Morning Commentary: Sirius Computer, Allied Universal trade higher; primary goes quiet

By Paul A. Harris

Portland, Ore., June 28 – Junk opened the Friday session unchanged to slightly better, according to a trader in New York.

High-yield ETF share prices were flat. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 3 cents, or 0.03%, at $87.18 per share.

Secured bonds price Thursday by Allied Universal Holdco LLC were trading well above their issue price on Friday morning, the trader said.

The Allied Universal 6 5/8% senior secured notes due July 2026 were 101 5/8 bid, 101 7/8 offered.

The $1 billion tranche, ultimately upsized by $500 million with proceeds shifted from the concurrent term loan, came at par and was heard to be oversubscribed since early in the roadshow.

The unsecured notes were also trading better on Friday morning.

The Allied Universal 9¾ senior unsecured notes due July 2027 (Caa2/CCC/CCC+) were 99¾ bid, par offered.

The $1.05 billion tranche came at 98.641 to yield 10%.

Elsewhere, the new Sirius Computer Solutions, Inc. 11% senior notes due July 2027 (Caa1/CCC+), backing the leveraged buyout of the company by Clayton, Dubilier and Rice, were par bid, par ¾ offered on Friday.

The $300 million issue priced at par to yield 11%, wide of the 10½% to 10¾% yield talk, and well beyond initial price talk in the 10% area, a trader said.

The deal underwent covenant changes.

The primary market was quiet on Friday.

The dollar-denominated new issue market is apt to remain slow into the abbreviated week ahead, as markets in the United States are set to close Thursday for the July 4 Independence Day holiday.

One deal is believed to remain on the active new issue calendar.

Canada's Alpha Auto Group marketed a $225 million offering of five-year notes on a roadshow during the June 17 week, after which the deal went “radio silent,” market sources say.

Initial price talk was in the 8% to 8¼% area, a trader said, adding that interest in the deal, at 11%, is heard to have surfaced.

Mixed Thursday flows

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

High-yield ETFs saw a hefty $487 million of inflows on the day.

However actively managed high-yield funds were flat, posting $15 million of outflows on the session.

News of Thursday's daily flows follows a late Thursday afternoon report that the combined funds saw $3.089 billion of net inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

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