Morning Commentary: New Gogo bonds trade higher; market liquidity thins ahead of holidays

By Paul A. Harris

Portland, Ore., Dec. 21 – Market liquidity continued to thin ahead of the coming holidays, according to a trader based on the East Coast of the United States.

High-yield ETFs were flat on the morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down a penny, or 0.01%, at $86.38 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $36.43 per share, was also down a penny, or 0.03%.

Tuesday's deal from in-flight connectivity services provider Gogo was trading at a premium to its new issue price.

The Gogo Intermediate Holdings LLC/Gogo Finance Co. Inc. add-on to the 12½% senior secured notes due July 1, 2022 (B2/B-) was 108 5/8 bid, after trading as high as 109, the trader said.

The upsized $65 million deal (from $50 million) priced at 108 to yield 10.234% on Tuesday, at the rich end of the 107.5 to 108 price talk.

The Concho Resources Inc. 4 3/8% senior notes due Jan. 15, 2025 (Ba2/BB+) have crept slightly higher, with a few investors looking to opportunistically take on a little paper amid the late December lull.

The Concho 4 3/8% notes were par-ish on Wednesday. The paper had been trading at 98 5/8 bid a week ago.

The $600 million issue priced at par on Dec. 13.

In the health care sector, hospital names remain under pressure amid concerns that the new Republican-led government will make big changes to the Affordable Care Act, or even repeal it, the trader said.

However the better names in the sector, such as Tenet Healthcare and HCA (Healthcare Corp. of America), are lately down 2 to 3 points, whereas they were down 4 to 5 points in the immediate wake of the Nov. 8 election which delivered victory to the Republicans.

Investors prefer the secured paper to the unsecured, the trader said.

Bonds of Community Health Systems Inc. have also staged a modest improvement recently, part of which can be chalked up to short covering, the trader said.

Meanwhile, all is quiet in the primary market and is expected to remain so until players resume their places in the new year.

© 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.