Morning Commentary: Valeant bonds gain as Mr. Ackman goes to Washington; Corral sets talk

By Paul A. Harris

Portland, Ore., April 27 – High-yield bonds were steady in Wednesday morning trading, according to a trader based on the East Coast of the United States.

Against a backdrop of softer stock prices, high-yield ETFs were modestly higher heading into the mid-morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 13 cents, or 0.15%, at $83.49 per share. SPDR Barclays High Yield Bond ETF (JNK), at $35.12 per share, was up 6 cents, or 0.16%.

Valeant trades higher

The bonds of Valeant Pharmaceuticals International Inc. were up half a point to a point as activist investor Bill Ackman was set to testify before the Senate Special Committee on Aging on Wednesday, the trader said.

The VRX Escrow Corp. 5 7/8% senior notes due May 15, 2023, a $3.25 billion issue, was 84¾ bid, up a point since Tuesday morning and seeing pretty good two-way flow, the trader said.

Meanwhile the sole issue of DreamWorks Animation SKG, Inc. is quoted higher on the heels of a Wall Street Journal story reporting that Comcast Corp. is in talks to buy DreamWorks for more than $3 billion.

The DreamWorks 6 7/8% senior notes due Aug. 15, 2020 were quoted up 1½ points, the trader said, but added that as the bonds are callable on Aug. 15 of this year there was no trading in the name, as trading is constrained by the call.

Corral Petroleum PIK talk

In an otherwise quiet primary market Corral Petroleum Holdings AB set price talk for its $700 million equivalent offering of five-year PIK toggle notes (/B/B).

The deal, which is playing primarily to an emerging markets audience (very few high-yield players are involved, a trader said), features dollar-denominated notes talked to yield 11¾% to 12%. Official talk saw the bottom end of the 11% to 12% initial guidance pushed higher.

There is also a tranche of euro-denominated notes talked to yield 11½% to 11¾%.

Tranche sizes remain to be determined.

The deal is expected to price before the end of the present week, sources say. A New York-based trader looks for the deal to price Thursday.

Deutsche Bank has the books.

Mixed flows on Tuesday

The cash flows of the dedicated high-yield bond funds were mixed on Tuesday, a trader said.

High-yield ETFs sustained $29 million of outflows on Tuesday.

Actively managed funds, however, saw $20 million of inflows on the day.

© 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.