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Morning Commentary: Investors eyeball Diversey bonds following Solenis buyout news
By Paul A. Harris
Portland, Ore., March 8 – The junk bonds of Diversey Holdings Ltd. traded higher on Wednesday morning following news that Solenis will acquire the South Carolina-based hygiene products supplier in a transaction valued at around $4.6 billion, according to a trader.
The Diamond (BC) BV (Diversey Holdings) 4 5/8% senior notes due 2029 were quoted at a wide bid-offer spread, 90½ bid, 92½ offered, as investors attempted to size the deal up, the source said, adding that those bonds traded Tuesday at 82.
Solenis, a Platinum Equity portfolio company, disclosed in a Wednesday Securities and Exchange Commission filing that it has a debt financing commitment for the deal from BofA and Goldman Sachs.
The buyout is expected to close during the back half of this year.
The high-yield bond market opened 1/8 of a point lower on Wednesday following a substantial Tuesday sell-off on the heels of hawkish inflation-fighting talk from Fed chair Jerome Powell in testimony before the Senate Banking Committee.
With the major U.S. stock indexes mixed at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was flat at $74.17, down 2 cents, or 0.03%.
Apart from an off-the-run deal from Floatel International, $100 million three-year notes to come with an 11¼% coupon at par, the dollar-denominated new issue market was quiet on Wednesday, and the active forward calendar was empty.
Fund flows
High-yield ETFs sustained a hefty $601 million of daily cash outflows on Tuesday, according to a market source.
Actively managed high-yield funds posted relatively modest inflows of $70 million on the day, the source said.
The combined funds are tracking $763 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.
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