Morning Commentary: Junk firms in post-holiday open; Prestige Brands brings $350 million drive-by

By Paul A. Harris

Portland, Ore., Feb. 16 – The high-yield market opened on reasonably firm footing on Tuesday following the Presidents Day extended holiday weekend, according to a trader based on the East Coast of the United States.

Cash bonds were generically up around half a point.

High-yield ETFs were in positive territory heading into the New York mid-morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was 11 cents higher, or 0.14%, at $76.83 per share. SPDR Barclays High Yield Bond ETF (JNK) was up 0.25% at $32.08 per share, 8 cents better on the morning.

The deeply distressed bonds of Whiting Petroleum Corp. were the outperformer in the early going, the trader said, and spotted the Whiting Petroleum 5% senior notes due March 15, 2019 at 43 bid, 44 offered.

Those same notes were seen at 37½ bid last Friday morning.

Whiting Petroleum’s bonds fell precipitously last week when Moody's Investors Service downgraded Whiting’s corporate family rating to Caa1 from Ba2.

Crude oil prices, which had seen steady improvement in recent days, were on the decline Tuesday morning.

The barrel price of West Texas Intermediate crude for March 2016 delivery was down 56 cents on the day, or 1.9%, at $28.88, heading into the mid-morning.

Prestige Brands drive-by

In the new issue market Prestige Brands Holdings, Inc. plans to price a $350 million offering of senior notes due March 1, 2024 (expected ratings Caa1/B) on Tuesday trailing a mid-morning conference call with investors.

The eight-year notes are in the market with initial guidance in the mid-to-high 6% yield range, according to the trader.

Barclays is the lead left bookrunner. RBC, Citigroup, Deutsche Bank and Morgan Stanley are the joint bookrunners.

The company plans to use the proceeds to partially fund the acquisition of DenTek, to redeem all of the Prestige Brands 8 1/8% notes due 2020 and for general corporate purposes.

Mixed flows

The cash flows of the dedicated high-yield bond funds were mixed, with ETFs seeing inflows but actively managed funds sustaining outflows, on Friday, the trader said.

The ETFs saw $145 million of inflows on the day.

Actively managed funds sustained a substantial $255 million amount of outflows on Friday.

Dedicated bank loan funds were also negative on Friday, with $175 million of outflows.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.