Secondary liquidity dwindles; Carnival active; AMC downtrend continues; Cornerstone higher

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 28 – The primary market remained quiet on Monday, having quite likely run its course for the summer, market sources say.

The active forward calendar is empty.

The month ahead figures to see a substantial reactivation of the new-issue market.

A trader, pointing out that the first post-Labor Day September session won’t take place until the fifth day of the month, looks for $8 billion to $10 billion of primary market volume in the month ahead.

Meanwhile, it was a quiet day in the secondary space as liquidity continued to dwindle with the market firmly in the dog days of summer.

“Crickets,” a source said.

Trading volumes were light on Monday and expected to progressively diminish as the week continues.

While activity was light, it was a green day for the secondary space with the cash bond market adding about 1/8 point.

While activity was muted, ETFs were buyers on the day with some offers-wanted-in-competition lists circulating the market, a source said.

Activity remained relegated to large, liquid issues with some topical news and portfolio adjustments also contributing to the volume in the space.

Carnival Corp.’s senior notes were among the most actively traded issues in the space although with little movement in price.

AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) continued to fall after plunging the previous session as the conversion of the company’s preferred equity units took effect.

Cornerstone Building Brands, Inc.’s 8¾% senior secured notes due 2028 (B2/B) saw some buying interest on Monday with the notes trading near their all-time highs.

Carnival active

Carnival’s senior notes were among the most actively traded issues in the secondary space on Monday although with little movement in price.

Carnival’s 5¾% senior notes due 2027 and 6% senior notes due 2029 (B3/B) were the tranches in focus.

The 5¾% senior notes continued to trade on a 93-handle to close the day in the 93½ to 93¾ context, according to a market source.

The yield was about 7 7/8%.

There was $20 million in reported volume.

The 6% senior notes due 2029 were changing hand in the 88 to 89 context with the yield about 8½%.

There was $17 million in reported volume.

AMC’s downtrend

AMC’s 10% senior secured second-lien notes due 2026 continued their strong downtrend on Monday after plunging 7 points the previous session.

The notes sank another 2 points in heavy volume.

They traded as low as 59¾ early in the session but were lifted into the close to end the day in the 60½ to 61½ context, a source said.

The yield shot up to 32 1/8%.

There was $17 million in reported volume.

AMC’s 10% notes have been on a strong downtrend since the company executed its plan of conducting a reverse stock split and converting its preferred equity units into common stock late last week.

Cornerstone rises

Cornerstone’s 8¾% senior secured notes due 2028 saw some buying interest and were lifted about ½ point in heavy volume.

The notes rose to a 99-handle to close the day in the 99¼ to 99 3/8 context, a source said.

The yield was about 8 7/8%.

There was $13 million in reported volume.

The 8¾% notes are now trading at their highest level since pricing at 90.296 to yield 11% in July 2022 as part of the LBO financing that supported Clayton, Dubilier & Rice’s buyout of the company.

Indexes

The KDP High Yield Daily index gained 8 basis points to close Monday at 50.15 with the yield now 7.6%.

The ICE BofAML US High Yield index gained 28.6 bps with the year-to-date return now 6.431%.

The CDX High Yield 30 index gained 27 bps to close the day at 102.61.

Fund flows

High-yield ETFs saw a substantial $502 million of daily cash inflows on Friday, according to a market source.

Actively managed high-yield funds sustained $45 million of outflows on the day, the source said.

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