Morning Commentary: Liquidity ultra-thin as curtain drops on 2017; Thursday cash flows flat

By Paul A. Harris

Portland, Ore., Dec. 22 – With liquidity having fallen off completely, market participants who showed up for work on Friday were turning their attention to the logistics of holidays with family and friends, said a trader on the East Coast of the United States.

“There is nothing going on,” the source said.

“There is no liquidity in the market. Even if you wanted to get something done there is no one on the other side.

“We're finished for the year.”

The primary market was shuttered on Friday. The active calendar was empty heading into year-end.

There is a January pipeline, sources say.

The final deal of 2017, the Lonestar Resources US Inc. 11¼% senior notes due Jan. 1, 2023, was 101¾ bid, unchanged on Friday morning, the trader said.

The bonds appeared in four runs on Friday, whereas it appeared in eight runs on Thursday, the source said, noting that JPMorgan brought the deal, and their trader was out on Friday.

The $250 million issue, which priced on Tuesday at par, ended up being oversubscribed after crawling to the finish line, according to market sources.

The Fort Worth oil and natural gas company, which was in the market to refinance its 8¾% senior notes due 2019, made concessions to investors that included widening the rate from 10¾%, tweaking covenants and extending call protection.

Flat Thursday flows

In spite of a stock market that was somewhat weak in the early going on Friday, and a 0.5% drop in the price of crude oil, high-yield ETFs were modestly higher at mid-morning.

The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was up 0.09%, or 3 cents, at $36.59 per share.

The daily cash flows of the high-yield funds were mixed and essentially flat on Thursday, the most recent session for which data was available at press time.

High-yield ETFs saw $20 million of inflows on the day.

However actively managed funds sustained $60 million of outflows on Thursday.

News of Thursday’s daily flows surfaced on the heels of a Thursday afternoon report from Lipper US Fund Flows that the dedicated high-yield funds sustained a substantial $1.112 billion of net outflows during the week to Wednesday's close.

© 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.