Netflix, Liberty Cablevision price; euro junk market sees tightest print ever; newer notes rise

By James McCandless and Paul A. Harris

San Antonio, Oct. 22 – The high-yield news flow remained heavy on Tuesday as a big calendar of deals began to unwind, and the secondary space saw generally positive movement in newer notes as the week’s newsmakers continued to retain high levels of activity.

Netflix, Inc. priced approximately $2,225,000,000 equivalent of 10.5-year senior bullet notes in two tranches.

Liberty Cablevision of Puerto Rico priced an upsized $1.2 billion issue of eight-year senior secured notes at par to yield 6¾%.

Fairstone Financial Inc. priced a $125 million add-on to its 7 7/8% senior notes due July 15, 2024.

A new record was set for the all-time tight print in the European junk market, a source there said.

Crown Holdings, Inc. priced a €550 million issue of senior notes due Feb. 15, 2023 at par to yield ¾%.

In the secondary, new notes priced by KB Home, United Rentals (North America), Inc. and Charter Communications, Inc. all saw positivite movement.

Meanwhile, WeWork Cos. Inc.’s issues were declining after news broke that it will be taken over by large backer SoftBank as part of a rescue deal.

In pharma, Teva Pharmaceutical Industries Ltd.’s paper improved as the market reacted to its settlement news.

Big Book for Liberty Cable

Netflix priced approximately $2,225,000,000 equivalent of 10.5-year senior bullet notes (Ba3/BB-) in two tranches, in an upsized sale.

It included $1 billion of notes that price at par to yield 4 7/8%, 12.5 basis points inside of yield talk in the 5 1/8% area.

It also included €1.1 billion of notes that priced at par to yield 3 5/8%, also 12.5 bps inside of price talk in the 3 7/8% area.

The overall amount of issuance increased from approximately $2 billion equivalent.

The Netflix dollar-denominated 4 7/8% notes due June 2030 were trading at par ½ bid, par ¾ offered late Tuesday afternoon, according to a New York-based trader.

Meanwhile Liberty Cablevision of Puerto Rico priced an upsized $1.2 billion issue of eight-year senior secured notes (B1/B+/BB-) at par to yield 6¾%.

The issue size increased from $1 billion.

The yield printed at the tight end of the 6¾% to 7% yield talk.

The $1.2 billion deal was heard to have been playing to demand in excess of $3.5 billion from over 150 accounts, a trader said.

In drive-by action, Fairstone Financial priced a $125 million add-on to its 7 7/8% senior notes due July 15, 2024 (B1/B) at 104.00.

The reoffer price came at the rich end of price talk in the 103.75 area.

Lowest-ever print!

A zero-handle deal that priced Tuesday set a new record for the all-time tight print in the European junk market, a source there said.

Crown Holdings priced a €550 million issue of senior notes due Feb. 15, 2023 at par to yield ¾%.

The yield printed on top of final yield talk that had been revised from earlier talk in the 7/8% area.

It is the tightest-ever print on a euro-denominated junk bond, a buyside source said.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $264 million of inflows on the day.

However, actively managed high-yield funds sustained $305 million of outflows on Monday, the source said.

New notes gain

Newer notes priced this week and last saw gains during Tuesday’s session, traders said.

Los Angeles-based homebuilder KB Home’s new 4.8% senior bullet notes due 2029 landed at 100½ bid.

The $300 million deal priced in a quick-to-market trade at par on Monday.

Initial guidance was in the 5 1/8% area.

Elsewhere, Stamford, Conn.-based equipment rental company United Rentals’ new 3 7/8% senior secured notes due 2027 finished its first day at 100¾ bid.

The $750 million split-rated issue also priced at par on Monday.

Stamford, Conn.-based telecommunications company Charter’s recent 4.8% senior secured paper due 2050 inched up ¼ point to close at 101 bid.

WeWork lower

WeWork’s notes were seen declining throughout Tuesday’s session, snapping a four-day rise, market sources said.

The 7 7/8% senior notes due 2025 lost 1¼ points to close at 84¾ bid.

On Tuesday, news broke that the New York-based coworking company will accept a rescue package from its largest investor, SoftBank, which values the name at $8 billion.

As part of the package, former chief executive officer Adam Neumann will receive a $185 million consulting fee and sell about $1 billion of stock.

“I think they are finally recognizing that they can’t be just a startup anymore,” a trader said. “They’re going to have to spend a lot of time rebuilding their reputation.”

The company has seen intense negative pressure in recent weeks after an initial public offering plan pegged its value at $47 billion.

After the number was disputed, the IPO was shelved and Neumann resigned as CEO.

Teva improves

Elsewhere, in pharmaceuticals, Teva’s issues improved, traders said.

The 3.15% senior notes due 2026 gained 1¾ points to close at 78¼ bid. The 2.2% senior notes due 2021 tacked on ¼ point to close at 95½ bid.

The Petach Tikva, Israel-based generic drug maker announced on Monday that it had reached a settlement with two Ohio counties over opioid-related claims just before a federal trial was set to begin.

The terms call for the company to pay out $20 million and donate $20 million in opioid addiction medication.

Teva concurrently announced that it had reached an agreement in principle on a blanket settlement against other litigation pending, agreeing to donate medicine it values at $23 billion over the next 10 years along with a cash payment of $250 million.

“It’s a win for holders and the company if that’s the final number,” a trader said. “The expectation has been that they would need to shell out a number in the high hundreds.”

Indexes trend up

The KDP High Yield Daily index picked up 5 basis points on Tuesday, finishing the session at 71.23 with the yield lowering to 5.56%

The index trailed by 5 bps on Monday and finished unchanged on Friday and Thursday.

The ICE BofAML US High Yield index inched up 1.5 bps with the year-to-date return now at 11.850%.

The index gained 5.9 bps on Monday, tacked on 1.7 bps on Friday and rose 7.9 bps on Thursday.

The CDX High Yield 30 index dipped 33.52 bps to 107.3184.

The index reached up 33.29 bps on Monday, rose 33.74 bps on Friday and picked up 33.92 bps on Thursday.

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