Morning Commentary: Alteryx rides higher on merger news; jink ETF outflows continue

By Paul A. Harris

Portland, Ore., Dec. 19 – After opening flat on Tuesday the junk bond market gained ground by midmorning, according to a trader who saw cash bonds as well as the high-yield index up about ¼ of a point at midmorning.

With the Dow Jones industrial average up half a percent at that time the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was 0.38% better, up 29 cents, at $77.27.

The Alteryx, Inc. 8¾% senior notes due March 2028 were up two points on the morning, trailing Monday’s news that the company has agreed to be acquired by Clearlake Capital Group LP for $4.4 billion.

The Alteryx notes were 105 bid, 106 offered, possibly trading into a make-whole call, the trader said.

With the approach of winter, the high-yield index now posts big year-to-date returns of over 12%, up over 2½% in December, sources say.

Dramatic declines in risk-free rates, with the 10-year Treasuries peaking at 4.988% on Oct. 18, then staging a steep decline heading into year-end (3.913% on Tuesday morning) helped to support junk’s dramatic late-year price appreciation, they add.

The impact on cash some of the cash bonds priced earlier in the autumn can be eye-popping, a trader noted on Tuesday morning.

The Spirit AeroSystems, Inc. senior secured second-lien notes due November 2030 were 107 bid, 107½ offered, up ¼ point on Tuesday, the source added.

The $1.2 billion issue price at par on Nov. 9.

The Navient Corp. 11½% senior notes due March 2031 were trading Tuesday morning at 110, the source said.

The $500 million issue priced at 99.81 on Oct. 31.

The new issue market remained quiet on Tuesday, and has likely concluded its business for the year, sources say.

However, January promises to be a big month in the primary market, a syndicate banker said.

Fund flows

High-yield ETFs sustained $471 million of daily cash outflows on Monday, according to a market source.

Those negative flows follow the $377 million of outflows that the junk ETFs sustained on Friday.

Preceding those two consecutive days of negative flows was a $1.03 billion inflow on Thursday, the source said.

Meantime, actively managed high-yield funds had $22 million of inflows on Monday.

The combined funds are tracking $1.1 billion of net inflows for the week that will conclude with Wednesday’s close, according to the market source.

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