Morning Commentary: Junk slightly firmer pre-holiday; Northriver Midstream on deck

By Paul A. Harris

Portland, Ore., Oct. 9 – High-yield bonds felt a touch firmer on a quiet Friday morning as the market caught its breath following a raft of Thursday issuance, according to a bond trader.

With all of the new issue activity, investors seem not to be very dialed in on Fridays these days, the source said, adding that people are zeroed in on the extended holiday weekend ahead.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was flat on the morning, up 4 cents, or 0.05%, at $84.80 per share.

Looking at Thursday’s $3.82 billion burst of issuance, the new Gray Television, Inc. 4¾% senior notes due October 2030 (B3/B+/BB-) were par 5/8 bid, par 7/8 offered, having topped out around 101, the trader said.

The upsized $800 million issue (from $550 million) priced at par, at the tight end of talk, playing to a book that was heard to be five-times oversubscribed.

The MGM Resorts International 4¾% senior notes due October 2028 (Ba3/BB-) – a bullet deal – were wrapped around par, with the underwriter possibly stepping in to clean the deal up, according to the trader.

The MGM notes priced at par and were upsized to $750 million from $500 million. Like Gray Television, MGM came in a Thursday drive-by.

Further down the credit curve, the Peninsula Pacific Entertainment LLC 8½% unsecured notes due November 2027 (Caa1/CCC+) were turning in a notable secondary market performance on Friday morning at 101½ bid, 102½ offered in light volume.

The upsized $475 million issue (from $450 million) came at par, in the middle of official talk but wide to initial guidance, having undergone covenant changes.

Looking to the European market, the Primo Water Corp. 3 7/8% senior notes due 2028 (B1/B) were par ½ bid, 101¼ offered on Friday morning.

The €450 million deal came Thursday at par, at the tight end of talk.

In the new issue market Northriver Midstream Finance LP has the Friday spotlight to itself as it plans to price a $525 million offering of five-year senior secured notes (Ba3/BB) around midday. Talk is 5½% to 5¾%.

Thursday inflows

The dedicated high-yield bond funds saw $505 million of daily net inflows on Thursday, according to a market source.

Actively managed high-yield funds saw $315 million of inflows on the day.

High-yield ETFs saw $190 million of inflows on Thursday.

News of Thursday’s daily flows trails a Thursday report that the dedicated high-yield bond funds saw a whopping $4.014 billion of net inflows in the week to the Wednesday, Oct. 7 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

That’s the 11th biggest inflow on record, according to the market source, who added that nine of the 12 largest weekly inflows on record have occurred since late March.

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