Morning Commentary: Junk slips amid ongoing volatility; ETFs see big Thursday inflows

By Paul A. Harris

Portland, Ore., March 17 – With the capital markets remaining in the grip of volatility on Friday morning, the high-yield bond market was down ¼ point to ½ point, sources said.

While volatility in Treasuries has abated somewhat, beyond that metric the financial markets continue to be rocked, a trader remarked.

Friday morning financial headlines included SVB Financial Group's filing for a court-supervised reorganization under Chapter 11 bankruptcy.

The group's capital structure was generically bid in the high-50s, offered in the low-60s, the trader said, adding that there may be a view taking hold that the holding company has sufficient assets to cover the bond debt.

With the S&P 500 stock index down 1.35% at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.63%, or 46 cents, at $73.35.

The DISH Network Corp. 11¾% senior secured notes due November 2027 (Ba3/B+), one of the new year's benchmark issues, were 94¼ bid, 94½ offered on Friday morning, off 3/8 of a point on the morning, the trader said.

The notes were 94 5/8 bid, 94 7/8 offered on Thursday, the source added.

The $1.5 billion deal, an add-on, priced at 102 on Jan. 17.

In the primary market, Norway oilfield services provider PGS ASA opened books on a $450 million offering of four-year senior secured notes (expected ratings B3/B) with coupon talk of 13% to 13½% at OID 98, with books set to close late in the Scandinavian day.

Away from that Nordic deal the primary market remained sidelined, and the active forward calendar was empty on Friday morning.

Fund flows

High-yield ETFs saw huge daily cash inflows of $1.2 billion on Thursday, according to market sources.

Actively managed high-yield funds sustained negative flows on the day, posting $290 million of outflows on Thursday.

News of Thursday's daily flows trailed a Thursday afternoon report that the combined funds sustained $1.427 billion of net outflows during the week that concluded with the Wednesday, March 15 close, according to fund-tracker Refinitv Lipper.

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