Split-rated Standard Industries prices; energy up though crude rise slows; funds gain $66 million

By Paul Deckelman

New York, Feb. 18 – For a second straight session, the high-yield market found its new-deal action sitting on the fence between junk bonds and investment grade.

Syndicate sources said that Standard Industries, Inc., a maker of roofing and insulation supplies, priced an upsized $1 billion two-part split-rated offering on Thursday, consisting of five-year and seven-year notes.

That drive-by offering – reworked from what was originally just a tranche of five-year notes – came to market too late in the session for any immediate aftermarket activity to be seen.

The Standard Industries deal followed in the footsteps of Wednesday’s considerably smaller, single-tranche offering from Medical Properties Trust, Inc. – another quickly shopped, split-rated deal which saw some high-yield market interest as well as the expected attention from investment-grade accounts.

The healthcare real estate investment trust’s paper, meantime added to its initial aftermarket gains, firming Thursday in moderately busy dealings.

Away from the new-deal arena, Freeport-McMoRan Inc.’s split-rated issues continued to dominate the Most Actives list, extending the metals mining and energy company’s recent upside momentum.

Energy issues also continued to firm, even though the recent surge in world crude oil prices moderated on Thursday on news of mounting stockpiles of crude and refined product in the United States.

The news did not deter the continued rebound in Whiting Petroleum Corp.’s notes, or in Denbury Resources Inc., the latter despite posting an unexpected quarterly loss.

Statistical measures of junk market performance turned mixed, after having been higher across the board for the previous three consecutive sessions. Before that, they had been lower last Thursday and mixed for two sessions last Tuesday and Wednesday.

Another numerical gauge – flows of cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – broke out of their recent rut, posting a $65.5 million inflow during the latest trading week. That snapped a two-week losing streak, although more weekly outflows than inflows have still been seen so far this year.

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