Warner Music, Kennedy-Wilson add-on price; Sprint continues to dominate secondary; Frontier active

By James McCandless and Paul A. Harris

San Antonio, Feb. 28 – The high-yield space was relatively calm on Wednesday, with the only new issues being Warner Music Group’s $325 million issue of eight-year senior notes and Kennedy-Wilson, Inc.’s $250 million add-on to its 5 7/8% senior notes due 2024, as the secondary market was largely quiet, traders said.

Volume was taken up mostly by recently priced issues and volume favorites backed by recent news.

Sprint Corp. continues to dominate the secondary market since its $1 billion pricing last Wednesday.

Activity spiked in Valeant Pharmaceuticals International, Inc. after a Q4 report showed a net income lower than analyst estimates.

Frontier Communications Corp. notes maintained high volume after Tuesday’s quarterly earnings report and Wednesday’s news that it will rescind its quarterly dividend.

Intelsat SA and California Resources Corp. contributed to the day’s activity.

In Wednesday's primary market Warner Music Group priced a $325 million issue of eight-year senior notes (B3/B-) at par to yield 5½% in a quick-to-market trade.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Credit Suisse Securities (USA) LLC was the lead bookrunner. Barclays, Goldman Sachs & Co., Morgan Stanley & Co., UBS Investment Bank and Nomura were the joint bookrunners.

The New York-based music content company plans to use the proceeds to repay debt.

Elsewhere Kennedy-Wilson, Inc. priced a $250 million add-on to its 5 7/8% senior notes due 2024 at 98.625.

The real estate investment company plans to use the proceeds to repay the entire amount currently drawn under its revolving credit facility and a portion of the amount outstanding under its term loan facility.

New Enterprise talk

New Enterprise Stone & Lime Co., Inc. talked its $450 million offering of eight-year senior secured notes (B2/B+) to yield 6¼% to 6½%.

Pricing is set for Thursday.

Goldman Sachs & Co. is the left bookrunner. KKR is the joint bookrunner.

The New Enterprise, Pa.-based heavy construction materials supplier and contractor plans to use the proceeds, together with cash on hand and borrowings under its asset-based revolving credit facility, to pay off its existing term loan and the required prepayment premium.

Teva sets roadshow

Teva Pharmaceutical plans to start a two-team international roadshow on Thursday for a $3.5 billion equivalent four-part offering of non-callable senior notes.

The offer is coming in tranches of dollar- and euro-denominated notes.

Teva Pharmaceutical Finance Netherlands III BV, the dollar-denominated issuing entity, is selling six-year notes and 10-year notes.

Teva Pharmaceutical Finance Netherlands II BV, the euro-denominated issuing entity, is selling four-year notes and seven-year notes.

Active bookrunner Barclays will bill and deliver for the 10-year notes and seven-year notes. Active bookrunner BofA Merrill Lynch will bill and deliver for the six-year notes and the four-year notes. BNP Paribas, Citigroup, Credit Suisse and HSBC are also active bookrunners.

The Jerusalem-based pharmaceutical company plans to use the proceeds to fully repay its existing dollar-denominated and yen-denominated term loans due 2018 through 2022, as well as to fund the partial early redemption of its existing senior notes due 2018, and for general corporate purposes.

With the conclusion of the conclusion of the JPMorgan Global High Yield and Leveraged Finance Conference in Miami on Wednesday, look for deal announcements in the final two sessions of the February-March crossover week, a bond investor advised.

There are a couple of homebuilders and possibly even a retail credit, the source said.

Sprint rolls on

Notes in the $1 billion new issue of Overland Park, Kan.-based wireless company Sprint continued their high volume activity Wednesday, a market source confirmed, retaining a place among the highest traded in the secondary market.

Despite the activity, the 7 5/8% notes due 2026 remained level at just below 100 bid.

Valeant active on lower income

Canada-based pharmaceutical name Valeant saw a spike in activity after announcing its Q4 numbers, a trader said. The company reported $2.16 billion in revenue, missing analyst estimates.

“That made them very active on the day,” a trader said.

The 7¼% issues due 2022 fell about ½ point to close near 100½ bid.

Frontier down on news

Norwalk, Conn.-based wireline telecom name Frontier Communications notes declined after reports confirmed that the company would be rescinding its dividend in order to free up capital to pay down existing debt, partially reversing gains made on Tuesday’s Q4 report. The company reported $2.22 billion in revenues for Q4.

“People have been squawking at them for years to get rid of that dividend,” a trader said. “They have not had a reason for one in a while, so it’s a good move to scrap it.”

The 7 5/8% notes due 2024 shaved off ½ point to close at 63½ bid. The 10½% notes due 2022 lost 1½ point to close at about 85 bid. The 11% notes due 2025 fell 1½ point to close at 78 bid.

Volume names active

Luxembourg-based satellite communications company Intelsat’s notes were active again after Tuesday’s comments by FCC chairman Ajit Pai sent them trading higher. Pai suggested changes to the U.S. 5G network that would likely benefit it and other satellite names.

The Intelsat Jackson SA 5½% notes due 2023 dropped ¾ point to close at 83 bid. The 7¼% notes due 2020 lost about 1 point to close at 92¾ bid.

Los Angeles-based independent oil and gas name California Resources saw its 6% paper due 2024 jump about 1½ point to close under 63 bid.

Indicators fall slightly

The KDP High Yield Daily Index shaved off 5 basis points to end at 70.75. Its yield rose 2 bps to end at 5.64%.

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