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Morning Commentary: Rakuten launches notes; funds see $678 million inflows
By Paul A. Harris
Portland, Ore., Nov. 22 – The high-yield bond market opened 1/8 of a point higher and maintained that premium into the mid-morning, market sources said.
With the Dow Jones industrial average up 0.8% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was 0.21% better, up 16 cents, at $74.36.
The Ford Motor Credit Co. LLC 7.35% senior notes due November 2027 (Ba2/BB+/BB+) were 102¾ bid, 103½ offered, according to a bond trader in New York.
The $1.5 billion deal priced at par on Nov. 1.
The Sabre GLBL Inc. (Sabre Corp.) 11¼% senior secured notes due December 2027 (Ba3/B), the most recent deal to clear the market, were par ½ bid, 101 offered on Tuesday morning, according to the New York trader.
The refinancing deal, which priced at 98.134 to yield 11¾% in an upsized $555 million issue (from $535 million), came cheap, according to this trader's reckoning.
It was a clubby trade, the source noted, adding that it played to $550 million of reverse inquiry and to a book containing around $1 billion of orders.
In the primary market, Tokyo-based Rakuten Group, Inc. launched its $500 million offering of two-year senior notes (S&P: BB+) with a 10¼% coupon at 96.968 to yield 12%, in the middle of yield talk.
Tuesday morning's announcement also detailed the deal's bullet structure.
There has been a significant number of indications of interest across Asia, Europe and the United States, according to a syndicate source.
High-yield accounts in the United States are taking a close look at the Rakuten offering, sources say.
It is set to price later on Tuesday.
Monday inflows
The dedicated high-yield bond funds saw $678 million of net daily cash inflows on Monday, according to a market source.
High-yield ETFs saw $653 million of inflows on the day.
Actively managed high-yield funds saw $25 million of inflows on Monday, the market source said.
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