Morning Commentary: Vivint notes slip on NRG management shakeup; funds see outflows

By Paul A. Harris

Portland, Ore., Nov. 20 – Junk bonds opened unchanged to 1/8 of a point better on Monday, according to market sources.

Among large, liquid issues that came in the second half of 2023, the GTCR W-2 Merger Sub LLC (Worldpay) 7½% senior secured notes due January 2031 were unchanged on the morning at par ¾ bid, 101½ offered, a trader said.

The $2.175 billion issue priced at par in mid-September.

The recently priced Verde Purchaser, LLC 10½% senior secured notes due November 2030 (B2/B+) were down ¼ of a point at mid-morning, trading at 99 bid, 99½ offered, after opening the session at 99 5/8 bid, 99 7/8 offered, the trader said.

The $700 million issue, which came last Friday in support of the CD&R’s buyout of Veritiv Corp., priced at par.

Away from recent issues, news that NRG Energy Inc. CEO Mauricio Gutierrez left the company on the heels of activist shareholder Elliott Investment Management LP’s months-long condemnation of his strategic direction, pressured the bonds of Vivint Smart Home Inc., which NRG acquired late last year in a $2.8 billion deal, a trader said.

The APX Group, Inc. (Vivint) 6¾% senior secured notes February 2027 changed hands on Monday morning at 98½, down ½ point, the source said.

Gutierrez, who led NRG’s effort to acquire Vivint, wanted traditional power generator NRG to become active in managing energy for smart homes, sources say.

In a May 2023 letter to the NRG board, Elliot Investment Management called the Vivint acquisition “the single worst deal in the power and utilities sector in the past decade.”

On the heels of announcing the departure of Gutierrez, NRG also said it is adding four independent directors and will conduct a review of its operations.

The new issue market remained idle on Monday morning, as the holiday-abbreviated pre-Thanksgiving week got underway.

The active forward calendar remained empty.

It is conceivable that the dollar-denominated new issue market will remain dormant until the conclusion of the holiday weekend ahead, sources say.

Fund flows

The dedicated high-yield bond funds saw $193 million of net daily cash outflows on Friday, according to a market source.

High-yield ETFs sustained $168 million of outflows on the day.

Actively managed high-yield funds saw $25 million of outflows on Friday, the source said.

Friday’s outflows come on the heels of historically strong cash inflows during the mid-autumn period, market sources say.

The combined funds saw $10.7 billion of net inflows in the two weeks that ended Nov. 15, the second-largest inflows for a two-week interval on record, according to the market source, who added that the biggest-ever fortnight on record, the two weeks concluding June 3, 2020, saw $12.1 billion of net inflows.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.