Morning Commentary: High-yield primary quiet; Calpine notes flat in early trading

By Abigail W. Adams

Portland, Me., Dec. 20 – After a surprise drive-by on Thursday, the domestic high-yield primary market was quiet on Friday with sources expecting it to remain closed until the new year.

The tone was also quiet in the secondary space with little notable movement in the issues that were on the tape, a market source said.

After grinding tighter throughout the week, the secondary space was flat on Friday.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was $87.92 early in Friday’s session, an increase of 0.07 cents of 0.085%.

Calpine Corp.’s newly priced 5 1/8% senior notes due 2028 were the most actively traded issue of the day although the notes were hovering at par.

The market for the notes was par bid, par 3/8 offered with the notes changing hands at par 1/8 early in the session, a source said.

The lack of movement in the notes may be the result of end of the year illiquidity, a market source said.

The deal was also driven to the market by about $500 million in reverse inquiry.

Holders may have been happy with their allocations and holding onto them, the source said.

Calpine priced an upsized $1.4 billion issue of the 5 1/8% unsecured notes at par in a Thursday drive-by, one week after pricing a $1.25 billion issue of 4½% secured notes due 2029.

The 5 1/8% notes priced in the middle of the 5% to 5¼% yield talk.

The deal was upsized from $1.25 billion. However, the Houston-based power generator attempted to upsize the deal to $1.9 billion but downsized to $1.4 billion.

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