Recent flood of new high yield issues takes focus from distressed bonds; profit taking weighs on market

By Stephanie N. Rotondo

Seattle, Sept. 9 – As the week came to an end, investors continued to focus on straight high-yield issues over more distressed credits, according to market sources.

One trader noted that part of the reason for that was the $4.37 billion in new issues that priced on Thursday.

“There were a plethora of new issues yesterday,” he said. “Today, it’s all the new issues.”

The trader also noted that the market got “heavy” as the day progressed.

“The ETFs were hitting the go-gos,” he remarked.

“Benchmark things in general were down, given what equities were doing,” another trader said. “There was definitely some profit taking.”

As such, most of the day’s distressed dealings were trending toward the softer side.

For instance, iHeartMedia Inc.’s 9% notes due 2022 were down half a point, a trader said, placing the issue at 73½. The 9% notes due 2021 were a point weaker at 75¼.

Intelsat SA was also down on the day. The 7¼% notes due 2020 fell to 77 from levels around 78½ previously, a trader said. The 7¼% notes due 2021 closed at 74½, which compared to “76 and change” on Thursday.

But while there was a negative tone to the day, the energy space was more on the mixed side of things.

Bonanza Creek Energy Inc.’s 6¾% notes due 2021 traded down with the market, though a trader noted that the paper was off just a shade at 45¼.

However, Cloud Peak Energy Inc.’s 6 3/8% notes due 2024 were up nearly 2 points at 53¼. Hornbeck Offshore Services Inc.’s 5% notes due 2021 were also better – albeit slightly – at 58 3/8.

Peabody Energy Corp.’s debt exemplified the energy sector’s trend. The 6% notes due 2018 were seen up half a point at 24¼, though the 10% notes due 2022 declined 1½ points to 41.

“The 10s gave back some gains,” a trader said, seeing the issue trade “just below 42.”

That was off “a little more than a point,” he said.

But the trader added that the unsecured issues – such as the 6% notes – were “up a little bit,” trading with a 24 handle.

© 2015 Prospect News.
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