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Morning Commentary: Junk primary quiet; calendar robust; Horizon Pharma takes a hit
By Abigail W. Adams
Portland, Me., May 16 – The domestic high-yield bond primary market was quiet early Tuesday after a substantial buildup in the forward calendar the previous session.
Four dollar-denominated tranches with a face value of $2.93 billion are set to price before the week comes to a close with more issuers expected to tap the market.
While the remainder of the week is expected to be busy, no deals were set to clear the market on Tuesday, which was shaping up to be a quiet session for both the primary and secondary space.
As market players eyed the deals in the pipeline, few were making moves in the secondary space as debt ceiling negotiations dragged on.
“Wait-and-see” seemed to be the general theme with the market in wait-and-see mode through the Federal Open Market Committee announcement in early May and now in wait-and-see mode for debt negotiations.
“Everyone’s just sitting still,” a source said.
The cash bond market saw a soft open and was down about 1/8 point in thin volume.
Horizon Pharma USA, Inc.’s 5½% senior notes due 2027 (Ba2/B+) were the laggards of Tuesday’s session with the notes taking a hit on news the Federal Trade Commission was preparing to block Amgen’s $28.3 billion acquisition of the company.
The notes dropped 3½ points to trade below par for the first time since December 2022.
They were marked at 99¼ bid, 99¾ offered in early trade, a source said.
The 5½% notes were trading on a 95-handle in November 2022 but were lifted to a 99-handle as market chatter about a possible acquisition circulated.
The notes rose to 102 after Amgen’s acquisition was formally announced.
The deal was expected to close in the first half of 2023. However, the FTC is now preparing a lawsuit to block its completion.
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