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Morning Commentary: Junk trading muted in wake of terrorist attacks in France; Veritas bonds eyed
By Paul A. Harris
Portland, Ore., Nov. 16 – High-yield bonds were showing initial resilience in the wake of the weekend terrorist attacks in France, traders said early Monday.
The market was down an eighth of a point to a quarter of a point, selectively, in light trading heading into the Monday mid-morning, a trader said.
High-yield ETFs were flat.
The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 3 cents at $82.97 per share.
SPDR Barclays High Yield Bond ETF (JNK), at $35.38 per share, was down 4 cents heading into mid-morning.
Thin calendar
Focus is on the thin new issue calendar, a trader said.
Veritas Technologies LLC is selling an upsized $2,525,000,000 equivalent four-part offering of high-yield notes.
The deal, which is upsized from $2,275,000,000 equivalent, is likely being repriced following last week’s changes to the downsized $1.5 billion equivalent term loan B, which saw price talk widen to Libor/Euribor plus 500 basis points at an original issue discount of 95, from earlier talk of 450 bps to 475 bps at 98 to 99, the trader said.
The bank loan was downsized from $2.45 billion. A $700 million term loan B will be held by the underwriters.
The bond upsizing came in the two tranches of seven-year senior secured notes (B1/B+) – one each in dollars and euros – which were increased to $750 million equivalent from $500 million equivalent.
The overall size of the eight-year senior unsecured notes (Caa1/CCC+) – also coming in dollar- and euro-denominated tranches – remains unchanged at $1,775,000,000 equivalent.
The market awaits updated timing and pricing information, sources said on Monday.
Meanwhile Rackspace Hosting, Inc. has been marketing a $350 million offering of senior notes due January 2024 (Ba1/BB+).
The deal, via Morgan Stanley & Co. LLC, Goldman Sachs & Co. and J.P. Morgan Securities LLC, has been in the market with initial guidance of 5¾% to 6% and is expected to price in the middle part of the week.
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