Morning Commentary: Murphy Oil boards thin pre-Labor Day calendar; strong ETF inflows continue

By Paul A. Harris

Portland, Ore., Aug. 10 – Murphy Oil Corp. took a place aboard a thin pre-Labor Day new deal calendar as it rolled out a $500 million offering of eight-year senior notes (//BB+) on Wednesday.

The public offering, via J.P. Morgan Securities LLC, comes with initial yield guidance of 7¾% to 8% and is expected to price early in the week ahead.

Elsewhere issuance is expected to be muted in the run-up to Labor Day, more than three weeks away, according to a portfolio manager who said that the dealers have already brought most of what they have in the way of pre-Labor Day business.

ETF inflows continue

The cash flows of the dedicated high-yield bond funds remained positive on Tuesday.

For the fourth consecutive day, high-yield ETFs saw strong inflows, $270 million, on the day. It follows about $809 million of inflows during the three preceding sessions encompassing Aug. 4, 5 and 8.

The inflows represent a big turn in the cash tide of the ETFs, which saw $2.8 billion of outflows in nine sessions leading up to Thursday, Aug. 4.

Actively managed funds, meanwhile, saw $40 million of inflows on Tuesday.

Tuesday issues

Among deals that priced during Tuesday’s burst of new issue business, the Builders FirstSource, Inc. 5 5/8% senior secured notes due Sept. 1, 2024 (B3/B+) were 101 bid, 101¾ offered, according to the portfolio manager.

The $750 million issue priced at par on Tuesday.

MGM Growth Properties LLC’s 4½% senior bullet notes due Sept. 1, 2026 (B2/BB-) were par ¼ bid, par ½ offered.

The company priced an upsized $500 million (from $400 million) amount of the paper at par on Tuesday.

The deal hit the market with initial guidance in the high 4% context, whereupon it was talked in the 4 5/8% area, and eventually priced at the tight end of that talk.

The manager, who spoke on background, intended to play but dropped out “because they squeezed it.”

Kennedy-Wilson Holdings, Inc.’s add-on to the 5 7/8% senior notes due April 1, 2024 (B2/BB-) were 101¼ bid, 102 offered. The upsized $250 million deal (from $200 million) priced at par on Tuesday.

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