Morning Commentary: Charter, Marriott Vacations driving by; Monday deals trade higher

By Paul A. Harris

Portland, Ore., Sept. 17 – Familiar junk issuers Charter Communications, Inc. and Marriott Vacations Worldwide Corp. pulled up at the high-yield drive through window on Tuesday morning, market sources said.

Charter plans to price $1 billion of CCO Holdings, LLC/CCO Holdings Capital Corp. 10.5-year senior notes.

Initial talk has the deal, which will mature in 2030, coming to yield in the 4¾% area, an investor said.

Elsewhere Marriott Vacations Worldwide plans to price $300 million of 8.25-year senior notes (existing ratings Ba3/BB) trailing a late-morning conference call with investors.

In European junk land, Madrid-based Telefonica, SA and England's Nationwide Building Society are in the market with hybrid deals.

Meanwhile in an offer being talked at a spread, Greece’s OTE plc is marketing €500 million of seven-year senior notes (BB+). Talk is mid-swaps plus 165 basis points, and the deal size will not grow.

Monday deals surge

Deals priced in well oversubscribed Monday junk bond sales were trading at handsome premiums on Tuesday morning, sources said.

The Performance Food Group Co. 5½% senior notes due October 2027 (B1/B+) were 102½ bid, 103 offered, an investor said.

The $1.06 billion issue priced at par to yield 5½%, at the tight end of talk as it played to massive demand, according to the investor, who added that the order book was heard to be seven-times oversubscribed.

Meanwhile the Installed Building Products, Inc. 5¾% senior notes due February 2028 (B3/B+) were 102½ bid, 103¼ offered on Tuesday morning, according to the investor.

The $300 million issue came at par, pricing 12.5 bps tighter than the 5 7/8% to 6% yield talk.

The deal played to $1.8 billion of orders, according to a bond trader.

The market had a firm tone heading into mid-morning, the investor said.

Amid moderately lower stock prices high-yield ETFs were slightly softer on the morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.09%, or 8 cents, at $87.39 per share.

Big inflows

The high-yield bond asset class continues to attract cash in notable volumes, the data suggest.

Actively managed high-yield funds, the asset managers, saw $1.25 billion of daily inflows on Monday, according to market sources.

High-yield ETFs saw $19 million of inflows on the same day.

Those numbers follow $1.08 billion of daily inflows to the junk ETFs last Friday, sources say.

Week to date for the period that will conclude at Wednesday's close, the combined funds are tracking $2.9 billion of inflows, a market source said.

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