Morning Commentary: Recent deals trade above issue prices; junk ETFs post Friday inflows

By Paul A. Harris

Portland, Ore., Aug. 23 – With stock indexes in the United States squarely in the green, junk opened unchanged to an eighth of a point better on Monday, a trader said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 21 cents, or 0.23%, at $87.50 at mid-morning.

Among recent issues, Sylvamo Corp.’s 7% senior notes due September 2029 (B1/BB) were par 3/8 bid, par 7/8 offered at mid-morning, a trader said.

Trading activity in the issue appeared thin, the source added.

The market's most recent deal, these new bonds from the commercial paper business being spun off by International Paper came in a downsized $450 million tranche (from $500 million) at par last Friday, after widening substantially from early guidance which was in the high 5% area. There were also covenant changes.

The second most recent issue to clear the market emanated from farther up the speculative-grade credit spectrum.

Pilgrim's Pride Corp.’s 3½% senior notes due March 2032 (B1/BB+/BBB-) were 101 5/8 bid at mid-morning, the trader said, adding that earlier in the session they were 101½ bid, 102 offered.

The deal came last Thursday in an upsized $900 million tranche (from $750 million), which was heard to be two-times over-subscribed at the close of books.

The new issue market itself failed to generate any news as the week got underway.

Although it may not remain totally dormant during the run-up to the extended Labor Day holiday weekend, which gets underway following the Sept. 3 close, new issue activity is expected to remain muted ahead of an anticipated big September burst of business in the primary market.

Away from recent names there was no evidence that high-yield investors are seeing improvement in pandemic risk.

The Royal Caribbean Cruises Ltd. 4¼% senior notes due June 2026 (B2/B), a bullet, were 95½ bid on Monday morning, close to the lows at which they have traded since being priced in a $650 million deal at par in June.

The bonds have been trading between 95 and 96 for the past week, the source remarked.

Friday inflows

The high-yield ETFs saw $288 million of daily inflows on Friday, according to a market source.

Actively managed high-yield funds sustained a low-to-moderate $18 million of outflows on the day, the source added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.