Morning Commentary: Primary reopens with Yum! Brands drive-by; funds see Friday inflows

By Paul A. Harris

Portland, Ore., March 30 – Monday’s big news in the high-yield bond market was the emergence of a new offer – the first in nearly a month.

Yum! Brands, Inc. plans to sell $500 million of five-year senior notes (existing ratings B1/B+) later on Monday following a mid-morning conference call with investors.

The deal is expected to come with a yield in the 7¾% area and is playing to orders in excess of $3.5 billion, according to an investor.

The junk bond index opened unchanged on Monday morning, a trader said.

The yield on 10-year Treasuries slid throughout the early going, as the March-April crossover week got underway. At mid-morning the 10-year was yielding 0.624%, according to a market source.

With the Dow Jones industrial average up 400 points, the iShares iBoxx $ High Yield Corporate Bd (HYG) was up 0.88%, or 68 cents, at $77.71 per share.

The dedicated high-yield bond funds saw $398 million of net inflows on Friday, according to a market source.

High-yield ETFs were modestly negative, sustaining $17 million of outflows on the day.

Actively managed high-yield funds, meanwhile, saw a solid $415 million of outflows on Friday, the source added.

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