Junk sector swings to losses as CPE awaited; Carnival falls back; funds out $3.5 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 22 – The wild market swings that categorized the secondary space in 2022 continued into the final days of the year.

The pendulum again swung to losses on Thursday with the market falling ¼ to ½ point to nearly eliminate gains from the previous session.

While many have already thrown in the towel on 2022, the release of the Consumer Price Expenditure report, the Federal Reserve’s preferred inflation gauge, promises to spark more volatility.

However, with liquidity light, activity in the space remained centered on large, liquid issues.

Carnival Corp.’s junk bond pulled back on Thursday after earnings were announced on Wednesday and the subsequent market rally lifted the cruise line operator’s notes 1 to 3 points.

While the broader market eliminated its gains from the previous session, Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) did not.

The 6½% notes held despite the pressure on the market with the notes now on an 85-handle.

Meanwhile, high-yield mutual and exchange-traded funds saw another outsized outflow with $3.5 billion leaving the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flows Report Newsline.

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