Centene expected to sell $1.7 billion eight-year notes on Wednesday; initial talk 5¾% area

By Paul A. Harris

Portland, Ore., May 9 – Centene Corp. is expected to price $1.7 billion of eight-year senior notes (Ba1/BB+) on Wednesday following a mid-morning conference call with investors, according to market sources.

Initial talk has the Rule 144A and Regulation S for life deal coming to yield in the 5¾% area, a trader said.

Citigroup Global Markets Inc. is the left bookrunner. Barclays, SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Allen & Co., BMO Capital Markets Corp., Fifth Third Bank, Morgan Stanley & Co. LLC, MUFG, PNC Capital Markets LLC, Regions Securities and U.S. Bancorp Investments Inc. are the co-managers.

The notes feature a make-whole call at Treasuries plus 50 basis points for the first three years, then become callable at par plus 75% of the coupon. They also feature a three-year 40% equity clawback and a 101% poison put.

The issuing entity is Centene Escrow I Corp., which is to be merged with and into Centene Corp.

The St. Louis-based managed care and specialty health care services provider plans to use the proceeds to help fund its acquisition of Fidelis Care and to repay debt under its revolving credit facility.

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