Morning Commentary: Junk market unchanged after non-farm payrolls; ZipRecruiter on deck

By Paul A. Harris

Portland, Ore., Jan. 7 – In the wake of a solid miss in U.S. non-farm payrolls, the high-yield market was unchanged to slightly lower at mid-morning on Friday, according to a trader working from home in the New York City metropolitan area.

Payrolls increased by 199,000 in December, versus economists' expectations of 450,000, according to a Friday report from the Labor Department.

However, the unemployment rate beat expectations, coming in a 3.9% for December versus expectations of 4.1%, and improving from November's reported 4.2%.

In the wake of those numbers, bids backed off but offers were basically unchanged, according to the trader.

Higher quality speculative-grade bonds, with their greater sensitivity to rising Treasury yields, have definitely been heavier, the trader said.

Bonds priced earlier in the week by Ford Motor Credit Co. LLC, $2 billion of unsecured notes (Ba2/BB+) in two tranches, continued to toil at or below issue prices.

The Ford Credit 2.3% notes due February 2025 were straddling their issue price at 99¾ bid, par ¼ offered. The $1.25 billion tranche priced at 99.999.

The 2.9% notes due February 2029, meanwhile, continued to lag their issue price on Friday at 99 bid, 99½ offered. The $750 million tranche priced at 99.998.

Thursday’s sole dollar-denominated issue, the VodafoneZiggo 5% senior secured sustainability-linked notes due Jan. 15, 2032, were just above issue price on Friday, holding in at 99 1/8 bid, 99 3/8 offered. Those 5% notes priced at 99.03 to yield 5 1/8%.

The Netherlands-based telecom also priced a €750 million tranche of the notes which came at par to yield 3½%.

Meanwhile, in an otherwise quiet primary market, debut issuer ZipRecruiter Inc. has its $500 million offering of eight-year senior notes (B2/BB-/BB-) teed up to price Friday.

Official talk came at 5% to 5¼%, tight to initial guidance in the low 5% area, sources said.

Thursday fund flows

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

High-yield ETFs sustained $432 million of outflows on the day.

However, actively managed high-yield funds were positive on Thursday, posting $233 million of inflows on the day, the source said.

Thursday’s daily numbers trail a Thursday report from Refinitiv Lipper that the combined funds saw $584 million of net inflows in the week to the Wednesday, Jan. 5 close.

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