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Morning Commentary: Junk primary quiet; Genesis Energy, Summit Materials at a premium
By Abigail W. Adams
Portland, Me., Dec. 1 – The domestic high-yield bond primary market was quiet on Friday after capping one of the busiest months of 2023 for new deal activity.
As the secondary space logged its best monthly performance of the year, the primary market saw 32 issuers price $22.041 billion, marking the second heaviest volume month of the year, according to the Prospect News database.
While there were no deals in the market as December commenced, the primary market is expected to continue to unleash deals at a rapid clip.
Sources anticipate $10 billion in new supply before the year draws to a close with most of the activity expected in the next two weeks.
Meanwhile, the secondary space was unchanged early Friday after a spectacular 4½ point rally in November with most gains realized after the release of the Consumer Price Index report on Nov. 14.
New paper remained in focus with recent deals continuing to put in strong performances.
While off the heights reached on the break, Genesis Energy, LP and Genesis Energy Finance Corp.’s new 8½% senior notes due 2029 (B3/B) continued to trade at a healthy premium to their discounted issue price.
The notes were changing hands in the 99 1/8 to 99 3/8 context in active trade early Friday, according to a market source.
Gensis Energy priced an upsized $600 million, from $550 million issue, of the 8¼% notes at 98.961 to yield 8½% in a Thursday drive-by.
Summit Materials, LLC and Summit Materials Finance Corp.’s new 7¼% senior notes due 2031 (Ba3/BB) also held onto the gains made on the break.
The 7¼% notes were trading in the par ½ to par ¾ context early in the session, a source said.
Summit priced an $800 million issue of the 7¼% notes at par on Thursday.
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