Morning Commentary: Warner Music Group brings €195 million tap; funds see Monday inflows

By Paul A. Harris

Portland, Ore., April 16 – Junk opened firm on Tuesday, according to a trader in New York.

High-yield exchange-traded fund share prices were flat on the morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 3 cents, or 0.03%, at $86.93 per share.

The recently minted Staples, Inc. 10¾% senior notes due April 2027 (B3/B-) were up 1/8 of a point at mid-morning, according to the trader, who added that $1 million of the paper changed hands at 102 5/8.

The notes priced at par on April 9.

Warner Music sets talk

In the primary market, Warner Music Group Corp. plans to price a €195 million add-on to its 3 5/8% senior secured notes due 2026 in a quick-to-market Tuesday trade.

The deal is talked at 103.25 to 103.5, according to an investor.

Credit Suisse Securities (USA) LLC has the books.

The New York-based music recording and publishing company plans to use the proceeds to redeem its 5 5/8% senior secured notes due 2022.

Elsewhere, in a deal that figures to play to an audience comprised of both emerging markets and high-yield accounts, Melco Resorts & Entertainment Ltd. plans to price $500 million of senior fixed-rate notes (expected ratings Ba2/BB) on Wednesday via Deutsche Bank and ANZ.

The Macau-based owner and operator of gaming and resort properties plans to use the proceeds to repay bank debt.

With Melco aboard, the Wednesday primary market session should be an active one.

Melco joins Natural Resource Partners LP, which is in the market with $275 million of six-year notes (Caa2/CCC+) guided in the 9% area.

Gogo Finance Co. Inc. plans to price $900 million five-year senior secured first-lien notes (B3) with initial guidance in the high 9% to 10% area.

And Vizient, Inc. is expected to sell $300 million of eight-year senior notes with early guidance in the high 6% area.

As of Tuesday morning, official price talk on all of those deals was pending.

Monday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Monday, according to an investor.

High-yield ETFs saw $251 million of inflows on the day.

Actively managed high-yield funds saw $100 million of inflows on Monday, the investor said.

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