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Morning Commentary: Junk flat at equities waver; funds see $619 million Tuesday outflows
By Paul A. Harris
Portland, Ore., Aug. 24 – The high-yield bond market was unchanged to slightly positive – up perhaps 1/8 of a point – as the U.S. stock indexes wavered during the mid-morning period on Wednesday, according to a bond trader in the New York area.
With the Dow Jones industrial average absolutely flat, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 7 cents, or 0.09%, at $76.34.
Trading volume remained low, the trader said.
The Ford Motor Co. 6.1% senior green notes due August 2032 (Ba2/BB+) – one of the most recent deals to clear the market – recovered the drop in price which they sustained on Tuesday, the trader said, marking the paper 99¼ bid, 99¾ offered.
Those bonds were seen as low as 98½ bid, 99 offered on Tuesday, sources said.
The new Ford green bonds came at par on Aug. 16 in a $1.75 billion high-grade-style execution.
Bonds placed in early August by Charter Communications, Inc. continue to be priced at a significant discount to their reoffer price, the trader said.
The CCO Holdings, LLC/CCO Holdings Capital Corp. 6 3/8% senior notes due September 2029 (B1/BB-) were 98¼ bid, 98¾ offered on Wednesday morning; however, there were no trades on the day, the source noted.
The oversubscribed, upsized $1.5 billion issue (from $1 billion) priced at par on Aug. 4.
There was no news in the dollar-denominated primary market, and chances for any pre-Labor Day new issue business continue to dwindle, sources say.
Tuesday outflows
The dedicated high-yield bond funds sustained $619 million of net outflows on Tuesday, according to a market source.
The negative flows were concentrated in the actively managed cohort: actively managed high-yield funds saw $535 million of outflows on the day.
High-yield ETFs sustained $84 million of outflows on Tuesday, the source said.
The combined funds are tracking a whopping $3.59 billion of net outflows for the week that will conclude with Wednesday’s close, according to the market source.
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