Morning Commentary: High-yield market quiet ahead of Fed; new Radian notes trade actively

By Paul Deckelman

New York, June 17 – The high-yield market was quiet on Wednesday morning, market participants said, with many investors cautiously hugging the sidelines ahead of the conclusion of the Federal Reserve Board’s two-day policy meeting.

The U.S. central bank’s policy-setting Federal Open Market Committee is scheduled to release a statement outlining what it plans to do in the near- to medium-term on interest rates and new economic forecasts at 2 p.m. ET. Shortly thereafter, Fed chair Janet Yellen will hold a press briefing that may shed more light on the Fed’s intentions.

Most observers believe that the Fed will likely begin gradually raising U.S. interest rates this fall, perhaps as soon as September, the first such interest rate increase in nine years.

At 10 a.m. ET, the KDP High Yield Daily index stood at 70.51, up 1 basis point from its close on Tuesday, when the index fell by 12 bps, its third consecutive loss and its 10th downturn in the last 11 sessions. The index’s yield was unchanged on Wednesday morning at 5.69%, after having risen by 5 bps on Tuesday – its third consecutive widening and ninth such increase in the last 10 sessions.

Among specific issues, the new Radian Group Inc. 5¼% notes due 2020 were being quoted at par bid, unchanged from the level at which the upsized $350 million issue had priced late Tuesday as a regularly scheduled forward calendar deal, after having been upsized from an originally shopped $300 million. A market source said that more than $32 million of the Philadelphia-based mortgage insurance and risk-management products provider’s new notes had changed hands.

Elsewhere, HCA Corp.’s 7½% notes due 2022 were seen up ¼ point at 115 bid.

The Nashville-based hospital operator’s bonds had firmed in active trading on Tuesday, including its 5 3/8% notes due 2025, against a backdrop of the company’s announcement that it had amended its bank credit facilities, with a new $1.4 billion A-5 term loan due 2020 replacing two facilities, A-2 and A-4, that were scheduled to mature next year.

Besides extending the maturity by four years, the new loan has better pricing – 150 basis points over Libor, versus 250 bps over Libor on the older facilities being refinanced.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.