Primary closes the books on 2020; liquidity at a standstill

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 24 – The domestic high-yield primary market was dormant, as expected, during Thursday’s truncated session with activity expected to be concluded for the year.

The secondary space was practically dormant as well with reported volume, which typically averages $4 billion to $6 billion, at less than $500 million about an hour before the market’s early close.

Netflix Inc.’s 5 7/8% senior notes due 2028 saw some trades although with little movement in price.

First Quantum Minerals Ltd.’s 7¼% senior notes due 2023, Calpine Corp.’s 4½% senior notes due 2028 and Bausch Health Cos. Inc.’s 9% senior notes due 2025 also made an appearance on the tape.

Ford Motor Co.’s junk bonds topped the list for largest gain and loss during Thursday’s session although the price movement was most likely the result of bad prints.

Active?

The secondary space ground to a halt on Thursday with late-year illiquidity becoming no liquidity.

Most accounts were out for the day and are calling it a year with the primary market expected to remain closed until 2021.

Some names did make an appearance on the tape although with little notable movement in price.

Netflix’s 5 7/8% senior notes due 2028 were seen changing hands at 119¼ in the midafternoon with $5 million in reported volume.

First Quantum’s 7¼% senior notes due 2023 were changing hands at 102¾ with reported volume just shy of $5 million.

Calpine’s 4½% senior notes due 2028 traded at 104¼ and Bausch Health’s 9% notes due 2025 changed hands at 109¾ with each issue seeing about $4 million in reported volume by the midafternoon.

The activity that did exist in the space was largely just end-of-year housekeeping, a source said.

Bad print

Ford’s 4.346% senior notes due 2026 topped the list for gains and Ford’s 4.75% senior notes due 2043 had the biggest loss on Thursday although the movement was due to bad prints.

The 4.75% senior notes due 2043 traded down more than 4 points to 102.

The note’s final print on Wednesday was 106 3/8, according to Trace data.

The notes had been trading in a wide range pf par ¼ and 102 prior to the 106 print.

The 4.346% senior notes gained more than 4 5/8 points to trade up to 106¾.

The notes appeared to make a large gain because the last print on Wednesday was 102

The notes had been trading in a range of 104½ to 107 prior to the 102 print.

While the movement in Ford’s bonds was most likely due to bad prints, illiquidity lends itself to large fluctuations in price.

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