Morning Commentary: High-yield market continues to gyrate as a few buyers step forward

By Paul A. Harris

Portland, Ore., March 20 – With the stock market in the United States opening in the green on Friday, high-yield bonds were up 1 point to 2 points, according to a New York-based trader.

By mid-morning, however, junk was slightly off its highs, the source added.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.79%, or 57 cents, at $71.92 per share at mid-morning.

The HCA Inc. 5 3/8% senior notes due February 2025 were up 3/8 of a point at 94¼ bid, said the trader, who added that $1 million of bonds had changed hands.

It was possibly a defensive move with respect to the ongoing coronavirus pandemic, the trader said, but added that at the same time the HCA 5 7/8% senior notes due February 2026 were lower on the day, last trading at 94 1/8.

The Charter Communications, Inc. CCO Holdings, LLC/CCO Holdings Capital Corp. 4.8% senior secured notes due March 2050 were up 2 points on the morning, the trader said.

Prices of bonds in the deeply distressed energy sector tended to be generally correlated with crude oil prices, according to the source.

The barrel price of West Texas Intermediate crude oil for April 2020 delivery, which surged a whopping 23% on Thursday, fell back 3.65% on Friday, down 92 cents at $24.30.

The trader faced uncertainty as to how long the company will remain open because of the Covid-19 situation in the New York City area and speculated that Friday might be the last day that traders at the firm would be allowed to come to work.

Thursday inflows

The dedicated high-yield bond funds saw $53 million of net inflows on Thursday, a market source said.

High-yield ETFs saw $453 million of inflows on the day.

However, actively managed high-yield funds sustained $400 million of outflows on Thursday, the source said.

News of Thursday’s daily cash flows trails a Thursday afternoon report that the combined high-yield funds sustained $2.9 billion of outflows in the week to the Wednesday, March 18, close, according to Lipper U.S. Fund Flows.

Those outflows took place as part of an epic exodus of cash from the corporate bond market, with U.S.-based taxable bond funds seeing $55.9 billion of outflows on the week, the largest weekly outflows on record, the market source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.