Morning Commentary: Junk edges up amid low pre-Memorial Day liquidity; CQP marked higher

By Paul A. Harris

Portland, Ore., May 28 – High yield opened unchanged as the coming Memorial Day holiday weekend, and Friday’s early bond market close ahead of the long weekend, thinned liquidity to a trickle, sources said.

Toward mid-morning a trader marked junk 1/8 to ¼ better against a backdrop of stronger equity prices.

Trading desks were at half strength, a source said.

The new CQP Holdco LP/BIP-V Chinook Holdco LLC 5½% senior secured notes due June 2031 (expected ratings B2/B) were marked higher at 101 bid, 102 offered but did not appear to be trading, sources said.

The $1.4 billion issue priced at par on Thursday as a true private that is ultimately expected to trade as a Rule 144A issue.

Another trader, also straining for color on the private placement (and also seeing no trades), heard the dealer was out with a 101¾ supporting bid.

The issue date for the bonds will be June 4.

It appears that trades ahead of that date may be akin to gray market trades, the source said.

Among other recent issues, the new Bausch Health Cos., Inc. 4 7/8% senior secured notes due 2028 (Ba2/BB) were better on Friday at par 7/8 bid, having closed Thursday at par ¾ bid, a trader said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 7 cents, or 0.07%, at $87.28 per share at mid-morning.

The new issue market remained dormant ahead of the holiday weekend.

The primary market appeared to be in summer mode as the final week of May faded and will possibly remain in summer mode in the week ahead, a trader said.

The active new issue calendar was empty on Friday.

One flicker of new issue news emanated from London earlier in the day.

Barclays advised investors that it would host a conference call for a credit from the leisure sector on Tuesday at 10:30 a.m. ET.

A deal featuring fixed- and floating-rate tranches is expected to be marketed on a roadshow by means of one-on-one meetings between investors and management on Tuesday and Wednesday.

Thursday fund flows

High-yield ETFs saw $172 million of inflows on Thursday, according to a market source.

Actively managed funds sustained $76 million of outflows on the day, the 11th consecutive daily outflows sustained by the asset managers, but the smallest among those outflows, which had been averaging $440 million per day, the source said.

News of Thursday’s daily flows followed a Thursday report that the combined high-yield funds sustained $1.37 billion of outflows in the week to the Wednesday, May 26 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.