Morning Commentary: Away from commodities, junk opens flat; Kraton, Clear Channel start roadshows

By Paul A. Harris

Portland, Ore., Dec. 7 – Apart from bonds in the troubled energy, commodities and mining sectors, junk opened the week basically unchanged heading into the Monday mid-morning, according to a trader based on the East Coast of the United States.

ETFs were trading lower.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 51 cents at $82.15 per share.

The SPDR Barclays High Yield Bond ETF (JNK), at $34.89 per share, was off 19 cents.

Ball Corp.’s dollar-denominated 4 3/8% senior bullet notes due Dec. 15, 2020 (Ba1/BB+/BB+) were unchanged at 101¼ bid heading into mid-morning.

The $1 billion tranche priced at par last Wednesday as part of an upsized €2,043,752,359 equivalent three-part deal that also featured euro-denominated five- and eight-year paper.

The cash flows of the dedicated high-yield funds were negative on Friday, the trader said.

High-yield ETFs saw $268 million of outflows on the day.

Asset managers sustained $155 million of outflows on Friday.

Modest calendar

The primary market produced a modicum of news on Monday.

Kraton Polymers, Inc. started a roadshow on Monday for a $425 million offering of eight-year senior notes (B3/CCC+).

The acquisition deal, via Credit Suisse, Nomura and Deutsche Bank, is set to price late this week.

Early guidance has the notes coming in a mid-10% yield context, according to a trader.

And Clear Channel Outdoor Holdings, Inc. started a roadshow for a $225 million offering of five-year senior notes via bookrunner Goldman Sachs.

Early guidance has yet to surface, according to a trader, who noted that the use of proceeds involved loans within the corporate structure that will ultimately see most of the proceeds go to controlling stockholder iHeartCommunications, Inc., which may use those proceeds for its own corporate purposes, including debt repayment.

The trader estimated that the deal could come with a yield in the mid-7% context.

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