Morning Commentary: Junk flat in mid-morning trading; AerCap bonds trade above new issue price

By Paul A. Harris

Portland, Ore., Oct. 19 – Junk bonds were basic basically unchanged in quiet trading heading into the mid-morning on Monday, according to a trader in New York.

The CDX HY 25 index was trading slightly below 102½ bid, unchanged to perhaps down an eighth of a point, the trader said.

High yield ETFs were flat to slightly lower.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 16 cents at $85.12 per share.

The SPDR Barclays High Yield Bond ETF (JNK) was trading at $36.35 per share heading into mid-morning, down 3 cents.

AerCap above new issue

The AerCap Holdings NV 4 5/8% senior notes due Oct. 30, 2020 (Ba2/BB+/BB+) were 101¼% bid, 101 5/8% offered on Monday, the trader said.

The massively upsized $1 billion issue, which was increased from $400 million, priced last Friday at par in a deal that was multiple-times oversubscribed and came at the tight end of price talk.

However the brisk execution notwithstanding, AerCap is viewed as something of an outlier in that it's a high-quality credit, which some expect will eventually receive investment-grade credit ratings, sources say.

Therefore the deal does not necessarily signal the reopening of the primary market, which has been nearly dormant during the early part of autumn, a trader said.

Primary remains quiet

There was very little news in the new issue market on Monday.

Match Group Inc. plans to sell $500 million of seven-year senior notes (Ba3/BB-) as part of the spinoff of the online dating service from IAC/InterActiveCorp (see related story in this issue).

Timing has not yet been announced.

Meanwhile the active forward calendar finds just two high-yield deals on the road.

Greatbatch Ltd. is marketing $360 million of eight-year senior notes (Caa1/B-), an acquisition financing via Credit Suisse and KeyBanc.

The market awaits official price talk.

Early guidance has the notes coming in a yield range of 8% to 8½%, a trader said.

The deal is set to price early in the present week.

And Verisure Holding AB was scheduled to start a roadshow last Friday for a €700 million offering of seven-year senior secured notes (B1/B).

The roadshow wraps up on Wednesday, and the deal is set to price thereafter.

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