Fired-up primary has second straight big day, pricing $4.37 billion; funds up $610 million

By Paul Deckelman and Paul A. Harris

New York, Sept. 8 – The newly resuscitated high-yield primary market picked up on Thursday right where it had left off on at the close on Wednesday, pricing new junk bond deals at a frantic pace.

Wednesday and Thursday’s activity followed several weeks of almost complete inactivity.

If anything, Thursday was even busier than Wednesday, with some $4.373 billion of new dollar-denominated and fully junk-rated offerings from domestic or industrialized-country issuers coming to market in nine tranches – the heaviest pace of new high-yield activity in a number of months.

German automotive and industrial components manufacturer Schaeffler AG priced a total of $1.5 billion of dollar-denominated new paper, broken into equally-sized $500 million tranches of five-, seven and 10-year senior secured PIK toggle notes, as part of a six-part bond behemoth that also included euro-denominated tranches in those maturities.

All of the day’s other offerings were single-tranche affairs, and all of Thursday’s deals were upsized and all but one were regularly scheduled transactions coming off the forward calendar.

Away from the new deals, oil and natural gas issues like Chesapeake Energy Corp. got a boost from continued strong crude oil prices.

Statistical market performance measures were trending higher on Thursday, after having been mixed over the three previous days.

Another numerical market gauge – flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – was back on the upside this week, rebounding from last week’s loss, as $610 million more came into those weekly-reporting-only domestic funds than left them.

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