Secondary soft, liquidity thin; AMC losses mount; Nabors down; Carnival rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 20 – The primary market remained sidelined on Monday as high-yield issuance for 2021 has likely concluded, market sources say.

Meanwhile, liquidity in the secondary space continued to thin with activity in the space expected to further decrease as the holiday-shortened week progresses.

While volumes were light, the market was soft as investors grappled with a surge in Covid cases and the expected defeat of the “Build Back Better Act.”

Nabors Industries, Inc.’s 5¾% senior notes due 2025 were under pressure alongside the broader energy sector as crude oil futures fell.

Losses continued to mount for AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Ca/CCC-).

However, other reopening trade names were paring their losses from the previous week with Carnival Corp.’s junk bonds on the rise.

Nabors down

Nabors 5¾% senior notes due 2025 were under pressure on Monday.

The notes fell 1¼ point in active trading.

They were changing hands in the 88 5/8 to 88¾ context heading into the market close, a source said.

There was about $10 million in reported volume during the session.

The oil and gas drilling contractor’s junk bonds were under pressure alongside the broader energy sector.

Crude oil futures sank on Monday as traders assessed the impact a resurgence in Covid outbreaks will have on demand.

WTI crude oil futures settled at $68.23, a decrease of $2.63 or 3.71%. Brent crude oil futures settled at $72.14, a decrease of $1.38 or 1.88%.

AMC losses mount

AMC Entertainment’s 10% senior secured second-lien notes due 2026 continued to leak on Monday with the notes down another 1½ points.

The 10% senior notes fell to a 92-handle and were changing hands in the 92¼ to 92 3/8 context heading into the market close.

There was more than $10 million in reported volume.

The 10% notes have fallen almost 10 points over the past week.

Fears of renewed lockdowns due to a resurgence in Covid cases and dimming views of a box-office recovery have driven down the notes.

Carnival gains

While losses continued to mount for AMC, other reopening trade names saw a minor reprieve from the pressure felt the previous week.

The overall market was soft on Monday.

However, Carnival’s junk bonds pared their losses from last week’s sell-off.

Carnival’s 6% senior notes due 2029 were up about 1 point.

The 6% notes returned to a 97-handle and were changing hands in the 97¼ to 97½ context heading into the market close.

There was about $10 million in reported volume.

Carnival’s 5¾% senior notes due 2027 were up about 1½ points to close the day at 98½.

There was more than $4 million in reported volume.

$263 million Friday inflows

The dedicated high-yield bond funds saw $249 million of net daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $263 million of inflows on the day.

Actively managed high-yield funds were negative on the day, sustaining $14 million of outflows on Friday, the source said.

Indexes

The KDP High Yield Daily index fell 11 points to close Monday at 65.38 with the yield now 4.13%.

The index posted a cumulative loss of 9 points on the week last week.

The CDX High Yield 30 index was down 12 bps to close Monday at 108.35.

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