Midday Commentary: First Data add-on outperforms; MGM 5¼% below issue price; primary slumbers

By Paul A. Harris

Portland, Ore., Jan. 2 - Treasuries rallied amid softness in equities on Thursday morning, according to a buyside source, who spotted 10-year government paper at 2.99% after having opened the session in a context of 3.03%.

Against that backdrop junk bonds appeared to be a mixed bag.

The First Data Corp. add-on to its 11¾% senior subordinated notes due Aug. 15, 2021 (Caa2/CCC+/) continued to outperform. The notes, which priced at 103.5 in a $725 million issue on Dec. 16, were 105.5 bid on Thursday morning.

Meanwhile the MGM Resorts International 5¼% senior notes due March 31, 2020 (B3/B+) substantially lagged the new issue price at 99 bid, 99½ offered on Thursday morning. The $500 million deal came at par on Dec. 16.

The new issue market lay dormant, with activity unlikely before the end of the week, sources say.

The week ahead could be a different story, however, with activity expected both in Europe and the United States.

January is expected to be a big month for high-yield issuance.

However higher rates will be a factor, a trader cautioned, adding that the three-handle 10-year Treasury appears to represent a new reality in rates.

High-yield issuers and investors may require a little time to become accustomed to that rate context, the trader added.

© 2015 Prospect News.
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