Morning Commentary: New SS&C notes firm as market tone improves; ETFs see Monday outflow

By Paul A. Harris

Portland, Ore., June 30 – In the wake of Monday’s sell-off triggered by negative financial headlines out of China, Greece and Puerto Rico, the high-yield bond market opened with a better tone on Tuesday, traders said.

The CDX HY24 index was up ¼ point at a touch above 106 bid, after closing in the 105¾ area on Monday, according to a trader.

SS&C plows through chop

The newly minted SS&C Technologies Holdings Inc. 5 7/8% senior notes due July 15, 2023 were turning in a strong performance in Tuesday morning trading, sources said.

The notes, which came at par on Monday, were 101 bid, 101½ offered on Tuesday morning, a trader said.

The deal, which upsized to $600 million from $500 million and priced in the middle of price talk, went surprisingly well given the session’s market tone, a trader said.

Another trader had the SS&C 5 7/8% notes due 2023 at par 7/8 bid, 101 3/8 offered, on Tuesday morning.

Elsewhere, the recently issued TI Group Automotive Systems, LLC 8¾% senior notes due July 15, 2023 (Caa1/B) were slightly better at 99 5/8 bid, par 1/8 offered on Tuesday, after having traded as low as 99½ bid, par offered on Monday, a trader said.

The deal, which came at par in a downsized $450 million issue last Thursday, ended last week at par bid, par ¼ offered, the trader added.

StandardAero on deck

Counting down to the three-day Independence Day holiday weekend in the United States, set to commence following Thursday's close, the primary market was generally quiet on Tuesday and might stay that way until the post-Independence Day week, sources say.

One deal is on deck.

StandardAero talked its $485 million offering of eight-year senior notes (Caa2/CCC) to price at a discount of approximately 1.5 points and to yield 10¼% on Tuesday morning.

Books close at 2 p.m. ET on Tuesday, and the deal is set to price shortly thereafter.

Jefferies is the left bookrunner for the buyout deal.

Outflow from ETFs

The cash flows of the dedicated high-yield bond funds were mixed on Monday, according to a market source.

High-yield ETFs saw a substantial $617 million outflow on the day.

Asset managers, meanwhile, saw inflows of $85 million.

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