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Morning Commentary: Schaeffler, IHS bonds firm in secondary; ETFs better buyers on the week
By Paul A. Harris
Portland, Ore., Oct. 22 – Cash junk bonds were mixed to slightly weaker in Wednesday morning trading, according to a trader on the East Coast of the United States.
However bonds issued Tuesday by Schaeffler Holding Finance BV were commanding strong premiums in the secondary market, the trader said.
The Schaeffler 6¼% notes due November 2019 (B1/B) were 103 3/8 bid, 103 5/8 offered. The notes priced at par in a $475 million issue.
The Schaeffler euro-denominated 5¾% notes due November 2021 were par ¾ bid, 101¼ offered Wednesday morning. The notes priced Tuesday at 98.576 to yield 6% in a €350 million issue that was upsized from €300 million.
Meanwhile the new IHS Inc. 5% senior notes due November 2022 (Ba1/BB+/BBB) were 101½ bid, 101¾ offered on Wednesday. The deal came at par on Tuesday in a $750 million issue that was upsized from $500 million.
ETFs are buying
High-yield bonds have seen a huge rally thus far into the Oct. 20 week, the trader said.
During that time exchange-traded funds have been actively buying.
Indications are that cash has been flowing into the asset class throughout the past week, the source said, adding that last Friday ETFs saw a $384 million daily inflow.
Tesoro Logistics on deck
Meanwhile the primary market is quiet, with just one announced deal expected to price on Wednesday.
Tesoro Logistics LP is selling $1.3 billion of senior notes (Ba3/BB) in two tranches.
Price talk surfaced Tuesday.
A tranche of five-year notes is talked to yield in the 5¾% area.
A tranche of eight-year notes is talked in the 6½% area.
The deal is expected to price Wednesday afternoon.
BofA Merrill Lynch, RBS Securities Inc., Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, MUFG, RBC Capital Markets, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.
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