Inc. continued its surge on Monday in its 7 7/8% notes due 2022, which traded up ½ point to 108 7/8, per two market sources.

A separate market source saw an increase in the company’s 6.35% notes due 2020, which were one of the day’s biggest gainers. They were up 2¼ points to 102¾.

AMC Entertainment Holdings, Inc. began a roadshow on Monday to offer a $900 million two-part offering of senior subordinated notes, but a market source said that activity was “pretty much unchanged” on the day.

The company’s 5¾% notes due 2025 saw a half-dozen trades at 100 3/8 handle, a market source said.

Wire-to-wire

After the announcement that AT&T Inc. would acquire Time Warner Inc. for $85.4 billion, the deal went under intense scrutiny on Monday. Some cited concerns about the regulatory aspects of the deal, and the stocks of both companies plummeted throughout the day.

Other telecommunication companies seemed to respond to the news surrounding the potential merger.

Sprint Corp.’s 7 7/8% due 2023 were active, but “virtually unchanged,” a market source said, adding they were up 1/8 point to 102½; a separate market source said the coupon traded as high as 102 7/8.

T-Mobile Inc.’s 6% notes due 2024 were pretty active, a trader said, citing an uptick of 1/8 point to 107 1/8.

Dish DBS Corp. saw active volume on the day’s trading. A trader said the 7¾% notes due 2026 were up 1¼ points to 113 on “active volume.” A market source said the 5% notes due 2023 were up ¼ point to 101¼.

Intelsat Corp.’s Jackson-linked 8% notes due 2024 were up 3/8 point to 101½, one trader said, while another market source quoted the notes at 101¼.

San Jose, Calif.-based Brocade Communications Systems, Inc. was down ½ to 99½.

The 8% notes due 2020 of Cablevision Systems were up 1 to 107, and CCO Holdings, LLC’s 5¾% notes due 2024 were up ½ point to 107.

Round up

Market sources saw no activity with developer and homebuilder UCP, Inc. after it withdrew its $200 million five-year notes offering.

Indexes report

The KDP High Yield Daily index price rose on the day 1.2 to 71.84. Yield, meanwhile, decreased 0.2 to 5.25%.

The Markit CDX Series 27 High Yield index was bid at 104 12/25 and offered at 104 29/50, a 1/10 increase on the day. It was the fourth gain in the last five trading days.

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