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Morning Commentary: Euro-denominated primary takes center stage; funds see Monday inflows
By Paul A. Harris
Portland, Ore., March 20 – High-yield bonds opened unchanged on Tuesday after ending a rocky Monday session ¼ point to ½ point lower, a trader said.
High-yield ETFs were flat to slightly better at mid-morning.
The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.13%, or 12 cents, at $85.57 per share.
Among recent issues Parkland Fuel Corp.’s 6% senior notes due April 2026 (B1/BB-) were slightly better at par ¼ bid, par ¾ offered, the trader said.
The $500 million issue priced last Friday at par to yield 6%.
Energy prices were also better on Tuesday.
The barrel price of West Texas Intermediate crude oil for April 2018 delivery was up $1.36, or 2.19%, at mid-morning, trading at $63.42.
Busy euro calendar
Although the dollar-denominated primary market has remained quiet since the beginning of the week, the European new issue market has generated considerable news.
Chicago-based LKQ Corp. started a roadshow on Monday for a €1 billion two-part offering of senior notes (Ba2/BB).
HSBC and BofA Merrill Lynch are managing the sale.
Italy-based TeamSystem Holding SpA is expected to price €750 million of senior secured floating-rate notes in two tranches on Thursday.
Goldman Sachs is leading the offer.
Travel and tourism company TUI AG is in the market with €400 million of seven-year notes.
Barclays, Commerzbank, HSBC and Credit Agricole CIB are managing the sale.
And Corestate Capital Holding SA is marketing €300 million of non-callable five-year notes (BB+) through Wednesday.
Credit Suisse and Morgan Stanley are the bookrunners.
Monday inflows
The cash flows of the dedicated high-yield bond funds were positive on Monday, the trader said.
High-yield ETFs saw $125 million of inflows on the day.
Actively managed funds saw $20 million of inflows on Monday.
Dedicated bank loan funds were also positive on the day, the trader said.
The loan funds saw $105 million of inflows, $25 million of which came into bank loan ETFs.
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