Morning Commentary: High-yield primary quiet; secondary soft; Starwood notes at par

By Abigail W. Adams

Portland, Me., Dec. 3 – It was a quiet morning in junkbondland with the primary market again dormant.

While market players were forecasting $15 billion to $25 billion of new supply in December, only two weeks remain before accounts begin to close out their books on the year, and only one deal remains on the forward calendar.

II-VI Inc. plans to price a $990 million offering of eight-year non-call three-year senior notes (B2/B+) with initial price talk in the 5½% area, according to a market source.

The deal is expected to price next Wednesday.

The primary market priced only one deal in the past week – Starwood Property Trust, Inc.’s $400 million offering of 3¾% senior sustainability-linked notes due 2024 (Ba3/BB+).

The new paper was in demand during bookbuilding and priced at par at the tight end of the 3¾% to 4% price talk.

However, the notes have been stuck at par in the secondary space since breaking for trade.

Volatility continued to roil the secondary space on Friday with the market launching the day largely unchanged but growing weak as the session progressed as selling resumed in equities.

However, energy names remained strong despite the recent volatility in crude oil futures.

WTI crude oil futures were on the rise early Friday after Thursday’s about face, which saw futures drop as low as $62.43 in intraday activity only to rally and close the day largely unchanged.

WTI crude oil was up to $68.527, an increase of $2.07 or 3.11%, shortly before 11 a.m. ET.

Occidental Petroleum Corp.’s junk bonds continued to gain following Thursday’s tender offer for up to $2 billion of notes.

The 4.2% senior notes due 2048 rose about ¼ point and were changing hands in the 97¼ to 97 3/8 context early in the session, according to a market source.

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