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Morning Commentary: Junk lower amid ongoing volatility; funds track big weekly outflows
By Paul A. Harris
Portland, Ore., Feb. 17 – High-yield bond prices fell on Thursday as volatility generated by geopolitics continues to commandeer the capital markets spotlight, a bond trader said.
Markets remain apprehensive about ongoing military brinksmanship in the Ukraine as news outlets report artillery fire in the eastern Ukraine, possibly involving Ukrainian security forces and Russian backed rebels.
The CDX HY 37 index, which tracks high-yield and emerging markets credit default swaps, was down 3/8 of a point at mid-morning, the trader said.
The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.34%, or 29 cents, at $82.83.
Among cash bonds the Icahn Enterprises LP/Icahn Enterprises Finance Corp. 4 3/8% senior notes due February 2029 were 92½ bid, 93¼ offered, down ¼ point, the trader said.
Some issues were moving counter to the market, the source added.
The recently minted News Corp. 5 1/8% senior notes due February 2032 (Ba1/BB+) traded Thursday morning at 101, up ¼ point, according to the trader.
The $500 million issue priced at par on Feb. 8.
Outflows expected
The dedicated high-yield bond funds are tracking $3.1 billion of outflows on the week to Wednesday's close, as they await the official number in a weekly report on fund flows from Refinitiv Lipper, expected Thursday afternoon, according to a market source.
However, the most recent daily fund flow numbers are positive.
High-yield ETFs saw $194 million of inflows on Wednesday, the market source said.
That's the third consecutive daily inflow for the junk ETFs, which saw $672 million of inflows on Tuesday and $351 million of inflows on Monday.
Those inflows come on the heels of a six-week period in which the high-yield ETFs sustained aggregate outflows in excess of $11 billion.
Actively managed high-yield funds also posted positive cash flows on Wednesday, reporting $25 million of inflows on the day, the source said.
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