Morning Commentary: Alcoa Nederland trades up 1¼ points; funds see daily, weekly inflows

By Paul A. Harris

Portland, Ore., March 8 – The junk bond market opened unchanged but firmer on Friday morning, according to a trader in New York.

With the S&P 500 stock index up 0.57% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.42%, or 33 cents, at $77.71.

Bonds priced Thursday by Alcoa Nederland Holding BV, the 7 1/8% senior notes due March 2031 (Ba1/BB/BB+), were up 1¼ points on Friday morning, the trader said.

The new Alcoas were 101¼ bid, 101½ offered, said the trader, who characterized the deal as having characteristics of a crossover trade that priced on the high-yield desk.

The $750 million issue priced at par, inside of price talk.

The greater part of that issue went into the strong hands of long-only accounts, the trader said.

Two other Thursday issues, the United Rentals (North America), Inc. 6 1/8% senior notes due 2034 (Ba2/BB+) and the Station, Casinos LLC 6 5/8% senior notes due 2032 (B3/B), were both trading above issue prices at the get-go on Friday, sources said.

A conspicuous mid-week deal from CoreCivic, Inc. continued its robust secondary market performance on Friday morning, trading at 103¼ bid, 103¾ offered, according to the trader.

The upsized $500 million issue (from $450 million) priced at par on Tuesday, riding in on $400 million of reverse inquiry and playing to a “well-healed” book that was twice deal size, according to an informed source, who added that allocations were tough.

Secondary levels rule that the color on “tough allocations” is absolutely accurate, traders say.

The new issue market remained quiet on Friday morning, and the active forward calendar is empty.

U.K. car-maker Aston Martin pre-marketed an expected £1.1 billion equivalent of Aston Martin Lagonda Global Holdings plc senior secured notes, in dollars and pounds sterling, late this week, sources say.

Accounts will like the name at the right price, according to a market source in London, who noted that investors are concerned that the company is heard to be blowing through cash like 007’s Aston Martin DB5 plowing through a formation of SMERSH machine gunners.

Profitability is also a problem, the London source noted.

A sellside source in New York maintains that a deal, with a five- or seven-year tenor, is near at hand.

If and when it comes, Aston Martin’s deal will need no introduction: The name’s Bond...Junk Bond.

Fund flows

The dedicated high-yield bond funds saw $162 million of net daily cash inflows on Thursday, according to a market source.

Actively managed high-yield funds saw $84 million of inflows on the day.

High-yield ETFs saw $78 million of inflows on Thursday, the source said.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined funds saw $346.7 million of net inflows for the week to Wednesday’s close, according to fund-tracker, Lipper.

That inflow follows the previous week’s net outflow of $451.7 million, the source said.

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