Junk liquidity thins; NFP notes pop; Alteryx improves; Kinetik up

By Cristal Cody

Tupelo, Miss., Dec. 20 – It was Jingle all the way in junkland on Wednesday, a trader said, forecasting that the market’s liquidity would continue to thin into the holiday weekend ahead.

The new issue market sat idle, as expected, with 2023 issuance now believed to have run its course.

If late-2023 market conditions – especially the autumn’s diving risk-free rates – carry over into the new year, then January should be a busy month for issuance, sources say.

While market action overall was quieter, some junk bond issues were popping Wednesday, sources said.

“There’s been a lot of spread compression the last couple of weeks,” a trader said.

NFP Corp.’s 6 7/8% senior notes due August 2028 jumped over the session on news that Aon plc will acquire the middle-market insurance brokerage for about $13.4 billion in cash and stock.

The bonds climbed more than 7 points from Tuesday.

“That bond is the most active high yield bond today,” a source said. “Biggest gainer, too.”

Alteryx, Inc.’s 8¾% senior notes due 2028 also were up about 1 point on the day and more than 5 points better since Monday’s announcement the data analytics company agreed to be acquired by Clearlake Capital Group LP for $4.4 billion.

Despite the stock market’s swoon, recent issues including Kinetik Holdings LP’s $300 million add-on to its 6 5/8% senior sustainability-linked notes due Dec. 15, 2028 (Ba1/BB+/BB+) improved over the day.

The bonds were trading about ½ point higher from earlier in the session.

NFP perks up

NFP’s 6 7/8% senior notes due August 2028 climbed to 101 bid, 102 offered by the close Wednesday on the Aon takeover news, a source said.

The bonds traded Tuesday at 92¼ bid, 93¼ offered.

Aon plans to acquire the company for $7 billion in cash with $5 billion of new debt to be raised in 2024 and $6.4 billion of Aon stock, a source said.

Alteryx higher

Alteryx’s 8¾% senior notes due 2028 were going out Wednesday at 106 bid, 107 offered, a trader said.

The issue was quoted Friday ahead of Monday’s acquisition announcement at 101¼ bid, 102¼ offered.

On Tuesday, the notes were seen at 105 bid, 106 offered.

Alteryx reported that it will become a private company after the acquisition by Clearlake and Insight Partners, which is expected to close in the first half of 2024.

Kinetik improves

Kinetik Holdings’ reopened 6 5/8% senior sustainability-linked notes due Dec. 15, 2028 (Ba1/BB+/BB+) traded late Wednesday afternoon at 101 bid, 102 offered, a source said.

The bonds were up from par ½ bid, 101 offered early in the session.

On Monday, the issue was quoted at a print of 100.688.

Kinetik priced a $300 million add-on to the bonds on Friday at 100.5 to yield 6.479% in an offering upsized from $200 million.

Fund flows

High-yield ETFs had $261 million of daily cash inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds sustained $34 million of outflows on the day.

With only Wednesday’s daily fund flow numbers remaining to go into the tally the combined funds are tracking $1.36 billion of net inflows for the week to Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index went out Wednesday at 50.82 and a yield of 6.72%, compared to 50.69 with a 6.78% yield on Tuesday and 50.56 with a yield of 6.84% on Monday.

The index added 109 basis points in the prior week.

The CDX High Yield 30 index dropped 37 bps Wednesday to 105.19 after adding 17 bps on Tuesday and 1 bp on Monday.

The index posted a cumulative gain of 144 bps in the previous week.

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