Morning Commentary: Junk opens weaker; Cablevision notes slip below issue prices; Alcoa lower

By Paul A. Harris

Portland, Ore., Sept. 28 – High-yield bonds started the week lower, according to a trader in New York.

iShares iBoxx $ High Yield Corporate Bd (HYG) was trading at $83.11 at midday on Monday, down 96 cents.

SPDR Barclays High Yield Bond ETF (JNK) was 35 cents lower at $35.76 per share.

Energy and commodities bonds continue to sell off, the trader said.

Chesapeake Energy Corp.’s 5¾% notes due 2023 were down a couple of points at 64 bid, 65 offered. They ended last week wrapped around 68, the source said.

New Cablevision notes slip

The new week saw new notes issued by Altice/Cablevision Systems Corp. slip below new issue prices, the trader said.

The $4.8 billion of notes came Friday in three tranches, all of which sold at par.

The 6 5/8% 10-year senior guaranteed notes (Ba1/BB-) were 99 bid, 99½ offered heading into midday.

The 10 1/8% 7.25-year senior unsecured notes (B2/B) were also 99 bid, 99½ offered.

The 10 7/8% 10-year senior unsecured notes (B2/B) were 98¾ bid, 99¼ offered.

The new Olin Corp. bonds, although weaker on Monday, were holding above new issue prices, the trader said.

Olin priced $1.22 billion of senior notes (Ba1/BB+) in two tranches at par on Friday.

The Olin 9¾% notes due Oct. 15, 2023 were par ¼ bid, par ¾ offered heading into midday.

The 10% notes due Oct. 15, 2025 were par 3/8 bid, par 5/8 offered.

SunOpta kicks off deal

In the primary market SunOpta Foods Inc. commenced marketing a $330 million offering of senior secured second-lien notes due 2022 on Monday.

The deal is on track to price during the week of Oct. 5.

BMO, Jefferies LLC and Rabobank are the joint bookrunners.

The Toronto-based vertically integrated global company plans to use the proceeds, together with the proceeds from a common share offer and borrowings under its existing credit facilities, to fund the acquisition of Sunrise Holdings (Delaware), Inc.

Only one other deal is parked on the active new issue calendar.

NN, Inc. is scheduled to wrap up a roadshow for its $300 million offering of eight-year senior notes (Caa1/B) in the midwestern United States on Monday.

Formal price talk has not yet been announced; however, preliminary guidance in the 8½% area was heard in the market late last week, sources say.

SunTrust is the left bookrunner for the acquisition deal. KeyBanc and Regions are the joint bookrunners.

Alcoa bonds weaken

News that aluminum producer Alcoa would split into two publicly traded companies pushed share prices higher but caused the company’s bonds to weaken, the trader said.

Alcoa’s 5 1/8% notes due 2024 were 90 bid, 91 offered heading into midday, down from 97 bid, 97½ last week.

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