Morning Commentary: Caesars, Garda, PRA, Verisure open above par; outflows continue

By Paul A. Harris

Portland, Ore., Jan. 24 – The high-yield bond market was unchanged to 1/8 point lower on Tuesday morning, according to a bond trader in New York.

With the S&P 500 index down 0.5% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.28%, or 21 cents, at $75.95.

Bonds priced Monday in a $2.8 billion gush of issuance were all trading actively and above new issue prices on Tuesday morning, the trader said.

The Caesars Entertainment Inc. 7% senior secured notes due February 2030 (Ba3/B) were par 5/8 bid, par 7/8 offered, the trader said.

They were par ½ bid, par ¾ offered late Monday.

The upsized $2 billion issue (from $1.25 billion) priced at par in a Monday blowout that was heard to be playing to $8.4 billion of orders.

PRA Group, Inc.’s 8 3/8% senior notes due February 2028 (Ba2//BB+) changed hands Tuesday morning at par 3/8, the trader said.

The upsized $400 million issue (from $350 million) priced on Monday at par.

And the Garda World Security Corp. 7¾% senior secured notes due February 2028 (B2/B) were par ¾ bid, 101¼ offered on Tuesday morning.

The upsized $400 million issue (from $350 million) also priced on Monday at par.

Among recently minted euro-denominated issues, Verisure Holding AB’s 7 1/8% senior secured notes due 2028 (B1/B) opened the session in Europe at par 7/8 bid, 101 3/8 offered, a market source said.

The upsized €450 million issue (from €350 million) priced at par on Monday.

Following a busy Monday session in both the dollar-denominated and euro-denominated primary markets, there were no announcements Tuesday morning on the new issue front.

Fund flows

Negative cash flows continue to dog the dedicated high-yield bond funds, which have seen outflows in the first three of the present reporting week's five sessions, according to a market source.

On Monday, the funds saw a relatively modest $65 million of net outflows.

The high-yield ETFs sustained $47 million of outflows on the day.

Actively managed high-yield funds saw $18 million of outflows on Monday.

The combined funds are tracking $1.3 billion of net outflows for the week that will conclude with Wednesday’s close, according to the market source.

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