Junk bond sell-off intensifies; Citrix gives back YTD gains; Ford below par; AMC Networks adds

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 21 – No dollar-denominated deals priced during Tuesday's session in the high-yield bond primary market, according to market sources.

Meanwhile, it was a brutal day in the secondary space with selling intensifying as geopolitical and interest rate concerns converged with Treasury yields skyrocketing.

News Russia was suspending observation of its nuclear treaty with the United States added a new level of anxiety to a market that was already expressing trepidation about the Federal Reserve.

While there were several days over the previous two weeks where a low open gave way to dip buying with the market lifted into the close, there was no lifting of bids on Tuesday.

The cash bond market opened down ¼ point and continued to fall as the session progressed with the market off ¾ to 1 point at the close, sources said.

The rout in Treasuries continued to pressure the junk bond market with the 10-year Treasury yield closing the day at 3.954%, its highest level since November 2022.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) gave back their year-to-date gains with the notes trading at their lowest level since early January.

Ford Motor Credit Co. LLC’s 7.35% senior notes due 2030 (Ba2/BB+) fell to their lowest level since pricing in early January with the notes giving up all gains and breaking below par on heavy volume.

While the broader market had heavy selling pressure on Tuesday, AMC Networks Inc.’s 4¼% senior notes due 2029 (Ba3/BB-) continued to add with a tender offer for the company’s short-dated maturities pushing the notes higher.

Citrix gives back gains

Citrix’s 6½% senior secured notes due 2029 gave back its year-to-date gains on Tuesday with the notes falling to their lowest level since early January.

The 6½% notes were off almost 1½ points.

They launched the day on an 86-handle and continued to trend lower as the session progressed, a source said.

The notes were changing hands in the 85½ to 86 context heading into the market close with the yield rising to 9 5/8%.

There was $19 million in reported volume.

Citrix’s notes were on a tear in January with the notes trading up to a 90-handle in early February, their highest level since the $4 billion issue priced at 83.561 in September 2022.

However, the notes have been on a steady downtrend since peaking in early February.

The large, liquid issue is a high-beta name that has been moving with the market, a source said.

Ford below par

Ford’s 7.35% senior notes due 2030, one of the first deals to price in 2023, were off 1½ points in heavy volume on Tuesday with the once high-flying issue breaking below par.

The 7.35% notes sank to a par-handle in early trading and continued to move lower as pressure on the market mounted.

The notes were pushed to par in the early afternoon but sank as selling pressure intensified into the close.

The 7.35% notes closed the day in the 99¼ to 99½ context, a source said.

Ford’s 7.35% notes, which priced at par on Jan. 3, outperformed as the broader market ripped in January.

The notes traded up to a 107-handle amid the post-Fed surge on Feb. 2 but have come in alongside the broader market.

AMC Networks adds

While Tuesday marked an ugly day for risk assets, AMC Network’s 4¼% senior notes due 2029 continued to add in heavy volume.

The 4¼% notes rose another ¾ point to close Tuesday at 72¾, a source said.

The yield was 10½%.

There was $20 million in reported volume.

The notes shot up 8 points last Friday following a surprise earnings beat.

The company’s tender offer for its 5% senior notes due 2024 and 4¾% senior notes due 2025 continued to add to the strong gains of the 2029 notes, a source said.

The company will pay a par purchase price for the 2024 notes and 95 for the 2025 notes, Prospect News reported.

While volume was light, the 4¾% notes due 2025 rose another 2½ points to close Tuesday at 93½.

The notes were trading around 86 heading into last Friday’s session.

Outflows continue

The dedicated high-yield bond funds sustained $1.175 billion of net daily cash outflows on Friday, according to a market source.

High-yield ETFs had $1 billion of outflows on the day.

Actively managed high-yield funds sustained $175 million of outflows on Friday, the source said.

That follows the previous session's massive $2.29 of daily outflows from the ETFs.

The combined funds are tracking $3.64 billion of net outflows on the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index fell 36 points to close Tuesday at 51.72 with the yield now 7.63%.

The index posted a cumulative decline of 69 points on the week last week.

The ICE BofAML US High Yield index sank 79.5 basis points with the year-to-date return now 1.401%.

The index posted a cumulative loss of 93.7 bps on the week.

The CDX High Yield 30 index plunged 87 bps to close Tuesday at 101.23.

The index posted a cumulative loss of 16 bps on the week last week.

© 2015 Prospect News.
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