Morning Commentary: Junk market gyrates; DISH active amid talks to sell Boost Mobile

By Paul A. Harris

Portland, Ore., Oct. 13 – A hotter-than-expected Consumer Price Index report for September sent stocks tumbling on Thursday morning, with the junk bond market endeavoring to hold its water, a New York-based trader said.

After opening the session up ½ point, the high-yield market dropped 1¼ points in a reversal triggered by the CPI reading, the trader said.

As stocks regained ground heading into the mid-morning, the high-yield index snapped back, with the trader marking it 5/8 of a point lower at that point, but specifying that cash bonds were off 1 point to 2 points on the morning.

Phenomenal fluctuations in the yield of 10-year Treasuries were making it exceedingly difficult to price risk, the trader remarked. Ten-year governments spiked to 4.06% on Thursday morning, post-CPI, up from 3.9% on Wednesday.

Ongoing volatility in risk-free assets is taking an even bigger toll on high-grade corporate bonds, the trader said, noting that investment-grade paper traded to year-to-date wides on Wednesday, with 1,500 high grade names trading at their widest levels thus far in 2022.

In the high-yield space, bonds of cash-strapped DISH Network Corp. were active and outperforming on Thursday on a news report that a special purpose acquisition company (SPAC) created by DISH Network founder Charlie Ergen is now in talks to purchase Boost Mobile from DISH.

The DISH Network Corp./DISH DBS Corp. 5¼% senior secured notes due December 2026 were 81¼ bid, 82 offered on the news in active trading, although little changed from 81¼ bid, 81¾ offered, the trader said, adding that the entire complex of DISH bonds was active.

Among recent issues, the EnQuest plc 11 5/8% senior notes due November 2027 (B3/B+) were 98½ bid, 99 offered, essentially straddling the new issue price on Thursday morning.

The $305 million issue priced at 98.611 to yield 12% on Wednesday in a deal that was run on the London high-yield syndicate desk, playing to a primarily European aggregate of investors, according to market sources.

Elsewhere, the RXO, Inc. 7½% split-rated senior notes due November 2027 (Baa3/BB+) were 98½ bid, 99 offered on Thursday morning, down from 99 bid, 99½ offered on Wednesday, the trader said.

The $355 million deal, backing XPO Logistics, Inc.'s spinoff of its transportation brokerage platform, priced Tuesday at 98.962 to yield 7¾% in a high-yield style execution that was heard to have been well oversubscribed.

In the primary market, Bluewater Holding BV mandated DNB Markets and Pareto Securities to arrange meetings with fixed income investors starting on Friday, with a possible $240 million offering of four-year senior notes to follow, pending market conditions.

Bluewater would take a place on a thin dollar-denominated active forward calendar.

The only other deal on offer is the Odeon Finco plc/AMC Entertainment Holdings, Inc. $400 million offering of five-year senior secured notes (S&P: B), in the market with initial talk that has them coming with a 12¾% coupon at 95 to 96 to yield around 14%, and set to price on Friday.

News of the movie theater operator's new debt refinancing deal sent AMC's 10% second-lien notes due 2026 tumbling 4 points on Wednesday to 58.

That paper fell further, to 56½, on Thursday – among the morning's biggest losers – the trader said.

Holders of the 10% notes have become restive at the likelihood of being layered into a more expensive debt structure, sources say.

© 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.