Secondary firms; Sealed Air gains; Copeland improves; Bausch outperforms

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 7 – With no new issue activity on Friday the dollar-denominated high-yield primary market was skunked in the holiday-abbreviated July 3 week.

It was an active week in the euro-denominated primary market, however, with four issuers pricing €1.75 billion in a combined five tranches.

Euro issuers announced their deals on Monday and Tuesday, whereas the dollar market was closed on Tuesday, and Monday sort of fell through the crack created by the weekend before it and Independence Day holiday, which followed it, a New York trader suggested, by way of explaining the sizable difference in activity levels between the dollar and euro new-issue markets during the past week.

The dollar market is expected to reactivate in the week ahead, sources said on Friday.

However, it is not clear how busy it might be, they added.

No one volunteered issuer names or sectors.

Meanwhile, the secondary space firmed on Friday after the heavy selling of the previous session with the U.S. nonfarm payrolls report painting a different portrait of the labor market.

U.S. job gains came in below expectations in the report, which pointed to some weakness in the labor market, although wage growth remained strong.

The report follows Thursday’s blockbuster ADP employment report, which blew past expectations and drove the secondary space down ½ to 5/8 point.

The market pared its losses on Friday with cash bonds adding ¼ to 3/8 point, a source said.

However, volume in the space remained thin with the primary market closed for the week.

Sealed Air Corp.’s 6 1/8% senior notes due 2028 (Ba2/BB+) saw strong buying interest on Friday after the company announced its earnings release date.

Copeland’s 6 5/8% senior secured notes due 2030 (Ba3/BB-/BB-) improved in active trade.

While BB credits recovered some losses after sinking under the rate move of the previous session, the lowest rungs of the credit spectrum continued to outperform.

Bausch Health Cos. Inc.’s senior notes (Ca/CCC-) added to the strong gains made throughout the year after the company announced a new financing facility.

Sealed Air gains

Sealed Air’s 6 1/8% senior notes due 2028 made strong gains on Friday with the notes among the most actively traded in the secondary space.

The 6 1/8% notes added 1 point after breaking below a 98-handle the previous session.

The notes were changing hands in the 98 5/8 to 98 7/8 context heading into the market close, a source said.

The yield was about 6 3/8%.

There was $15 million in reported volume.

The notes traded as low as 97¾ under the heavy market conditions on Thursday.

However, they have largely flatlined on a 98-handle since the $775 million issue priced at par in mid-January.

Sealed Air announced Thursday it would report second-quarter earnings on Aug. 8.

The announcement may have triggered the interest in the name, a source said.

Copeland improves

Copeland’s 6 5/8% senior secured notes due 2030 improved in active trading on Friday.

The 6 5/8% notes gained ½ point to once again trade on a 98-handle.

The notes were changing hands in the 98 5/8 to 98 7/8 context heading into the market close, a source said.

The yield was about 6 7/8%.

There was $14 million in reported volume.

Copeland’s notes have largely traded on a 99-handle since the $2.275 billion issue priced at par in early May.

However, they have been on a strong downtrend over the past week and broke below a 98-handle during Thursday’s session.

Bausch gains

Bausch’s senior notes continued to outperform the market and were the largest gainers of Friday’s session.

Bausch’s 9¼% senior notes due 2026 jumped 3 points to an 86 handle.

The notes were trading in the 86 to 86½ context heading into the market close, according to a market source.

The yield was about 15 5/8%.

There was $10 million in reported volume.

The 6¼% notes due 2029 jumped 2 points to close the day wrapped around 43 with the yield 26¼%.

There was $5 million in reported volume.

Bausch made large gains after announcing a new $600 million finance facility with KKR.

“That’s good news,” a source said. “That’s extra liquidity.”

Bausch is one of a handful of names that have driven the double-digit gains of the CCC credit tier in 2023.

Fund flows

High-yield ETFs sustained a whopping $1.19 billion of daily cash outflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $59 million of inflows on the day.

News of Thursday’s daily cash flows followed a Thursday afternoon report that the combined high-yield funds sustained $283 million of net outflows in the week to the Wednesday, July 5 close, according to fund-tracker Refinitiv Lipper.

Tracking 2023 monthly cash flows through the end of the year’s first half, June saw $2.6 billion of inflows, May saw $4.9 billion of outflows, April saw $5.9 billion of inflows, March saw $3.8 billion of outflows, February saw $10.1 billion of outflows and January saw $1 billion of outflows, according to the market source.

Hence the cash flows of the dedicated high-yield funds to the end of the first half of 2023 were negative-$11.3 billion, the source said.

Indexes

The KDP High Yield Daily index added 11 points to close Friday at 50.21 with the yield now 7.52%.

The index was down 39 points on Thursday, 9 points on Wednesday and 2 points on Monday.

The index posted a cumulative loss of 39 points on the week.

The CDX High Yield 30 index gained 5 bps to close Friday at 101.83.

The index was down 50 bps on Thursday, 30 bps on Wednesday and 19 bps on Monday.

The index fell 94 bps on the week.

© 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.