Morning Commentary: High-yield market quiet heading into holiday weekend; trading volume thin

By Paul A. Harris

Portland, Ore., Aug. 29 – The high-yield market was quiet on Friday morning heading into the three-day Labor Day weekend in the United States, according to a trader on the East Coast.

Of the $672 million inflow to dedicated high-yield bond funds for the week to Wednesday that was reported on Thursday by Lipper-AMG, nearly all of it went into the actively managed funds, the trader said, adding that high-yield exchange traded funds took in approximately $27 million of that total.

Meanwhile September is shaping up to be a big month, with market sources forecasting $30 billion to $40 billion of issuance, and perhaps more, in the month to come.

“We'll have to wait and see,” the trader said.

A lot of big deals are almost certainly going to come in the September-October time period, the source added.

One issuer expected to come during that period with a large deal is Scientific Games Corp., sources say.

The New York-based gaming technology company is planning $3.45 billion of bonds split between $750 million of senior secured notes, $2.2 billion in eight-year senior unsecured notes and $500 million in 10-year senior unsecured notes.

The notes proceeds, in addition to $2.1 billion of bank debt, will help fund the acquisition of Bally Technologies Inc.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. are leading the debt financing.

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