Primary eyed; AMC rebound continues; Kraft Heinz, Charter down

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 3 – The domestic high-yield primary market was quiet at the start of the New Year.

However, it is not expected to remain quiet for long. While sources diverged on when new issue activity would recommence, sources are eyeing $20 billion in new paper in January.

Meanwhile, the secondary space was equally quiet on the first trading day of the New Year with the cash bond market largely unchanged.

While equities again hit new heights on Monday, the 10-year Treasury yield was again on the rise, closing the day at 1.631%.

Kraft Heinz Co.’s senior notes were under pressure in active trading with the capital structure down about 1 to 1½ points.

Charter Communications’ 4.5% senior notes due 2032 (B1/BB) were also down about 1 point in active trading.

However, AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) continued to rebound with news reports about potential debt refinancing in the coming year adding a further boost to the notes.

Primary eyed

Although it took the high-grade corporate bond market no time whatsoever to commence 2022 new-issue operations, the high-yield primary market remained dormant on Monday.

While no one professed visibility of a specific deal, the junk new-issue market might weigh anchor as early as Tuesday, according to one market source who added that January is expected to generate $20 billion plus, perhaps even as much as $30 billion of gross issuance.

Others said that activity would commence later this week, while one market watcher shared an expectation that the high-yield primary would not reactivate until the Jan. 10 week.

Kraft Heinz down

Kraft Heinz was under pressure on Monday with the capital structure down between 1 to 1½ points, according to a market source.

The company’s 4 3/8% senior notes due 2046 were down about 1 3/8 points. They were changing hands in the 115 7/8 to 116 1/8 context heading into the close.

There was about $10 million in reported volume.

While less active, the 5% senior notes due 2042 were down about 2 points to close the day at 122½; the 4 7/8% senior notes due 2049 were down 1¾ points to close the day at 124¼ and the 5.2% senior notes due 2045 were down 1 3/8 points to close the day at 126¼.

Kraft Heinz is one rating upgrade away from achieving rising-star status. However, the low yielding notes are also rate sensitive.

Charter down

Charter’s 4.5% senior notes due 2032 were also under pressure on Monday.

The notes fell about 1¼ point to 102.

There was about $10 million in reported volume.

Charter’s capital structure was under pressure in the final weeks of the year as the Federal Communications Commission considers revisiting the net neutrality rules that were rolled back under the Trump administration.

AMC rebounds

AMC’s 10% senior secured second-lien notes due 2026 continued to rebound in active trading on Monday following news the company is considering debt refinancing in the coming year.

The 10% notes were up ¾ point to trade in the 99¾ to par context, according to market sources.

There was about $23 million in reported volume.

The notes were under pressure in the final weeks of the year as lockdowns and weakening investor sentiment about box office recovery drove the notes down more than 10 points.

However, after hitting a 92-handle, the notes have been on the rebound.

Solid Friday inflows

The dedicated high-yield bond funds saw $581 million of net inflows last Friday, according to a market source.

High-yield ETFs saw $355 million of inflows on the day.

Actively managed high-yield funds saw $226 million of inflows on Friday, the source said.

The combined funds saw $1.72 billion of net inflows in the past two weeks, according to the market source, who added the combined funds sustained $13.6 billion of net outflows for the year 2021.

Indexes

The KDP High Yield Daily index was down 9 points to close Monday at 65.85 with the yield now 3.89%.

The CDX High Yield 30 index closed Monday at 109.12.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.