Morning Commentary: Diamond Sports/Sinclair Broadcast bonds track higher in firm market

By Paul A. Harris

Portland, Ore., Aug. 22 – Junk opened firm on Thursday, with some bonds up ¼ point to ½ point in thin, late-summer trading, according to a bond trader in New York.

Against a backdrop of lower stock prices, high-yield ETF share prices were flat on the morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was unchanged at $86.79.

The prices of bonds sold in mid-July by Sinclair Broadcast Group Inc. were higher in somewhat active trading on Thursday morning, the trader said.

The Diamond Sports Group LLC/Diamond Sports Finance Co. 5 3/8% senior secured notes due August 2026 (Ba2/BB) were 104¾ bid, up ½ point on the day.

The upsized $3.05 billion issue (from $2.55 billion) priced at par, at the tight end of talk on July 18.

The Diamond Sports 6 5/8% senior notes due August 2027 (B2/B) were also up ½ point on the morning at 102¾ bid.

The $1,825,000,000 tranche also priced at par on July 18, coming 12.5 basis points tighter than talk.

Trading in the paper has been consistently active, the trader remarked, noting that investor appetite for the Diamond Sports bonds was strong when the issue priced, in spite of upsizing and price tightening, and has generally remained strong.

Meanwhile the new issue market remained dormant on Thursday morning and is not expected to reactivate prior to the conclusion of the Labor Day holiday weekend in the United States during the first week of September.

Mixed Wednesday flows

The cash flows of the dedicated high-yield bond funds were mixed on Wednesday, according to an investor.

High-yield ETFs saw $544 million of inflows on the day.

In line with that hefty inflow traders worked through a large amount of offers-wanted-in-competition (OWICs), primarily from the ETFs, during the Wednesday session, the New York bond trader said.

The cash flows of the actively managed high-yield funds, meanwhile, were flat to slightly negative on Wednesday, as they sustained $10 million of outflows on the day, the investor said.

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