Morning Commentary: Biofarma €345 million buyout deal starts roadshow; ETFs see inflows

By Paul A. Harris

Portland, Ore., May 3 – The high-yield bond market opened the Tuesday session unchanged to slightly lower, according to traders.

With the U.S. stock indexes mixed at mid-morning, as the markets await the announcement of a widely anticipated 0.5% increase in the benchmark Federal Funds rate, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.51%, or 40 cents, at $78.63.

The Carvana Co. 10¼% senior notes due May 2030 (Caa2/CCC) were better on the morning, changing hands at 98½ in round-lot trading, according to a sellside source.

The deal went out on Monday night at 97 7/8, the source added.

The notes priced at par last Wednesday in an upsized $3.275 billion deal (from $2.275 billion) that struggled until venture capital firm Apollo Global Management stepped in to take down nearly half ($1.6 billion) of the upsized amount, sources said.

Turning to the primary market, Kepler SpA began shopping a €345 million offering of seven-year senior secured floating-rate notes (B3/B-) on Tuesday.

The deal, which comes in support of the buyout of Italian supplement supplier Biofarma SpA by Ardian SAS from White Bridge Investments, is expected to price before the end of the week, a London-based investment banker said.

After being shut down for more than 10 weeks, the European high-yield new issue market reopened last week when Miller Homes priced £815 million equivalent of senior secured notes (B1/B+/BB-).

On Tuesday, the Miller Homes Euribor plus 525 basis points senior secured floating-rate notes due 2028 were 96 5/8 bid, 97 1/8 offered, a market source said.

The €465 million tranche priced last Friday at 97.

The dollar-denominated market remained quiet on Tuesday morning.

Bioventus LLC's $415 million offering of five-year senior notes (Caa1/CCC+) is the only dollar deal on the active calendar.

It ran a roadshow last week and was expected to price before last Friday's close.

It is nearly a week since the market heard any news on the offer.

Last Wednesday, Bioventus was talked to yield 9¾% to 10%, slightly wide to initial guidance in the mid-to-high 9% area.

Monday inflows

High-yield ETFs saw $444 million of daily cash inflows on Monday, according to a market source.

However, actively managed high-yield funds were negative, sustaining $125 million of outflows on the day.

The combined funds are tracking $722 million of net outflows for the week that will conclude with Wednesday's close, the market source said.

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