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Morning Commentary: Energy weak; Pharmaceutical Product plans PIK toggle notes; Senvion sets talk
By Paul A. Harris
Portland, Ore., April 27 – High yield bonds were unchanged at midmorning except in the energy sector, a trader said.
Energy was feeling some drag as the result of continued droop in the price of crude oil, the source added.
The barrel price of West Texas Intermediate crude for June 2017 delivery was $48.40 at midmorning, down $1.22 or 2.46%.
In the primary market Pharmaceutical Product Development, LLC plans to price $550 million of five-year PIK toggle holdco notes (expected ratings Caa1/CCC+) on Friday.
Initial guidance is 7½% to 7¾%.
JP Morgan is leading the recapitalization effort.
In Europe, Senvion Holding GmbH talked its €400 million offering of 5.5-year senior secured fixed-rate green bonds (B2/B+) to yield in the 4% area.
The debt refinancing deal, being helmed by Deutsche Bank and JPMorgan, is expected to price shortly.
Netflix euro debut a blowout
Netflix, Inc. made its debut as an issuer of euro-denominated bonds on Wednesday, pricing an upsized €1.3 billion issue of 10-year senior bullet notes (B1/B+) at par to yield 3 5/8%, in a deal that market sources characterized as a big blowout with substantial participation from U.S. accounts as well as European buyers.
The new Netflix paper was trading at 101 bid on Thursday.
The issue size was increased from €1 billion.
In the dollar-denominated realm, the new Sugarhouse Casino 5 7/8% senior secured notes due May 15, 2025 (B3/B-) were at par ¼ bid, par 5/8 offered at midmorning.
The $300 million issue came at par on Wednesday.
Wednesday inflows
As the market awaits news on the weekly cash flows for dedicated high-yield bond funds, the most recently reported daily flows, from Wednesday, were positive, a market source said.
High-yield ETFs saw $84 million of inflows on the day.
Actively managed funds saw $40 million of inflows.
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