Morning Commentary: Zayo, Quicken firm in secondary; primary quiet; junk accounts see outflows

By Paul A. Harris

Portland, Ore., May 4 – Recent issues were higher on Monday morning, traders said.

Zayo Group, LLC’s 6 3/8% senior notes due March 15, 2025 (Caa1/B-) were par ½ bid, 101 offered, up on the day, a trader said.

The $350 million issue priced at par, at the tight end of yield talk, on Friday.

The split-rated Quicken Loans Inc. 5¾% senior notes due May 1, 2025 (Ba2/BBB-) were up 1¼ points at 101¼ bid, 101½ offered heading into the midday.

The $1.25 billion issue, which priced Friday at par, was played by a lot of real money accounts, as well as some crossover- and investment-grade names, the trader said.

Quiet primary measures rates

The first full week of May could see as much as $6 billion to $10 billion of issuance, so long as interest rates remain supportive, a trader said.

The 10-year Treasury, which was yielding just under 2.1% on Monday morning, sold off last week in the wake of a Federal Open Market Committee meeting that left investors with the impression that due to economic droop the Fed has its finger off of the rate-trigger for the time being.

Meanwhile the week gets underway to a $3.7 billion active calendar.

The Chemours Co. has been marketing a $2.5 billion equivalent three-part senior notes transaction (B1/BB-), which is expected to include $1,125,000,000 of eight-year notes and $1 billion of 10-year notes.

The order book is heard to be at deal-size, a trader said.

While the market awaits official talk, the eight-year paper is shaping up at 6½% to 6¾%, and the 10-year notes are expected to come 25 basis points to 37.5 bps behind the eight-year notes.

There is also an expected €350 million tranche of the eight-year notes.

Outflows

The cash flows of the dedicated high-yield accounts were negative on Friday, the most recent session for which data was available at press time, sources said.

High-yield ETFs saw $444 million of daily outflows on Friday.

Actively managed accounts saw $110 million of outflows.

Last Thursday Lipper-AMG reported that dedicated high-yield accounts sustained $859.1 million of outflows for the week to the April 29 close.

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