Morning Commentary: High-yield primary quiet; secondary tone firms; Entegris gains

By Abigail W. Adams

Portland, Me., June 21 – It was a quiet morning in junkbondland on Tuesday as the market continued to digest the tumultuous events of the previous week.

The primary market remained dormant early in Tuesday’s session with no deals announced despite a firmer tone in the secondary space.

The secondary market was pointing to a ¼ to ½ point gain at the open with equity markets signaling the return of a risk-on sentiment.

However, the firmer tone did not translate into trading activity with few names seen early in the session, a source said.

The secondary space continued to be driven by macro concerns with the Federal Reserve signaling it was willing to risk a recession to tame inflation.

Average credit spreads during a recession have been 700 bps to 800 bps leaving “a big gap down to go,” a source said.

The ICE BofAML US High Yield index’s spread to worst at Friday’s close was 523 bps.

However, it will take a real primary market calendar to spark a repricing of the secondary, a source said.

While volume was light, Entegris Inc.’s recently priced 5.95% senior notes due 2030 (Ba2/BB/BB) continued to outperform with the issue one of the few new issues in 2022 to trade above its offer price.

The 5.95% notes rose about ¾ point.

It was changing hands at 93¼ early in the session.

Entegris’ 5.95% notes were the last new securities to clear the high-yield primary market.

The manufacturing company for semiconductor products priced a $895 million issue of the 5.95% notes at 90.832 to yield 7½% on June 16.

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