Morning Commentary: Junk prices improve as ECB rolls out stimulus; First Data, Sinclair up

By Paul A. Harris

Portland, Ore., March 10 – Junk bond prices felt pretty good to a trader on the East Coast of the United States, following news that the European Central Bank announced substantive new economic stimulus for the underperforming economy of the euro zone.

“Flows are not crazy either way,” said the trader.

“But there is a good tone, and we're better on the day, just maybe not off-to-the-races as much as you would expect, given the ECB.”

The share prices of the high-yield ETFs were higher on the morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 37 cents, or 0.46%, at $80.97 heading into the mid-morning. SPDR Barclays High Yield Bond ETF (JNK), at $33.89 per share, was up 19 cents, or 0.59%.

First Data, Sinclair eyed

A pair of Wednesday drive-by deals were trading well in the Thursday secondary market, the trader said.

The new First Data Corp. add-on to the 5% senior secured notes due Jan. 15, 2024 (B1/BB) were up a point on Thursday morning.

The upsized $900 million deal, which was increased from $500 million, priced at 99.5 to yield 5.076% on Wednesday, in the middle of the 99.25 to 99.75 price talk.

Meanwhile the new Sinclair Television Group, Inc. 5 7/8% senior notes due March 15, 2026 (B1/B+) were outperforming the market at 101¾ bid on Thursday morning.

The $350 million of issue came at par, in the middle of price talk.

It was well oversubscribed, according to market sources.

And it was clearly trading that way on Thursday morning, the trader remarked.

Away from recent issues, bonds of First Quantum Minerals Ltd. were better on news that the Vancouver, B.C.-based copper producer is selling its Kevitsa nickel-copper-platinum mine in Finland to Sweden’s Boliden AB for $712 million and plans to use the proceeds from the sale to pay down debt.

The First Quantum 7¼% senior notes due May 15, 2022 were up 6 points at 68½ bid, 70½ offered on Thursday, said the trader, who added that the market believes First Quantum got a good price for the mine.

The First Quantum 7¼% notes are up 20 points in the past month, the source added.

And news that Gulfport Energy Corp. succeeded in pricing an upsized 14.7 million issue of common shares to raise about $358 million on Wednesday was giving the entire high-beta energy sector a boost on Thursday, the trader said.

Quiet in the primary

No new junk deal announcements were heard on Thursday morning.

Vehicle leasing company LeasePlan Corp. NV released tranche sizes and battened down price talk on its restructured €1.55 billion equivalent two-part offering of five-year senior secured notes (B1/BB+/BB-) on Thursday, according to sources.

A €1.25 billion tranche is talked to yield in the 7% area, reduced from earlier yield talk of 7½% to 7¾%.

A $400 million tranche is talked in the 7½% area, again reduced from earlier talk in the 8¼% area.

A proposed tranche of euro-denominated seven-year notes has been abandoned.

Prior to the entire deal being pulled on Feb. 11 due to market conditions, that longer maturity euro-denominated tranche had been talked at 8% to 8¼%.

Books were set to close shortly after news of the revised talk circulated in the market, and the deal is expected to price Thursday.

Joint bookrunner JPMorgan will bill and deliver. Goldman Sachs, Credit Suisse and ING are also joint bookrunners.

Meanwhile in the crossover market Masco Corp. is shopping a $900 million two-part bond deal (Ba2/BBB) via Citigroup. The deal is pricing on the investment-grade desk and will not grow in size, according to an informed source.

Mixed flows

The cash flows of the dedicated high-yield bond funds were mixed on Wednesday, according to a trader.

High-yield ETFs sustained $79 million of outflows on the day.

Actively managed funds, meanwhile, saw $134 million of inflows on Wednesday.

© 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.