Morning Commentary: Junk sees slight rebound Thursday morning, trailing big Wednesday sell-off

By Paul A. Harris

Portland, Ore., Jan. 21 – After taking a beating on Wednesday, high-yield bonds staged a modest rebound on Thursday morning, traders said.

However heading into the New York mid-morning junk had yet to retrace all of the ground it gave up on Wednesday.

The market, which went down 3 to 5 points on Wednesday, came up 2 to 3 points today, said a trader, adding that flows seemed very light.

ETFs were buying.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was 61 cents better, or 0.8%, at $77.74 per share heading into mid-morning. SPDR Barclays High Yield Bond ETF (JNK), at $34.20 per share, was up 11 cents or 0.36%.

The bonds of Sprint Corp. were 2 to 3 points higher, a trader said.

The Sprint 7 7/8% senior notes due Sept. 15, 2023 were 63 bid on Thursday after trading as low as 59½ bid on Wednesday.

GCP aiming for Friday

As the market awaits official price talk on the GCP Applied Technologies Inc. $525 million offering of seven-year senior notes (B1/B+), the deal is said to be shaping up with a 10% yield context, according to a trader, who added that it is expected to price Friday.

The Goldman Sachs-led deal has been on a full roadshow that it set to wrap up Thursday on the West Coast of the United States.

Market conditions pushed pricing higher, sources say. When the roadshow got underway last week, guidance was around 8½%.

The deal has also undergone covenant changes.

GCP Applied Technologies, which is to be spun off from W.R. Grace & Co., plans to use the proceeds to fund a $500 million distribution to W. R. Grace & Co.-Conn., a direct subsidiary of W.R. Grace, and for general corporate purposes.

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