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Morning Commentary: Ship Finance brings Nordic deal; junk funds see mixed Friday flows
By Paul A. Harris
Portland, Ore., Aug. 27 – The major currencies new issue high-yield bond market remained quiet on Monday and is expected to remain so until the extended Labor Day Holiday weekend concludes on Sept. 4.
However, the Nordic new issue market continued to generate news.
Ship Finance International Ltd. mandated Nordea and a syndicate of banks to arrange a series of fixed income investor meetings in the Nordic region beginning Tuesday.
A five-year krone-denominated senior unsecured bond issue may follow, subject to market conditions.
Away from that deal, liquidity in the high-yield market remains characteristically thin in the run-up to Labor Day, sources say.
Global equities staged a healthy start to the Aug. 27 week, and high-yield ETFs were following suit.
The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 8 cents, or 0.08%, at $86.46 per share, at mid-morning.
Recent issues continue to trade at premiums to new issue prices.
Among the outperformers, the new Frontdoor, Inc. (ServiceMaster Global Holdings, Inc.) 6¾% senior notes due Aug. 15, 2026 (B2/B-) were 102¼ bid, 102¾ offered on Monday, according to a market source.
A week ago they were 101 7/8 bid, 102 3/8 offered.
The $350 million issue priced at par on Tuesday, 12.5 basis points below the tight end of yield talk in the 7% area, as part of a five-deal, $1.5 billion burst of late summer issuance that came on Aug. 14.
Elsewhere the Verscend Holding Corp. 9¾% senior notes due Aug. 2026 (Caa2) were 103 bid, 103½ offered, the source said.
Last Thursday those bonds were 102¾ bid, 103¼ offered.
The downsized $1.1 billion issue (from $1.15 billion), backing Verscend's acquisition of Cotiviti Holdings, Inc., priced at par on Aug. 10.
Friday inflows
The cash flows of the dedicated high-yield bond funds were mixed on Friday, a trader said.
High-yield ETFs saw $111 million of inflows on the day.
However, actively managed funds sustained $10 million of outflows on Friday.
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