Morning Commentary: Junk holds in as ETFs see substantial outflows; TPC, Rexel, Gestamp on deck

By Paul A. Harris

Portland, Ore., May 4 – High-yield bonds were trading flat but outperforming equities on Wednesday, according to a trader on the East Coast of the United States.

The soft spot in the junk market is the high-yield ETFs, the trader said, adding that there were $200 million of bids wanted in competition (BWIC) lists circulating in the market on Wednesday.

The ETFs saw their third substantial daily outflow on Tuesday, at $684 million.

The ETFs were negative $314 million on Monday and negative $862 million last Friday, sources say.

The ETFs were lower on the morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down a 25 cents, or 0.3%, at $82.71 per share. SPDR Barclays High Yield Bond ETF (JNK), at $34.74 per share, was down 14 cents, or 0.42%.

Tuesday’s deals

Tuesday’s new issues were turning in solid performance in the secondary market, the trader said.

Hanesbrands Inc.’s new 4 5/8% senior notes due May 15, 2024 and 4 7/8% senior notes due May 15, 2026 (both Ba2/BB) were up ½ point on Wednesday.

Both issues came at par in a pair of $900 million tranches on Tuesday, in executions that seemed “pretty snug,” the trader said.

The new United States Steel Corp. senior secured notes due 2021 (B1/BB-) were at 101 bid, 101½ offered on Wednesday morning.

The upsized $980 million issue (from $500 million) priced at par on Tuesday.

Primary market

In the primary market PTC, Inc. talked its $500 million offering of eight-year senior notes (Ba3/BB-) to yield in the 6¼% area.

The public offering, which was in the market with initial yield guidance of 6¼% to 6½%, is expected to price Wednesday.

Mobile Mini, Inc. is guiding a $250 million offering of eight-year senior notes with initial talk in the 6% area.

The deal comes to market on a significant amount of reverse inquiry, and its size is not expected to grow.

A mid-morning investor call was scheduled to take place on Wednesday, and the offering is expected to price Wednesday afternoon or Thursday morning.

Rexel SA talked an upsized €650 million offering of senior notes due 2023 to yield in the 3 5/8% area.

Initial yield guidance was in the high 3% context.

Books are closed, and the deal, which was upsized from €500 million, is set to price Wednesday.

And Gestamp Funding Luxembourg SA talked its €400 million offering of senior secured notes due 2023 (Ba3/BB+) to yield 3½% to 3¾%.

Timing on the deal is accelerated. It had been expected to be in the market through Thursday. However updated timing has it pricing Wednesday.

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