Morning Commentary: Junk unchanged post CPI; ETFs see $290 million Monday inflows

By Paul A. Harris

Portland, Ore., Feb. 14 – Tuesday’s U.S. Consumer Price Index report, indicating that January prices rose 0.4% on the month – a report unlikely to moderate the hands of inflation-fighting central bankers – left the high-yield bond market unchanged, according to a trader in New York.

With equities see-sawing at mid-morning, the high-yield market felt firmer, with more buyers filling in, the source remarked.

At that time, with the S&P 500 stock index down 0.63%, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.07%, or 6 cents, at $74.92.

Bonds that were priced last Friday with a hefty coupon from Hanesbrands Inc., the 9% senior notes due February 2031 (B1/BB-), were a little better on the morning at 101½ bid, 102 offered, the trader said.

The $600 million deal was a blowout, playing to reverse inquiry in excess of the offering size, according to market sources.

For the second consecutive morning the new issue bourse failed to generate any news.

The market awaits word on the Skill Bidco APS $765 million equivalent offering of five-year senior secured notes (B/B+) backing the buyout of Scan Global Logistics by CVC Capital Partners.

The deal is expected to price during the present week, but there have been no updates, sources say.

Early price discussions were in the 10½% to 11% area.

Away from that deal the active forward calendar is empty.

Monday inflows

High-yield ETFs saw $290 million of daily cash inflows on Monday, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $128 million of outflows on Monday, the source said.

The combined funds are tracking $2.18 billion of net outflows for the week that will conclude with Wednesday’s close, according to the market source.

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