Morning Commentary: Junk inches higher ahead of weekend; ETFs see chunky inflows

By Paul A. Harris

Portland, Ore., June 9 – The high-yield bond market opened 1/8 point higher on Friday and was perhaps slightly firmer at mid-morning, according to a trader in New York.

With the S&P 500 stock index up 0.45%, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was 9 cents better (0.12%) at $74.79.

The new HUB International Ltd. 7¼% senior secured notes due June 2030 (B2/B) were on solid footing on Friday morning at par ¾ bid, 101 offered after breaking to a disappointing 99 7/8 bid, par 1/8 offered late Thursday afternoon, the trader said.

The $2.175 billion issue priced at par after undergoing a $500 million downsize, with the proceeds shifted to the term loan.

There were some accounts that had drawn lines in the sand at 7 3/8%, the trader recounted, but added that with the shift of proceeds there was still ample or better interest in the bonds at 7¼%.

The recently minted Ryman Hospitality Properties, Inc. 7¼% senior notes due July 2028 (B1/B+) were unchanged at par ½ bid, 101 offered on Friday morning.

The upsized $400 million issue (from $300 million) priced at par on Wednesday.

In the euro-denominated market, the new InfoPro Digital (IPD 3 BV) senior secured notes due June 2028 (B2/B/B+) were better on Friday morning, according to a market source.

The 8% fixed-rate notes, which came Thursday at par in a €500 million tranche, were par ¼ bid, par 3/8 offered on Friday.

The Euribor plus 475 basis points floating-rate notes were 99.7 bid, 100.2 offered. Those notes priced at 99 in a €475 million tranche.

The new issue market was inactive heading into the weekend, although the week ahead could be an active one, sources say.

Fortrea Holdings Inc. is on a roadshow for a $570 million offering of senior secured notes due 2030 (BB/BB+), in the market with initial guidance in the high-7% to 8% area. Pricing is expected on Monday.

Two more big deals are believed to be close at hand.

Univar Solutions Inc. is expected soon with a $1.8 billion offering of secured notes backing the buyout of the company by Apollo. Initial talk is in the 8¼% to 8½% area.

And Viasat Inc.’s $1.6 billion offering of senior notes, whispered with an all-in yield of 12%, is also near at hand, sources say.

The new issue market presently seems to be an inviting place, with issuers tending to see good executions and deals trading well in the secondary, so activity should pick up, according to market sources.

Fund flows

High-yield ETFs saw a chunky $604 million of daily cash inflows on Thursday, according to market source.

Actively managed high-yield funds were negative on the day, posting $61 million of outflows on Thursday.

News of Thursday’s daily cash flows follows a Thursday afternoon report that the combined high-yield funds saw $2.5 billion of net inflows in the week to the Wednesday, June 7 close, according to fund-tracker Refinitiv Lipper.

Boring down into those weekly inflows – the biggest since mid-April – the junk ETFs saw $1.7 billion of inflows on the week, according to the market source.

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