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Secondary rallies, erases losses for the week; high-quality junk bond paper in demand
By Paul A. Harris and Abigail W. Adams
Portland, Me., July 15 – While the dollar-denominated primary market passed a quiet summer Friday – and a week without any new dollar issues – the buzz on an expected megadeal backing Apollo's buyout of Tenneco, Inc. picked up as the weekend neared.
The deal is one of two LBO offerings the market is expecting with Camelot Return Merger Sub Inc.’s $600 million offering of senior secured notes (B2/B) backing the buyout of Cornerstone Building Brands, Inc. slated to price next week.
Meanwhile, the cash bond market closed the day up ½ to ¾ point with the market erasing its losses over the past two sessions to close Friday with a weekly gain.
ETFs were buyers on Friday and lifted the broader market, a source said.
Due to calls, tenders, maturities, coupons and record low issuance, there is $93 billion in excess cash in the market, an all-time record, according to a BofA Global Research report.
There is a sentiment that the Federal Reserve’s rate hike campaign may peak at its next meeting with BB credits one of the first in line to benefit from the deployment of cash reserves.
The trend towards higher quality credit is already present in the market with BB paper outperforming.
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