CNO Financial, GoDaddy on tap; Fiat up on merger; Teva drops post settlement

By Abigail W. Adams

Portland, Me., May 28 – While the domestic high-yield primary market saw no deals price on Tuesday, two new deals joined the forward calendar.

GoDaddy Operating Co. and GD Finance Co. Inc. began marketing $600 million of long eight-year senior notes (B1/B+) with pricing expected on Thursday.

CNO Financial Group Inc. started a brief roadshow for a $425 million offering of 10-year senior notes (Baa3/BB+/BB+) that will run through Wednesday with pricing expected thereafter.

Meanwhile, the secondary space was soft on Tuesday, although trading volume was light on the return from the holiday weekend.

Fiat Chrysler Automobiles NV’s junk bonds were making gains following news of its proposed merger with Groupe Renault.

L Brands Inc.’s 5¼% senior notes due 2028 continued their upward trajectory on Tuesday with the notes again posting gains on the heels of an earnings beat.

However, Teva Pharmaceutical Industries Ltd.’s junk bonds dropped in high-volume activity following a settlement with the state of Oklahoma regarding its contribution to the opioid epidemic.

GoDaddy on tap

GoDaddy subsidiaries GoDaddy Operating Co. and GD Finance Co. Inc. began marketing $600 million of 8.5 year senior notes on Tuesday.

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

Pricing is expected on Thursday.

J.P. Morgan Securities LLC is leading the Rule 144A and Regulation S offering.

Proceeds from the refinancing deal will be used to repay $600 million in term loan borrowings under its senior secured credit facilities.

CNO on the road

CNO Financial Group started a brief roadshow on Tuesday for a $425 million offering of 10-year senior notes, which will run through Wednesday with pricing expected thereafter, according to a market source.

Early whispers had the deal coming with a yield in the low to mid 5% area, a source said.

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

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

The forward calendar

The new deals join Neiman Marcus Group Ltd. LLC’s $550 million offering of five-year second-lien notes on the forward calendar.

While sources had expected the deal to clear the calendar last week, there were no updates on the deal as of press time on Tuesday.

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

Fiat Chrysler gains

Fiat Chrysler’s junk bonds were making gains following news of its proposed merger with Groupe Renault.

Fiat’s junk bonds were up 1 to 2 points on the news.

The 5¼% senior notes due 2023 were trading between 104¾ and 105¼ during Tuesday’s session, a market source said.

They stood poised to close the day at 104 5/8, a source said.

The notes saw more than $10 million in reported volume during Tuesday’s session.

The proposal involves a merger to create a new company that would be owned 50/50 by Fiat and Renault shareholders.

The merger would make the combined companies the third largest global automaker.

The deal still requires approval from both companies’ boards of directors.

L Brands gains

L Brands 5¼% senior notes due 2028 continued their upward trajectory in active trading on Tuesday.

The notes were up another ¾ point to close the day at 90¼, according to a market source.

More than $19 million of the bonds were on the tape during Tuesday’s session.

The 5¼% notes have been posting gains since the fashion retailer, best known for its Bath & Body Works and Victoria’s Secret brands, released better than expected first-quarter earnings late last week.

While Victoria’s Secret sales continued to lag, Bath & Body Works sales were up an unexpected 15%.

Prior to the earnings report, the 5¼% notes were changing hands around 88, sources said.

Teva sells-off

Teva’s junk bonds were trading down in high-volume activity on Tuesday after the generic drug maker reached a settlement with the state of Oklahoma over its alleged liability in the opioid crisis.

Teva’s 3.15% senior notes due 2026 dropped 1 5/8 points.

They were poised to close the day around 78¼, according to a market source.

With more than $44.5 million in reported volume, the bonds were the most actively traded issue in the secondary space.

Teva’s 6% senior notes due 2024 were down 1 7/8 point to 95. The notes saw more than $28 million in reported volume.

Teva’s 6¾% senior notes due 2028 were down 2½ points to 93¾. There was more than $21 million of the bonds on the tape by the late afternoon.

Teva’s capital structure experienced a sell-off on Tuesday after the company announced it had reached an $85 million settlement with the state of Oklahoma over its role in the opioid crisis.

There is concern the settlement will be followed by others with the legal woes of the generic drug maker mounting, a market source said.

The lawsuit brought by Oklahoma is one of thousands that are targeting drug makers for their role in the opioid crisis.

Teva’s junk bonds were also under pressure in mid-March after it was named as the primary player in an unrelated lawsuit.

The lawsuit, brought by 44 states, alleged Teva conspired with other drug makers to divvy up the generic drug market to avoid competition and fix prices.

Indexes mixed

Indexes opened the week mixed after all posted cumulative losses for the week last week.

The KDP High Yield Daily index fell 4 basis points to close Tuesday at 69.83. However, the yield remained flat at 5.87%.

The index posted a cumulative loss of 24 bps on the week last week.

The ICE BofAML US High Yield index gained 7 bps with the year-to-date return now 8.19%.

The index saw a cumulative loss of 12.7 bps on the week last week.

The CDX High Yield 30 index dropped 27 bps to close Tuesday at 105.50. The index posted a cumulative loss of 58 bps on the week.

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