Morning Commentary: Junk notches higher; new Calumet, Fortrea bonds trade to premiums

By Paul A. Harris

Portland, Ore., June 13 – After opening the Tuesday session unchanged, high-yield bonds were up 1/8 of a point trailing a Consumer Price Index report for May that depicts diminished inflationary pressure and reinforces expectations that the Federal Open Market Committee will rest on its oars and refrain from increasing the benchmark rate when the Fed’s June meeting concludes on Wednesday, a bond trader said.

With the S&P 500 stock index up 0.59% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) was a quarter better, up 0.33% at $74.89.

A couple of bond deals that priced on Monday were trading at premiums to their new issue prices on Tuesday morning, the trader said.

The Fortrea Holdings Inc. 7½% senior secured notes due July 2030 (Ba3/BB/BB+) were up ¼ of a point on the morning at 101½ bid, 102 offered in active trading.

The $570 million issued priced at par, playing to an order book that was more than six-times oversubscribed, the trader said.

The Calumet Specialty Products Partners, LP/Calumet Finance Corp. 9¾% senior notes due July 2028 (Caa1/B-) were also active on Tuesday morning, at 101¼ bid, 101¾ offered.

The $325 million issue priced at par on Monday.

The dollar-denominated primary market failed to generate any news on Monday, perhaps awaiting Wednesday’s interest rate decision from the Fed, the trader suggested.

One deal is in the market.

HighPeak Energy Inc. was set to kick off its $575 million offering of five-year senior notes on an investor call scheduled for Tuesday morning, with the call to be followed by a roadshow that is expected to run through the end of the week.

Initial talk is 11½% to 12%, including a discount, the trader said.

There was Tuesday news out of the Nordic high-yield bond market.

Assemblin announced the planned sale of €480 million of Apollo Swedish Bidco AB six-year senior secured floating-rate notes (B2/B/B). It comes with initial spread talk of Euribor plus 500 basis points with no Euribor floor. Initial price talk is 96 to 97.

Fund flows

High-yield ETFs sustained $207 million of daily cash outflows on Monday.

Actively managed high-yield funds saw modest inflows of $16 million on the day.

The combined funds are tracking $200 million of net inflows on the week that will conclude with Wednesday’s close, according to the market source.

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