Morning Commentary: High-yield market flat in quiet trading; HD Supply, Surgery Partners on deck

By Paul A. Harris

Portland, Ore., March 28 – High-yield bonds were unchanged in quiet Monday morning trading, according to a trader on the East Coast of the United States.

High-yield ETFs were trading lower at mid-morning Eastern Time. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 25 cents, or 0.31%, at $81.10 per share. SPDR Barclays High Yield Bond ETF (JNK), at $34.03 per share, was down 12 cents, or 0.35%.

Bonds of Whiting Petroleum Corp. traded lower on news that the company entered into amendments to its credit agreements, decreasing its borrowing base to $2.75 billion effective May 1, 2016.

The Whiting Petroleum 5¾% senior notes due March 15, 2021 were down 2 points heading into mid-morning, at 67¾ bid, 68¾ offered, a trader said.

Primary news

In the primary market HD Supply, Inc. plans to price a $1 billion drive-by offering of eight-year senior notes on Monday trailing a late-morning conference call with investors.

Early 6% whisper on the deal has given way to tighter guidance of 5¾% to 6%, as the market awaits official price talk, a trader said.

There is a significant reverse inquiry factor at play in the deal, sources say.

Barclays is the left lead bookrunner for the debt refinancing deal. J.P. Morgan Securities LLC, BofA Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC are the joint bookrunners.

Elsewhere Surgery Center Holdings, Inc. talked its $400 million offering of five-year senior notes (Caa2) to yield in the 8¾% area.

Books close at 2 p.m. ET on Monday, and the deal, via left bookrunner Jefferies, is set to price shortly thereafter.

Look for new issue activity to increase during the course of the week, a trader said on Monday.

Watch for a couple of deals from the health care sector, a sellside source advised.

Mixed flows

The cash flows of the dedicated high-yield funds were mixed on Thursday, a trader said.

High-yield ETFs sustained $124 of outflows on the day.

Actively managed funds saw $45 million of inflows on Thursday.

The flow data follows news which surfaced late last week that the dedicated funds saw inflows of $2.16 billion for the week to last Wednesday’s close.

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