Morning Commentary: Junk notches higher; new Hexaware 5 3/8% notes trading 102½, 103

By Paul A. Harris

Portland, Ore., Oct. 28 – Cash bonds were up an eighth of a point at midmorning, Thursday, according to a trader in New York who added that the market felt pretty good, and there seemed to be buyers on hand.

With the major U.S. stock indexes in the green, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 14 cents, or 0.17%, at $87.08.

The new CA Magnum Holdings 5 3/8% senior secured notes due October 2026 (B1//BB-) continued to maintain a strong secondary market performance at 102½ bid, 103 offered, the trader said.

The $1.01 billion deal, backing the buyout of India-based Hexaware Technologies by Carlyle Group, priced Wednesday at par, was heard to play to $8 billion of demand.

Elsewhere the recently minted Roblox Corp. 3 7/8% senior notes due May 2030 (Ba2/BB) were wrapped around par, on Thursday morning, the trader said.

The $1 billion issue came Tuesday at par.

Investors had some difficulty cultivating an appetite for three-handle junk, and so Roblox books were slower to build, market sources said.

Turning back a few more pages of the calendar, new bonds from Kosmos Energy Ltd., a Houston-based deepwater energy exploration firm with operations off the West African coast, as well as in the Gulf of Mexico, were par ¾ bid, 101¼ offered on Thursday.

Kosmos Energy's 7¾% senior notes due May 2027 (B3/B+/B) priced at par a week ago.

Oil prices eased a bit on Thursday morning.

The barrel price of West Texas Intermediate crude oil for December 2021 delivery was down 20 cents, or 0.24%, at $82.46.

Meanwhile there was next to no news in the junk new issue market as Thursday's session got underway.

However, the active calendar contains no fewer than four deals, totaling $2.75 billion, on timelines that would have them pricing ahead of the coming weekend.

With no word, Thursday morning, on any of the deals in question, some are liable to be pushed into November, the trader said.

Funds tracking $1.2 billion weekly inflow

The dedicated high-yield bond funds are tracking $1.2 billion of net inflows on the week that concluded with Wednesday's close, ahead of a weekly report on the cash flows of the various asset classes, expected Thursday afternoon from Refinitiv Lipper, according to a market source.

The most recent daily flows available were modest.

High-yield ETFs saw $20 million of inflows on Wednesday, while actively managed funds were essentially flat on the day, posting $5 million of Wednesday inflows, the source said.

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