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Morning Commentary: Junk market opens firm on Friday; ETFs see big year-to-date inflows
By Paul A. Harris
Portland, Ore., Jan. 5 – The high-yield market opened with a firm tone on Friday, with cash bonds up ¼ point, according to a bond trader in the weather battered city of Boston.
High-yield ETFs were higher on the morning. The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was up 0.13%, or 5 cents, at $37.04 per share at mid-morning.
The junk ETFs attracted a conspicuous amount of cash, inflows totaling $1.5 billion, in the first three sessions of 2018, the trader said.
The daily cash flows of the dedicated high-yield bond funds were positive on Thursday.
The junk ETFs saw $550 million of inflows on the day.
Actively managed high-yield funds saw $150 million of inflows on Thursday.
News of the Thursday daily flows trails Thursday afternoon's weekly report from Lipper US Fund Flows that the dedicated junk funds saw $186 million of net inflows in the week to Wednesday's close.
Still no calendar
With news of cash inflows coming on top of a robust week in equities, all that's missing is a new issue calendar, sources say.
Despite the lack of issuance in the first four sessions of the new year, sources continue to predict healthy new deal volume for January, with forecasts running between $15 billion and $30 billion for the month.
However, heading into midday Friday no deals had been launched into the market thus far in 2018.
One name crossed the screens on Friday morning.
Houston-based driller Patterson-UTI Energy, Inc. announced that it is proposing to issue senior notes in a Rule 144A offering, with proceeds to repay bank debt and fund general corporate purposes.
Two other energy deals – one from an exploration and production company, the other from a master limited partnership – are expected to materialize during the Jan. 8 week.
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