High yield in retreat amid market volatility; oil and gas take a beating; mining names weaker

By Stephanie N. Rotondo

Phoenix, Oct. 15 – There was “a lot of carnage” in the high-yield bond market on Wednesday, a trader said.

The broader markets were also volatile – mostly toward the downside – amid a drop in consumer spending, manufacturing and inflation data. The weak information has investors considering whether the U.S. economy can hold up in the midst of a global economic slowdown.

“It was up, up, up for so long,” the trader said. “It could stay this way for awhile.

“It’s definitely been a lot wider than this before,” he noted.

“Newer deals were obviously weaker,” another trader said.

Dynegy Inc.’s $5.1 billion three-tranche deal from Friday “wasn’t down that much,” a trader said.

But Burger King Worldwide’s 6% notes due 2022 – a $2.25 billion issue that priced on Sept. 24 – “held in like a rock,” a trader said, deeming the issue unchanged at 99.

Anything even remotely energy related was getting clobbered in midweek trading.

“Anything oil and gas, there’s just bloodshed,” a trader said.

The mining sector also came under pressure, as the market’s volatility weighed on commodity prices.

Cliffs Natural Resources Inc.’s had “a bunch of trades,” a trader said, all to the down side.

The softness came after the name experienced a rebound in the previous session, attributed to rising iron ore prices and potential merger interest from Glencore.

The trader said the 4 7/8% notes due 2021 declined almost 3 points to 65˝.

© 2015 Prospect News.
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