Morning Commentary: Altice notes up sharply on results; credit outperforming equity

By Paul A. Harris

Portland, Ore., March 25 – With stock indexes whipsawing in the early going on Wednesday, the high-yield index was up nearly 2 points, as credit outperformed equity, according to a New York-based bond trader working from home.

The S&P 500 stock index stood basically unchanged at mid-morning.

However, the iShares iBoxx $ High Yield Corporate Bd (HYG) was posting a solid 2.27% advance, with shares up $1.62 at $73.08.

Bonds of telecommunications giant Altice improved as the company reported solid or better numbers late Tuesday.

The Altice France (SFR Group) dollar-denominated 7 3/8% senior secured notes due May 2026 were up 6 points to 7 points, trading as high as 95½ bid on Wednesday, the trader said, noting that those bonds traded in the high 80s on Tuesday.

The company’s paper generally improved 5 points to 7 points on Tuesday, with as much as 4 points to 6 points of further improvement early Wednesday, the source added.

The Altice Finco SA (Altice International Sarl) euro-denominated 4¾% senior notes due 2028 were up 7 points to 8 points at 80 bid, according to a market source in Europe.

Altice France reported Tuesday that its revenue grew by 11.2% year over year and EBITDA grew by 14.8% during the same period.

The company posted a positive outlook for 2020 with accelerating sales, EBITDA and average revenue per user.

The New York trader was seeing select buying in certain names, “but nothing massive,” early Wednesday morning.

Interest in beaten up junk bonds diminished proportionally to the exposure to coronavirus impacts of the credit in question, the source added.

The energy sector continued to whither, the source added, noting that bonds at the front end of the maturity curve of fallen angel Occidental Petroleum Corp. were still trading in the 60s, implying yields of 23% to 24%, while further back on the curve bonds were trading in the 50s, implying yields of 25%.

The barrel price of West Texas Intermediate crude oil for May 2020 delivery declined 0.75% on Wednesday morning, down 18 cents at $23.83.

Tuesday outflows

The dedicated high-yield bond funds sustained $485 million of net outflows on Tuesday, according to a market source.

High-yield ETFs were positive on the day, with $115 million of inflows.

However, the actively managed high-yield funds sustained $600 million of outflows on Tuesday, the source said.

The combined funds are tracking $1.55 billion of net outflows for the week that will conclude at Wednesday's close, according to the market source.

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