Morning Commentary: Junk primary quiet, secondary soft on rate risk; LifePoint lower

By Abigail W. Adams

Portland, Me., Oct. 2 – The domestic high-yield bond primary market was quiet early Monday after capping the busiest month of the year in September with $22.38 billion pricing in 30 deals.

The torrent of activity came amid a dramatic widening in spreads, which have pushed out about 35 basis points since the Fed’s Sept. 20 announcement.

The higher-for-longer narrative was continuing to weigh on risk sentiment as Treasury yields resumed their climb to recent heights with the aversion of a government shutdown doing little to provide relief.

The secondary space was off to a weak start early Monday with the cash bond market off 1/8 point early in the session and ETFs sellers, a source said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) share price fell to $73.04, a decrease of 0.40%, shortly before 11 a.m. ET.

LifePoint Health Inc.’s new 11% senior secured notes due 2030 (B2/B) were weaker amid the heavy market conditions with the notes giving back the premium gained on the break and returning to par.

The 11% notes were off ½ to ¾ point in heavy volume.

The notes opened the day wrapped around par ½ but quickly lost steam and were trading in the 99 7/8 to par 1/8 context as the session progressed, a source said.

LifePoint capped September with a $1.1 billion issue of the 11% notes, which priced at par in a Friday drive-by.

Pricing came on top of talk for a yield of 11%.

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