Morning Commentary: New PTC bonds up in active trading; new Sprints around issue price

By Paul A. Harris

Portland, Ore., Jan. 31 – Bonds issued Thursday by PTC Inc. were trading at healthy premiums in active Friday trading, according to a bond trader based in New York.

The new PTC 3 5/8% senior notes due 2025 were 101 3/8 bid, while the new 4% senior notes due 2028 were 101 5/8 bid, the trader said.

Both came in $500 million tranches (Ba3/BB-) that priced at par in a deal that was upsized to $1 billion from $750 million across both tranches and were heard to have played to $3 billion of demand.

Meanwhile bonds that came in a $1 billion issue from Sprint Corp. on Thursday were hanging around their issue price on Friday morning, the trader said.

The Sprint 7¼% senior guaranteed bullet notes due February 2028 (B1/B+/BB) were 99 bid, 99 1/8 offered on Friday morning.

They priced at 99.

It's a curious bond, said the trader. It's callable at par if Sprint's merger with T-Mobile goes through. And if the merger fails, the price of the bond is bound to fall.

So there is very little upside.

There were a lot of flippers in the Thursday deal, said the trader, who added that flippers were also involved in the Friday trading activity.

Away from specific names, and with equities in the throes of volatility being driven by coronavirus headline news, high-yield ETFs were well into the red at mid-morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.42%, or 36 cents, at $87.53 per share.

Advisor downsizes

A modest amount of new issue activity is on deck for Friday.

Advisor Group Inc. downsized its offering of eight-year senior secured notes (B/B+) to $500 million from $575 million and shifted the $75 million of proceeds to its concurrent term loan B on Friday morning.

The bonds were talked to yield 6½% to 6¾% on Thursday and are expected to price on Friday.

Also Castle US Holding Corp. (Cision) is expected to price a $300 million offering of eight-year senior notes (Caa2/CCC).

Pricing widened, according to a bond trader, who added that yield discussions had moved into the context of 8¾% to 9% from initial talk in the low 8% area.

Thursday outflows

The dedicated high-yield bond funds sustained $216 million of net daily outflows on Thursday, according to a market source.

High-yield ETFs sustained $286 million of outflows on the day.

Actively managed high-yield funds were positive on Thursday, posting $70 million of inflows, the source said.

News of Thursday’s daily flows trails a Thursday afternoon report that the combined funds sustained $2.87 billion of outflow for the week ended Jan. 29, the largest outflow since last August, according to the market source.

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