Junk bonds quiet as Powell reignites rate concerns; Carnival lower; Uniti falls below par

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 7 – The junk bond market, both primary and secondary, was listening as Federal Reserve chair Jerome Powell reignited rate concerns with his congressional testimony.

His warning that rates may need to rise higher than previously anticipated to tame inflation reawakened debates about a 50 basis points rate increase at the end of March and a 6% terminal rate.

While the market was firmly risk-off following Powell’s comments, the secondary space was quiet with the selling that did occur orderly, a source said.

The cash bond market shed ¼ to 3/8 point on Tuesday.

However, volume was light, which sources partly attributed to the lack of a calendar and partly attributed to the JPMorgan global high yield & leveraged finance conference, which runs through Wednesday.

With not much moving on Tuesday, activity in the space was driven by large, liquid, high-beta issues.

Carnival Corp.’s 10 3/8% senior notes due 2028 (B2/B+) were the most actively traded issue in the secondary space with the notes lower alongside the broader market.

Uniti Group LP, Uniti Fiber Holdings Inc., Uniti Group Finance 2019 Inc., CSL Capital, LLC’s 10½% senior secured notes due 2028 (B2/B/BB+) sank back below par in active trade after trading on a par handle for the past two weeks.

DISH Network Corp.’s senior notes were under pressure in heavy volume despite a surge in the company’s stock with rates and refinancing risks driving the notes lower.

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