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Morning Commentary: Junk weakens with equities, oil; good demand for Hertz second-lien notes
By Paul A. Harris
Portland, Ore., May 31 – After opening the Wednesday session flat to unchanged, high-yield bonds were off 1/8 point to ¼ point at midmorning, according to a bond trader in New York.
High-yield ETFs were lower. The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was down 0.11%, or 4 cents, at $37.36 per share.
The barrel price of West Texas Intermediate crude for July 2017 delivery was down $1.60, or 3.22%, at $48.06.
The S&P 500 index was down 0.19% at 2,408.
In the primary market Hertz Corp.'s $1 billion offering of five-year second-lien notes is seeing good demand inside of 7½%, a trader said.
The debt refinancing deal, via bookrunner Barclays, was scheduled to roll out in front of investors on a late-Wednesday morning conference call and to price later in the day.
An upsizing is possible, the trader said, adding that existing Hertz paper has been up 1 to 2 points following the new deal announcement on Tuesday.
Elsewhere in the new issue market Virtu Financial Inc.'s $825 million of second-lien notes appear to be shaping up with a yield of 7½% to 7¾%, the trader said.
Meanwhile, in yet another secured deal the proposed KIRS Group dollar-denominated five-year fixed rate senior secured notes (B3//B-) are shaping up in the 8% area.
The dollar notes, part of an £800 million equivalent three-part deal also set to include sterling-denominated five-year fixed-rate notes and sterling-denominated five-year floating-rate notes – all secured paper – were scheduled to start a roadshow in the United States on Wednesday after concluding a European roadshow.
The deal, via Barclays, is set to price later this week.
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