Morning Commentary: Low volatility keeping high yield well bid; NGL’s $450 million notes on deck

By Paul A. Harris

Portland, Ore., Feb. 16 – Low volatility and a dearth of surprises in corporate earnings reports are keeping the bid in high-yield bonds, said a trader, who focuses on the five-B crossover space.

The $1.1 billion five-B deal that came from Symantec Corp. earlier in the month began trading well and continues to do so, the source said.

The Symantec 5% senior notes due April 15, 2025 (Baa3/BB+/BB+) were 101½ bid on Thursday.

The issue, which attracted notable participation among holders of Symantec's previously existing bonds, including the 4.2% senior notes due Sept. 15, 2020, has traded actively and hasn't really rescinded, the trader said.

Of those trading it, 80% are high-yield players, the source added.

NGL talk 6% to 6¼%

In an otherwise quiet primary market NGL Energy Partners LP talked a $450 million offering of eight-year senior notes (B2/BB-/B+) to yield 6% to 6¼%.

Talk comes in line with early guidance in the low 6% area, a trader said.

Books close at 1 p.m. ET on Thursday, and the deal is set to price and allocate this afternoon.

Joint active bookrunner RBC Capital Markets LLC will bill and deliver for the debt refinancing deal. Deutsche Bank Securities Inc. and TD Securities (USA) LLC are also joint active bookrunners.

Market watchers are chalking up an ultra-quiet high-yield new issue market to a seasonal issuance blackout, as potential issuers must put up fresh earnings numbers.

Investors are seeing cash inflows and are thus looking for a calendar to materialize, sources say.

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