Tenneco junk bonds higher; Maxim Crane climbs; Foot Locker slips; ETFs reverse course

By Paul A. Harris and Cristal Cody

Portland, Ore., Aug. 23 – The primary market was inactive on Wednesday, as it has been since the beginning of the week, and will likely remain that way until Labor Day, sources say.

In the wake of the Labor Day holiday weekend primary market business is expected to ramp up, according to a debt capital markets banker who estimated that September could see new issue volume in the range of $8 billion to $10 billion.

Junk bond ETFs reversed course on Tuesday, posting a substantial outflow instead of inflow.

Meanwhile, new paper was proving attractive in the secondary market.

Tenneco Inc.’s 8% senior secured notes due November 2028 (B1/B) were “busy” Wednesday, a trader said.

The bonds, priced in the prior week, moved up on more than $20 million of paper traded with the issue at the top of the most active bonds list during the session.

“They’ve been inching higher,” the trader said.

Maxim Crane Works Holdings Capital, LLC’s new 11½% second-priority senior secured notes due 2028 have climbed nearly 3 points in the secondary space.

The issue was seen as high as a 101-handle over the day.

Overall junk secondary action has slowed along with the primary market in the last days of summer, sources report.

“It’s painful to get things done,” one trader said, but added, “things are trading.”

It was a strong day in the overall market as the S&P 500 equity index closed 1.1% higher, while the iShares iBoxx High Yield Corporate Bond ETF climbed 60 cents, or 0.81%, to $74.71.

Foot Locker, Inc.’s bonds were one of the day’s biggest losers in the junk space over the day after the company posted a second-quarter loss, a trader said.

The bonds gave back 4 points.

Tenneco picks up steam

Tenneco’s 8% senior secured notes due November 2028 (B1/B) traded in the 82¾ to 83¼ area Wednesday, according to a market source.

The notes improved on $20.9 million of paper traded.

Tenneco’s bonds started the session trading with an 82 handle, were seen at 83¼ midmorning and continued to improve by the close.

The issue’s last print Tuesday was around 82, 80.

Tenneco priced the notes at 85 on Aug. 15 and they were seen as low as 81 bid late last week.

Maxim Crane jumps

Maxim Crane Works, LP’s 11½% second-priority senior secured notes due 2028 issued through the Holding Capital entity traded Wednesday better at the par ¾ to 101 1/8 area, a trader said.

The issue saw about $10 million of volume over the session.

The bonds traded Friday in the 99¾ to par ¼ context in the first session after pricing.

The crane rental and lifting services company sold $500 million of the notes Thursday at 98.158 to yield 12%, at the wide end of the 11¾% to 12% yield talk.

Foot Locker declines

Elsewhere, Foot Locker’s debt and equity kicked lower in volatile trading Wednesday after the company reported a decline in revenue and second-quarter losses, lowered its fiscal year guidance and hit the pause button on its quarterly dividend payments after the Oct. 27 payout.

The athletic retailer’s 4% senior notes due 2029 (Ba2/BB+) slid 4 points in active trading totaling $9.3 million, a trader said.

The bonds were quoted at 70¾ and a 10.08% yield.

“The stock is down a lot,” the source said.

Foot Locker shares (NYSE: FL) sank 28.28% Wednesday to $16.64 in heavy trading.

RingCentral trades

RingCentral, Inc. insiders disposed of an aggregate total of more than $3 million worth of stock, according to several form 4 filing with the Securities and Exchange Commission.

The filings were filed after 4 p.m. ET but before the SEC stopped releasing filings for the day.

A trader noted that of that $3 million, the company’s chief executive officer and chairman Vladimir Shmunis sold $1.93 million of his shares.

RingCentral stock is down 17.21% year to date.

In the junk bond market, the company has 8½% senior notes due 2030 outstanding.

When queried on whether the notes had moved, in reaction to the insider stock divestments, the trader said that they had rallied on Wednesday with the rest of the market. The issued closed the day up a point, at 97.25, 98.25.

Fund flows

In a reversal of fortunes, the high-yield ETFs had a whopping $1.17 billion of daily cash inflows on Tuesday, according to market sources.

The inflow follows a pair of $1 billion-plus daily outflows seen in the past four sessions: $1.38 billion of outflows on Monday and $1.07 billion of outflows last Thursday.

Actively managed high-yield funds sustained $160 million of daily cash outflows on Tuesday.

The combined funds are tracking $1.9 billion of net outflows for the week set to conclude with Wednesday’s close, according to a market source.

Indexes

The KDP High Yield Daily index was up Wednesday at 50.15 with a 7.6% yield.

The index added 8 basis points to close Tuesday at 49.69 with the yield 7.79% after declining 12 bps on Monday.

The CDX High Yield 30 index climbed 67 bps Wednesday to 102.57.

The index added 4 bps Tuesday and gained 16 bps on Monday.

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