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Morning Commentary: Junk ETF HYG sees record $1.57 billion outflow; market steadies
By Paul A. Harris
Portland, Ore., Feb. 26 – The high-yield bond market in New York awoke on Wednesday to news that there was a record $1.57 billion one-day outflow from the biggest U.S. high-yield bond ETF, $HYG, on Tuesday, market sources said.
In all, the junk ETFs sustained a whopping $1.83 billion of outflows on the Tuesday session, according to a market source.
Damage limited
Away from that eye-grabbing headline, however, junk was up on Wednesday by a quiet ¼ point to ½ point, according to a trader in New York.
Outflows sustained on Tuesday by the actively managed high-yield accounts, the “real-money accounts,” were $120 million, modest in comparison to the ETFs, the trader pointed out.
And away from big moves related to headline news, such as opioid settlements, or the sectors with the greatest sensitivity to the coronavirus impacts, the sell-off in junkland has been muted, the source asserted.
As an example, the trader pointed to notes recently priced in a $2.58 billion megadeal late last week by Zayo Group Holdings Inc.
The Zayo Group/Front Range BidCo, Inc. 4% senior secured notes due March 2027 (B1/B) were unchanged on Wednesday at 99 5/8 bid, the trader said.
The Zayo Group/Front range 6 1/8% unsecured notes due March 2028 were also unchanged on Wednesday at 99½ bid, 99 5/8 offered.
Both issues priced at par.
Both are around 1½ points off their highs, the trader said, and added that had selling taken hold of the junk market, proportional to that which seized equities over the past three market sessions, the prices of that recent issue should have fallen a good deal more the 1½ points.
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