Morning Commentary: Junk gains ¼ point post-Fed; ETFs see $369 million inflows

By Paul A. Harris

Portland, Ore., Dec. 16 – With stocks rallying on Thursday morning, junk bonds were up ¼ point as the market digested what were perceived to be purposeful moves on the part of the Federal Reserve Bank to address pandemic-related inflation, sources said.

None of the bullet points from Wednesday’s meeting of the Federal Open Market Committee – including a tapering of asset purchases, and as many as three interest rate hikes in the year ahead – took the market by surprise, a trader said.

The high-yield secondary market was seeing decent trading volume as investors tended portfolios ahead of the dramatic decrease in liquidity expected in the pre-Christmas week ahead, the trader said.

The Iron Mountain Information Management Services, Inc. 5% senior notes due July 2032 (Ba3/BB-) were par ½ bid, 101 offered on Thursday morning.

That paper was seen at par 3/8 bid, par ¾ offered on Wednesday.

The upsized $750 million issue (from $500 million) priced Monday at par.

Recently issued bonds from Station Casinos LLC, a pandemic-sensitive name, were straddling issue price.

The Station Casinos 4 5/8% senior notes due December 2031 (B3/B-), a bullet deal, were 99½ bid, par ½ offered on Thursday morning.

The $500 million issue priced at par on Nov. 10.

The most recent deal to clear the market, the Skillz Inc. 10¼% first-lien secured notes due December 2026 (B3/B-) were 95 bid, 97 offered, the wide bid-offer spread perhaps indicating that the deal was not widely allocated, a trader remarked.

The $300 million issue priced Wednesday at 95 to yield 11.598%.

The fact that the debut issuer – which posted negative year-over-year earnings in the third quarter – got its deal done indicates an appetite for yield that remains vigorous, a market source said.

The Skillz deal cleared the active forward calendar.

The 2021 high-yield new issue market appears to have run its course, traders said on Thursday.

Junk ETF inflows

High-yield ETFs saw $369 million of cash inflows on Wednesday, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $132 million of outflows on Wednesday, the source said.

Pending publication of a weekly fund flows report by Refinitiv Lipper, expected later on Thursday, the combined funds are tracking $70 million of net outflows for the week to Wednesday’s close.

© 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.