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Morning Commentary: Howard Midstream on deck; Trinity Industries bonds trade to premium
By Paul A. Harris
Portland, Ore., June 29 – The Thursday high-yield new issue market spotlights a single deal.
Howard Midstream Energy Partners, LLC takes the on-deck circle with a $500 million offering of five-year senior notes (B3/B-).
Pending official talk, early guidance has the notes coming to yield in the 9% area, source say.
A portfolio manager, who was sizing the deal up, said that one interesting aspect of the company is its joint venture in the 200-mile Nueva Era cross-border pipeline connecting producers in South Texas directly with end-users in Mexico, where, said the investor, there seems to be a perennial shortage of natural gas.
In the euro-denominated primary market, Polynt Group launched its €300 million offering of SCIL IV LLC/SCIL USA Holdings LLC five-year senior secured notes (B1/BB-) – a dividend-financing deal – at 9½%, in the middle of talk, with pricing expected shortly.
The junk bond market opened 1/8 of a point better in New York on Thursday, sources said.
Among recent issues, the Trinity Industries, Inc. 7¾% senior notes due July 15, 2028 (Ba2/BB+/BB) were par ¾ bid, 101¼ offered at mid-morning, the portfolio manager said.
The $400 million issue priced at par on Wednesday.
Fund flows
The dedicated high-yield bond funds sustained a modest $45 million of net daily outflows on Wednesday, according to a market source.
High-yield ETFs saw $29 million of outflows on the day.
Actively managed high-yield funds sustained $16 million of outflows on Wednesday, the source said.
As the market awaits a Thursday afternoon report on the cash flows of the various asset classes from fund-tracker Refinitiv Lipper, the combined high-yield bond funds are tracking $675 million of net outflows for the week to Wednesday’s close, according to the market source.
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