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Morning Commentary: Junk market slumbers ahead of Fed decision; Noble Holding on deck in primary
By Paul A. Harris
Portland, Ore., Dec. 14 – The junk bond market felt a little sleepy on Wednesday morning ahead of an expected decision on interest rates from the Federal Open Market Committee, a trader said at mid-morning.
High-yield ETFs were flat to slightly positive.
The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.14%, or 12 cents, at $86.71 per share. The SPDR Barclays High Yield Bond ETF (JNK) was unchanged at $36.53 per share.
A pair of drive-by deals from the red hot energy sector that priced on Tuesday – new issues from AmeriGas Partners, LP and Concho Resources Inc. – were slightly above new issue price but not really going anywhere, the trader said, adding that both deals were tightly priced.
The Concho Resources 4 3/8% senior notes due Jan. 15, 2025 (Ba2/BB+) were par 1/8 bid, par 3/8 offered at mid-morning.
The $600 million issue priced at par, at the tight end of talk in the 4½% area and well inside of initial guidance in the 4¾% area.
Tuesday's sole deal to come on the heels of a roadshow was a little below issue price on Wednesday morning.
The American Midstream Partners, LP 8½% senior notes due Dec. 15, 2021 (Caa1/B+) were trading around 99¾ bid, said the trader.
The $300 million issue came at par, at the wide end of the 8¼% to 8½% yield talk.
Noble on deck
The primary market was also largely dormant at mid-morning.
Noble Holding International Ltd. is on deck for later Wednesday.
The Cayman Islands-based offshore drilling company talked its $500 million offering of non-callable seven-year senior notes (B1/BB-) to yield in the 8¼% area, including 1.5 points to 2.5 points of original issue discount.
Books close at 1:30 p.m. ET on Wednesday.
Fund flows eyed
The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday.
Actively managed funds saw big inflows of $550 million on the day.
However high-yield ETFs saw $58 million of outflows on Tuesday, the trader said.
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