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Morning Commentary: Junk underperforms equities in early going; Crown drive-by on tap
By Paul A. Harris
Portland, Ore., March 14 – High-yield bonds were underperforming equities as the week got underway, according to a trader, who was marking junk ¼ point lower at mid-morning on Monday.
With the Dow Jones industrial average up 1.05%, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.42%, or 34 cents, at $80.59.
The most recent deal to clear the market, Carpenter Technology Corp.'s 7 5/8% senior notes due March 2030 (B2/BB+/BB) were trading around par on Monday morning, bouncing around in light trading, the source said.
The $300 million issue priced at par on Friday afternoon and changed hands at par 7/8 heading into Friday's close.
Elsewhere, the Twitter, Inc. senior notes due March 2030 (Ba2/BB+) were down ¼ point to ½ point at 97 bid, 98 offered on Monday, the trader said.
The $1 billion bullet deal price at par on Feb. 23.
In the primary market Crown Americas LLC plans to price a $500 million offering of eight-year senior notes (expected ratings Ba3/BB-) in a Monday drive-by. Initial guidance is in the 5¼% area.
There is only one other deal on the active forward calendar.
SPX Flow Inc. (Redwood Star Merger Sub. Inc.) is shopping a $570 million offering of eight-year senior notes (Caa2/CCC) – initial guidance in the high 8% to 9% area – on a roadshow set to wrap up on Thursday.
There are other deals to be done, pending market conditions, sources say.
Friday outflows
The dedicated high-yield bond funds sustained $484 million of net daily outflows on Friday, according to a market source.
High-yield ETFs saw $386 million of outflows on the day.
Actively managed high-yield funds sustained $98 million of outflows on Friday, the source said.
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