Morning Commentary: Arbitration outcome pushes Navios higher; pre-holiday liquidity thin

By Paul A. Harris

Portland, Ore., Dec. 22 – The high-yield bond market headed into mid-morning unchanged, as market liquidity continued to thin ahead of the coming holidays, according to a trader in New York.

Amid a backdrop of softer stock prices, the high-yield ETFs were flat and mixed.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.07%, or 6 cents, at $86.31 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $36.51 per share, was down a penny, or 0.03%.

Bonds of Navios Maritime Holdings Inc. improved on news that a London arbitration tribunal ruled the 20-year contract between Corporacion Navios SA and Vale International SA for the iron ore port under construction remains in full force and effect.

The bonds of subsidiary Navios South American Logistics Inc., the 7¼% senior notes due May 1, 2022, were up 5 points since yesterday, trading in a range of 90 to 91 on the news, the trader said.

Navios initiated arbitration following written notice from Vale repudiating the contract.

The arbitration ruling emerged on Wednesday.

Elsewhere, recent energy deals were mixed.

AmeriGas Partners, LP's 5½% senior bullet notes due May 20, 2025 (Ba3//BB) were 101 bid, 101½ offered on Wednesday.

A week ago that paper, which came at par on Dec. 13 in a $700 million issue, was trading below par.

However the Antero Resources Corp. 5% senior notes due March 1, 2025 (Ba3/BB) continued to significantly lag new issue price on Wednesday, at 97½ bid, 98½ offered, the trader said.

Last week that paper, which came at par on Dec. 7, was trading in a 98-handle range.

Primary quiet

In an otherwise quiet primary market, participants still at their desks ahead of the holidays await timing and price talk on Baffinland Iron Mines Corp., which is in the market with a $350 million offering of five-year senior secured notes (Caa1/B-), the sole deal on the active forward calendar.

In a restructuring announced Wednesday, call protection on the notes increased to four years from two years.

Also on Wednesday a list of investor-friendly covenant changes was announced.

However there was no update on timing or talk, as the market awaits word as to whether the company will attempt to price the deal ahead of the holidays.

Prior to Wednesday the Baffinland Iron Mines deal had gone radio silent since the early part of the month.

Goldman Sachs is the left bookrunner and Morgan Stanley is the joint bookrunner.

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