Morning Commentary: Icahn bonds active as investors pare shorts ahead of holiday weekend

By Paul A. Harris

Portland, Ore., May 26 – The bonds of Icahn Enterprises LP gained 2 points to 3 points in active trading in the early going on Friday as investors seek to pare short positions ahead of the extended Memorial Day holiday weekend, according to a bond trader in New York.

With billionaire financier Carl Icahn, the prototype corporate raider, himself undergoing a raid, the stocks and bonds sold by his enterprise have been pummeled, the trader conceded.

However, Carl Icahn has been addressing the short sellers, the source added.

The focus has been on the Icahn Enterprises LP/Icahn Enterprises Finance Corp. 6¾% senior notes due February 2024, which were trading at 94½ at mid-morning on Friday, according to the trader, who added that the market was pressed for offers.

They changed hands at 92½ on Thursday.

“There are a lot of levers Icahn can pull,” said the trader, who counseled caution with respect to heading into a long weekend with exposed shorts in the name.

Away from that situation, the high-yield bond market was up 3/8 of a point on Friday morning after lagging equities the entire week, the trader said, adding that activity was being driven by rates.

Among recent new issues the Olympus Water US Holding Corp. (Solenis) 9¾% senior secured notes due November 2028 (B3/B-) were a little better on the morning at 99 3/8 bid, 99 7/8 offered.

The $1.7 billion issue priced at par on Wednesday.

Throughout the past week the new issue market has been underwhelming, the trader said, adding that four of the five most recent new issues were trading below their issue prices.

The only two deals on the active forward calendar will be carried over into the post-Memorial Day week, sources say.

Document changes surfaced Friday morning on the Mobius Merger Sub, Inc. $400 million offering of seven-year senior secured notes (B2/B/B+) backing the buyout of MoneyGram International Inc. by Madison Dearborn Partners, the trader said.

There were no updates on pricing, the source noted.

The deal has been guided at 10½% to 11%.

Meanwhile jailhouse telecom Aventiv Technologies LLC, which has drawn an exceptionally long stretch in the primary market, continues its attempt to place $400 million of four-year first-lien senior secured notes (B3/B).

That bond sale has now run for virtually the entire month of May.

As to the holiday abbreviated week beginning Tuesday, May 30, there could be one or two deals in addition to the above-mentioned offerings from MoneyGram and Aventiv, the trader said, but added that May, which saw $18 billion to $19 billion of new high-yield issues, was bigger than had been anticipated.

Fund flows

High-yield ETFs sustained notable daily cash outflows of $444 million on Thursday, according to a market source.

Actively managed high-yield funds saw $57 million of inflows on the day, the source added.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined high-yield funds saw $1.399 billion of net inflows for the week to the Wednesday, May 24 close, according to fund-tracker Refinitiv Lippper.

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