Crown Americas higher; Laredo, Moss Creek slip as oil declines; HY primary market shutters

By Cristal Cody and Paul A. Harris

Tupelo, Miss., March 15 – While the primary market was quiet, the junk bond secondary market remained active Tuesday ahead of the Federal Reserve’s widely expected rate hike on Wednesday, while overall tone improved with stocks higher and oil erasing gains.

The iShares iBoxx High Yield Corporate Bond ETF closed up 60 cents to $80.57.

“Trading was just a touch below average, but things were trading,” a source said. “Some guys don’t want to do anything before the Fed.”

Crown Americas LLC’s new $500 million tranche of 5¼% senior notes due 2030 (Ba3BB-) traded past par by the day’s end.

Bonds in the oil and gas space softened as oil prices retreated from heavy gains after Russia invaded Ukraine.

West Texas Intermediate crude oil benchmark futures for April deliveries dropped $6.57 to settle at $96.44 a barrel.

Laredo Petroleum, Inc.’s 7¾% senior notes due July 2029 (B3/B) slid over 2 points.

Moss Creek Resources Holdings Inc.’s 7½% senior notes due 2026 (Caa1/B) fell 2¼ points.

Primary quiet

The primary market remained shuttered on Tuesday following a Monday session that took the index down 91 basis points in a single day.

An investor said the market appeared frozen, with only a few names trading, and chunks of dealer inventory being discounted.

A sellside source countered that the dealers have been keen to get risk off their balance sheets, and thus far have done a decent, orderly job of accomplishing that task.

Some of the bigger, more liquid names were active on Tuesday, the sellsider said, marking junk up 1/8 point to ¼ point on the day, after opening 1/8 point to ¼ point lower in the morning, in the wake of Monday's massive rout.

The better tone was reflected in Tuesday trading of the market's most recent deal, the Crown Americas LLC 5¼% senior notes due April 2030 (Ba3/BB-) which priced at par in a $500 million issue on Monday, according to the sellsider.

Early Tuesday there was a round-lot trade at 99.938, the source said. Later in the day there were prints at par and then par 1/8.

At 4:05 p.m. ET the paper changed hands at par 3/8, the sellsider said.

And while the high-yield market can't look very hospitable to prospective issuers, there are investors starving for new issues, the source asserted.

Be that as it may, at Tuesday's close just one deal was parked 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 has been no news on that deal since the beginning of the week, the sellside source said.

There are other deals to be done, sources say, pending market conditions.

Energy bonds soften

Laredo Petroleum’s 7¾% senior notes due July 2029 (B3/B) were quoted off more than 2 points at 99 bid on $13 million of paper traded over the day, a source said.

The Tulsa-based oil and natural gas explorer priced $400 million of the notes back on July 13, 2021.

Moss Creek Resource Holdings’ 7½% senior notes due 2026 (Caa1/B) also were under pressure and went out 2¼ points lower at 90½ bid.

Trading volume in the Houston-based oil and gas exploration company’s notes totaled $4 million.

Indexes

The KDP High Yield Daily index posted Tuesday at 60.78 and a 5.8% yield after finishing Monday down 61 bps at 60.79 and a yield of 5.79%.

The CDX High Yield 30 index rose to 104.2 Tuesday after going out Monday down 28 bps at 103.75.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.