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Morning Commentary: High-yield secondary market firms after weak open; DaVita lower
By Abigail W. Adams
Portland, Me., June 22 – The domestic high-yield bond primary market remained dormant on Wednesday with little visibility on prospective deals as volatility continued to roil capital markets.
Risk assets were again gyrating between gains and losses early in Wednesday’s session as investors assessed the likelihood and the severity of an economic recession.
The secondary space opened in the red with ETF selling pressure again driving the market down.
However, the market firmed as the session progressed with the 10-year Treasury yield continuing to come in from its peak and ETFs turning positive.
The iShares iBoxx $ High Yield Corporate Bd (HYG) share price rose 15 cents to $74.16, an increase of 0.22% shortly before 11 a.m. ET after opening the day in the red.
The SPDR Bloomberg High Yield Bond ETF also fought back from negative territory and was up 27 cents to $91.60, an increase of 0.31%, shortly before 11 a.m. ET.
With no new issues entering the space and the pipeline clear, ETF fund flows, repositioning in response to the macro environment and topical news were the driving force of activity in the space.
DaVita Inc.’s 4 5/8% senior notes due 2030 (Ba3/B+) continued to move lower in heavy volume after the dialysis service provider lost a Supreme Court case.
The 4 5/8% notes fell another 1 point in active trading.
The notes were changing hands in the 74 to 74½ context early in the session.
The notes fell 4 points during Tuesday’s session.
The Supreme Court on Tuesday ruled against DaVita, which had claimed the reimbursement rate of an Ohio hospital’s health plan for patients with end-stage kidney disease was discriminatory.
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