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Midday Commentary: Junk pushes ¼ point higher in morning trading; FDC tap on upward march
By Paul A. Harris
Portland, Ore., Jan. 3 - Junk bonds were generally up ¼ point on Friday morning, according to a trader.
The First Data Corp. add-on to its 11¾% senior subordinated notes due Aug. 15, 2021 (Caa2/CCC+/) were 106 bid, up from 105.5 bid on Thursday, the trader said, noting that the deal, which priced at 103.5 in a $725 million issue on Dec. 16, continues to outperform.
The Halcon Resources Corp. add-on to its 9¾% senior notes due July 15, 2020 (Caa1/CCC+) was 104 bid on Friday morning. The $400 million deal priced at 102.75 to yield 8.999%, also on Dec. 16.
Everything seems to be up about one quarter of a point, said the trader, who noted that an exception to the rule is the MGM Resorts International 5¼% senior notes due March 31, 2020 (B3/B+), which were 99 bid on Friday, basically unchanged on the day. The $500 million deal came at par on Dec. 16.
Plenty of cash, no calendar
Despite Thursday's news that high-yield funds saw $643 million of outflows for the week to Wednesday there is still plenty of cash to be put to work in high yield, the trader said.
"We've seen some small-time selling, most from ETFs, but nothing major," the source remarked.
"There is still plenty of cash out there to be put to work, waiting for a calendar."
That calendar has been slow to materialize, market sources say.
In the face of forecasts that January should be a busy month on the new issue front, the week ahead is expected to be a slow one, the trader said.
"It's almost as if the dealers are nervous about making predictions right now," the source said.
A few European companies are expected to step forward next week, according to market sources.
One or more of those may attempt to raise cash in the dollar-denominated markets.
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