Morning Commentary: Benteler, Talen on deck; junk firms in early Thursday trading

By Paul A. Harris

Portland, Ore., April 27 – The high-yield primary market remained active on Thursday morning with news on pending dollar- and euro-denominated issues, sources said.

The dual-currency €975 million equivalent offering of five-year senior secured notes (Ba3/BB-) from first-time issuer Benteler International AG, which underwent some widening earlier in the week, came out with tight-to-guidance price talk on Thursday.

The deal features $500 million of notes talked at 10½% to 10¾%, tight to initial talk in the high-10% area. The early whisper was in the 10½% area.

The dollar-denominated tranche is heard to be two-times to three-times oversubscribed, a bond trader said on Thursday morning.

Benteler is also offering €525 million of notes talked in the 9½% area, tight to initial price talk in the mid-to-high 9% area. Early whisper was in the low-to-mid 9% area.

The notes in both tranches are set to price on Thursday.

Meanwhile, Talen Energy Supply, LLC is expected to price an $825 million offering of seven-year senior secured notes (Ba3/BB/BB+) on Thursday afternoon.

Pending official price talk, the deal is in the market with initial guidance in the 8¾% to 9% area, sources say.

In the secondary market, bonds sold Wednesday by Six Flags Entertainment Corp., the 7¼% senior notes due May 2031 (B3/B), broke below issue price and continued to lag on Thursday morning, the trader said, marking them at 98 5/8 bid, 98 7/8 offered.

The $800 million issue, which priced at 99.248 to yield 7 3/8% in a Wednesday drive-by, traded as low as 98½, the trader added.

Meanwhile, the Tekni-Plex, Inc. (Trident TPI Holdings, Inc.) 12¾% senior notes due December 2028 (Caa2/CCC+) were performing impressively at 101¾ bid, 102¼ offered on Thursday morning, the trader said.

The $620 million issue priced at 98.939 to yield 13% on Tuesday, with huge demand leading to rather harsh allocations, sources say.

The broad high-yield bond market was up ¼ of a point on Thursday morning, the trader said.

With the S&P 500 stock index up 0.93% at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.23%, or 17 cents, at $74.96.

Fund flows

The dedicated high-yield bond funds sustained $502 million of net daily cash outflows on Wednesday, according to a market source.

High-yield ETFs saw $469 million of outflows on the day.

Actively managed high-yield funds sustained $33 million of outflows on Wednesday, the source said.

As the market awaits a report on the weekly cash flows of the various asset classes, expected later Thursday from fund-tracker Refinitiv Lipper, the combined high-yield funds are tracking $850 million of net inflows for the week to Wednesday’s close, according to the market source.

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