Morning Commentary: Junk market pares losses; new Entegris notes gain in early trading

By Abigail W. Adams

Portland, Me., June 17 – The high-yield secondary space firmed on Friday after Thursday’s brutal sell-off drove the cash bond market to new lows.

After dropping more than 1 point the previous session, the market opened ¼ to 3/8 points better, sources said.

However, with the high-yield mutual and exchange traded funds seeing outflows of $5.7 billion in the week through Wednesday’s close, more selling was in store, a source said.

The outflow was one of the largest in the history of the high-yield market and the largest since Feb. 14, 2018 when $6.3 billion left the space, a source said.

The strong start was already fading as equity markets gave up early gains and turned negative.

However, Entegris Inc.’s newly priced 5.95% senior notes due 2030 (Ba2/BB/BB) were posting gains in early trading after falling flat on the break.

The 5.95% notes rose 1 point to trade in the 91¾ to 92¼ context, a source said.

The notes were flat on the break and were marked at 90½ bid, 91¼ heading into the market close on Thursday.

The $895 million issue priced with a coupon of 5.95% and a discounted offer price of 90.832 to yield 7½%, according to a market source.

Pricing came in the middle of official talk for a yield in the 7½% area.

Pricing was in line with initial guidance for a 5.95% coupon and in the middle of initial guidance for a discounted offer price of 90.1 to 91.5.

The deal was one of two to price over the course of the week.

The forward calendar remained empty heading into the long weekend.

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