Morning Commentary: High-yield secondary pulls back after rally; Antero Midstream lags

By Abigail W. Adams

Portland, Me., Nov. 6 – The domestic high-yield primary market remained dormant on Friday with the forward calendar empty heading into the Nov. 9 week.

However, the coming week is expected to be a busy one provided the outcome of the election is as predicted – a Biden administration in the White House and Republican control of the Senate.

While votes were still being tabulated early Friday and no official winner had been declared, former vice president Joseph R. Biden was zeroing in on victory with the ballot counts in Pennsylvania and Georgia leaning in his favor.

Meanwhile, the strong rally in the secondary space waivered on Friday as WTI crude oil futures sank and profit-taking drove down the cash bond market about 1/8 point, sources said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) traded down to $85.40, a decrease of 0.15%, and the SPDR Bloomberg Barclays High Yield Bond index (JNK) traded down to 106.32, a decrease of 0.14%, shortly before 11 a.m. ET.

Antero Midstream Partners LP and Antero Midstream Finance Corp.’s newly priced 7 7/8% senior notes due May 15, 2026 (B3/B) were lagging their issue price in secondary market activity.

The notes were marked at 99¼ bid, 99¾ offered early Friday, a source said.

While the deal was heavily oversubscribed during bookbuilding, the pricing “didn’t leave much meat on the bone,” a source said.

The pullback in the secondary space and the sell-off in WTI crude oil futures was also dragging down the level of the notes, sources said.

WTI crude oil futures dropped to $37.77, a decrease of $1, or 2.58%, shortly before 11 a.m. ET.

Antero Midstream priced an upsized $550 million, from $400 million, issue of the 7 7/8% notes at par in a Thursday drive-by.

Pricing came at the midpoint of talk for a yield of 7¾% to 8%. Initial guidance was in the low 8% area.

The deal was playing to $1.2 billion of orders from over 100 accounts before books closed, a source said.

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