Junk: Maxar active, unchanged; Southwestern Energy softens; Citrix back on 84-handle

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 20 – The junk bond primary market remained idle on Tuesday, and is expected to remain that way until January, sources say.

Meanwhile, weakness continued in the secondary space with the cash bond market off another ¼ point to mark its fourth consecutive day of losses.

However, end-of-year illiquidity continued to set in with large, liquid issues continuing to drive trading activity.

Maxar Technologies Inc.’s 7¾% senior secured notes due 2027 (B2/B+) were trading on heavy volume on Tuesday although with little movement in price after skyrocketing to their current level last Friday following news of an acquisition.

Southwestern Energy Co.’s 4¾% senior notes due 2032 (Ba2/BB+) were weaker in heavy volume, which sources attributed the movement to end of year repositioning.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) returned to an 84-handle on Tuesday after breaking above an 87-handle in early December.

Maxar active, unchanged

Maxar Technologies’ 7¾% senior secured notes due 2027 were actively trading with little change in price on Tuesday.

The 7¾% notes remained wrapped around 104½, a source said.

There was $19 million in reported volume.

The notes jumped 5 points last Friday to their current level following news of private-equity firm Advent Capital’s $6.4 billion acquisition of the space technology company.

Maxar priced the $500 million issue at par with a coupon of 7¾% on June 9.

The acquisition is subject to a 60-day go-shop period; however, if consummated the 7¾% notes will be subject to a conditional redemption, a source said.

Southwestern under pressure

Southwestern’s 4¾% senior notes due 2032 were under pressure in heavy volume on Tuesday.

The notes fell about ¾ point to an 87-handle.

They were changing hands in the 87 3/8 to 87 5/8 context heading into the market close with a yield of about 6 5/8%, according to a market source.

There was about $12 million in reported volume.

There was no news to spark the activity which was most likely the result of end-of-year repositioning.

While energy was the best performing sector in 2022, expectations for its performance are low in 2023, sources said.

Goldman Sachs shifted its recommendation on energy to neutral from overweight in 2023, given current valuations which provide less opportunities.

Citrix returns to an 84-handle

Citrix’s 6½% senior secured notes due 2029 returned to an 84-handle on Tuesday after breaking above an 87-handle in early December.

The notes slipped about 5/8 point to trade in the 84¼ to 84¾ context with the yield about 9 7/8%.

There was $17 million in reported volume.

The 6½% notes have been on a steady downtrend since hitting an all-time high of 88½ on Dec. 1, which marked the first time the notes broke above an 87-handle.

Tibco priced $4 billion of the 6½% notes at 83.561 to yield 10% in late September – the deal was the largest of 2022.

The notes have channeled between an 84-handle and an 87-handle since breaking for trade.

Fund flows

The dedicated high-yield bond funds sustained $914 million of net daily cash outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $879 million of outflows on the day.

Actively managed high-yield funds sustained $35 million of outflows on Monday.

The combined funds are tracking $2.1 billion of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index fell 16 points to close Tuesday at 52.29 with the yield now 7.31%.

The index was down 17 points on Monday.

The ICE BofAML US High Yield index fell 26.4 basis points with the year-to-date return now negative 10.501%.

The index was down 28.5 bps on Monday.

The CDX High Yield 30 index was down 24 bps to close Tuesday at 99.9.

The index fell 29 bps on Monday.

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