Morning Commentary: High yield opens firmer; Sprint rallies on financial results; GFL on deck

By Paul A. Harris

Portland, Ore., Jan. 26 – Cash bonds were generically up ¼ to ½ point in the early going on Tuesday, a trader said.

Bonds of Sprint Corp. were staging a rally, up 2 to 3 points, following the company’s latest quarterly financial report.

The Sprint 7 7/8% senior notes due Sept. 15, 2023 were at 70 bid, 71 offered early Tuesday, after trading with a 66 handle on Monday, the trader said, adding that Sprint paper was up 2 to 3 points throughout the structure.

The company reported operating results for the third fiscal quarter of 2015, including growth in postpaid phone customers for the second consecutive quarter with the highest net additions in three years at 366,000, the lowest-ever postpaid churn for a third quarter at 1.62%, and the highest postpaid net ports on record.

The company also raised its fiscal year 2015 adjusted EBITDA guidance to $7.1 billion to $8 billion from the previous expectation of $6.8 billion to $7.1 billion.

Elsewhere the freshly issued Lamar Advertising Co. 5¾% senior notes due Feb. 1, 2026 (Ba1/BB-) were trading on either side of 102 early on Tuesday, the trader said.

The $400 million issue priced at par on Monday, playing to an order book that was multiple-times oversubscribed on the back of strong reverse inquiry, sources said.

High-yield ETFs were stronger on the morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 39 cents, or 0.5%, at $78.44 per share. SPDR Barclays High Yield Bond ETF (JNK), at $32.83 per share, was up 15 cents or 0.47%.

In the primary market, GFL Environmental Corp. talked a minimum $250 million offering of five-year senior notes (B3/B) to yield in the 9¾% area.

Books close at 2 p.m. ET on Tuesday, and the deal is set to price thereafter.

The size of the acquisition funding deal could grow to $375 million, market sources say.

Credit Suisse, BMO and Barclays are the joint bookrunners.

Meanwhile Centene Corp. had been expected to launch a deal on Tuesday, according to a market source.

However that deal is delayed as the company announced that it cannot locate hard drives containing personal health – and other information on 950,000 patients in its inventory, the source said.

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