Morning Commentary: Junk unchanged to slightly lower; Sabre on deck as primary slows

By Paul A. Harris

Portland, Ore., Aug. 20 – High-yield bonds were unchanged to 1/8 point lower on Thursday against a backdrop of mixed to weaker prices on the major stock indexes in the United States, a trader said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.10%, or 9 cents, at $84.38 at mid-morning.

Among recent issues, the ON Semiconductor Corp. 3 3/8% senior notes due September 2028 (Ba2/BB) were par 5/8 bid, par ¾ offered, off from par ¾ bid, 101¼ offered on Wednesday.

The upsized $700 million issue (from $500 million) priced on Tuesday at par.

Among high beta issues recently priced, the new Carnival Corp. 9 7/8% senior secured notes due August 2027 (Ba1/BB+) were 97¾ bid, 98 offered. The $900 million issue priced at par on Tuesday.

However, the new Range Resources Corp. add-on notes to the 9¼% senior notes due Feb. 1, 2026 (B3/B+) were up 2 3/8 points on Thursday, the trader said, spotting them at 102 bid, 103 offered.

The upsized $300 million tap (from $200 million) priced at par on Tuesday.

Sabre on deck

Dealers rolled out a single drive-by deal on Thursday morning, as the new issue market, which piled full-bore into August – daily issuance averaging $3.7 billion to Tuesday's close – may be cooling, the trader said.

Sabre GLBL Inc. plans to price a $300 million offering of five-year senior secured notes (existing ratings Ba3/B+) trailing a late-morning conference call with investors.

Initial talk has the deal coming to yield in the high 7% area to 8%.

Wednesday outflows

The dedicated high-yield bond funds sustained $120 million of net outflows on Wednesday, according to a market source.

The hemorrhaging took place among the high-yield ETFs, which sustained $235 million of outflows on the day.

Actively managed high-yield funds, on the other hand, saw $115 million of inflows on Wednesday, the source said.

As the market awaits a weekly report on the fund flows of the various asset classes from the Refinitiv Lipper Fund Flow Report Newsline, later on Thursday, the combined funds are tracking $541 million of net outflows for the week to Wednesday's close, according to the market source.

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