Morning Commentary: Junk improves as equities rally; downsized Chart deal on deck

By Paul A. Harris

Portland, Ore., Dec. 8 – The high-yield bond market improved about ¼ of a point as U.S. stock indexes rallied on Thursday morning, according to a bond trader in New York.

With the S&P 500 stock index up 0.77% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.07%, or 6 cents, at $75.04.

The new issue market was poised to price its first dollar-denominated high-yield bond deal of December.

Chart Industries, Inc. set talk in a downsized $1.97 billion two-part notes offering, decreased from $2.06 billion with a shift of proceeds to its concurrent term loan.

The resized bond deal features an upsized $1.46 billion tranche (from $1.31 billion) of seven-year senior secured notes (Ba3/B+) talked to yield 7¾% to 8% with 1.5 points of OID.

The offering also includes a downsized $510 million tranche (from $750 million) of eight-year senior unsecured notes (B3/B) talked to yield in the 10% area with 2 points of OID.

The notes are expected to price later Thursday on an accelerated timeline.

Among existing issues, the Sabre GLBL Inc. 11¼% senior secured notes due December 2027 (Ba3/B) were up ½ point on the morning, changing hands at 103¼, the trader said.

The Texas-based software company’s oversubscribed and upsized $555 million deal (from $535 million) priced at 98.134 to yield 11¾% on Nov. 21.

Turning to distressed situations, the badly beaten up Carvana Co. 10¼% senior notes due May 2030 improved ½ point, changing hands at 42½ on Thursday morning, according to the trader, who added that the online car retailer appears headed for restructuring.

Fund flows

High-yield ETFs saw $173 million of daily cash inflows on Wednesday, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $85 million of outflows on Wednesday, the source said.

As the market awaits a Thursday afternoon report on the weekly cash flows of the various asset classes from fund-tracker Refinitiv Lipper, the combined funds are tracking $268 million of net inflows for the week to Wednesday's close, according to the market source.

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