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Morning Commentary: Junk liquidity thins as year-end nears; Antero trades at 101 3/8
By Paul A. Harris
Portland Ore., Dec. 18 – With the dust settling on a big week in the new issue bourse – $11.6 billion in 24 tranches – liquidity in high-yield bonds is thinning, a trader said on Friday morning.
Overnight flows were 60% of normal, the source said.
Friday morning flows were 50% of normal.
Friday afternoon activities were being moved ahead into the morning hours as it is becoming apparent that a number of clients are preparing to leave shortly for holiday vacations, the trader said.
With the Dow Jones industrial average and S&P 500 index both off around 0.5% at mid-morning, iShares iBoxx $ High Yield Corporate Bd (HYG) was essentially flat at $86.64 per share, up 3 cents, or 0.03%.
The Antero Resources Corp. 8 3/8% senior notes due July 2026 (B3/B), the latest in a December parade of deals from the energy sectors, were 101 3/8 bid on Friday morning, according to the trader.
The oversubscribed $500 million issue priced Thursday at par.
The new issue market was quiet on Friday morning.
Primary market activity for 2020 may be concluded, sources say.
However, it is conceivable that the dealers may attempt to bring offerings in the early part of the week ahead, according to sources, including syndicate officials.
The dedicated high-yield bond funds saw daily cash inflows of $655 million on Thursday, according to a market source.
High-yield ETFs saw $505 million of inflows on the day.
Actively managed high-yield funds saw $150 million of inflows on Thursday, the source said.
News of Thursday’s daily flows trails a Thursday afternoon report that the combined funds sustained $1 billion of net outflows in the week to the Wednesday, Dec. 16, close, according to the Refinitiv Lipper Fund Flow Report Newsline.
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