Morning Commentary: NortonLifeLock on tap; funds tracking $1.85 billion outflows

By Paul A. Harris

Portland, Ore., Sept. 8 – The first post-Labor Day junk bond deal, an oversubscribed NortonLifeLock Inc. $1.2 billion two-part offering of senior notes (B1/BB-/BB+), is expected to price on Thursday, according to a bond trader.

The deal, which includes five-year notes and eight-year notes, is heard to be playing to $2 billion of orders with strong participation from high-quality accounts, the trader said.

As the market awaits an update on tranche sizes, price talk and timing from the dealer, initial talk on the five-year notes was in the low-7% area, and in the 7 3/8% area for the eight-year notes, sources say.

However, the deal from NortonLifeLock (formerly Symantec Corp.) will likely end up being a six-handle print, the trader said.

Elsewhere, the new issue market is awaiting news on a secured LBO-financing megadeal from Citrix Systems Inc., which had been telegraphed as possible business for the post-Labor Day week, sources say.

A $4.05 billion bank loan, which is also part of the financing for the $16.05 billion leveraged buyout of the Florida-based cloud computing technology company by Vista Equity Partners and Evergreen Coast Capital, was set to launch on a Thursday morning lender call.

“There's a decent (high-yield) pipeline out there, but you get the feeling that Citrix needs to get done in order to clear the way for that pipeline,” the trader said.

The broad high-yield market opened unchanged to perhaps slightly better on Thursday morning, according to the trader, who noted that junk bonds lately seem somewhat decoupled from equities, with the main U.S. stock indexes see-sawing between positive and negative territory in the early going on Thursday.

With the S&P 500 stock index up 0.71% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.15%, or 11 cents, at $75.29.

The Ford Motor Co. 6.1% senior green notes due August 2032 (Ba2/BB+), which came in a high-profile late-summer transaction, were better on the morning at 97¼ bid, 97¾ offered, the trader said.

Those bonds were changing hands on Wednesday at 96 5/8.

The new Ford green bonds came at par on Aug. 16 in a $1.75 billion high-grade-style execution.

Fund flows

Actively managed high-yield funds sustained $400 million of daily cash outflows on Wednesday, according to a market source.

However, high-yield ETFs were firmly positive on the day, posting $342 million of inflows on Wednesday, the source said.

As the market awaits a report on the weekly cash flows of the various asset classes from fund-tracker Refinitiv Lipper, expected later on Thursday, the combined funds are tracking $1.85 billion of net outflows for the week to Wednesday’s close, according to the market source.

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