Endo, DirecTV active; CommScope improves; Freeport-McMoRan gains in low-grade secondary

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 31 – The junk bond primary market remained shuttered on Tuesday, and is expected to remain so until the post-Labor Day period.

Sources were divided on what to expect when the primary market resumes in September with some expecting a continuation of high-volume activity while others see a slower pace.

Meanwhile, the secondary space was unchanged on Tuesday with volume light.

Topical news, large liquid issues and end-of-month activity were the primary drivers of activity.

Endo Finance LLC’s 9½% senior secured notes due 2027 were in focus with the notes off slightly following the loss of a patent on one of its top-selling products.

DirecTV Entertainment Holdings LLC’s 5 7/8% senior secured notes due 2027 (Ba3/BB/BBB-) were active although with little change in price.

CommScope, Inc.’s 4¾% senior secured notes due 2029 (Ba3/B) were nominally improved in active trading.

Freeport-McMoRan Inc.’s longer-dated senior notes rose more than 1 point, which may be a play on the commodities the company mines.

Primary activity eyed

The primary market remained shuttered on Tuesday, and is expected to remain so until the post-Labor Day period when some market sources are expecting a busy-to-hectic September, while others entertain expectations of a somewhat quieter early autumn in the high-yield new issue market.

Meanwhile, a reactivation of the European primary market that was expected to get underway during the final week of August has thus far failed to materialize.

Apart from a couple of Scandinavian deals the European high-yield new issue market also remains on the sideline.

Endo in focus

Endo’s 9½% senior secured notes due 2027 were among the most actively traded issues in the secondary space on Tuesday.

The notes were down about ¼ point to close the day at 98¼, according to a market source.

There was more than $24 million in reported volume.

The notes were in focus following news that the pharmaceutical company had lost its battle to protect the patent on its blood pressure drug Vasostrict.

The news comes shortly after Endo tapped a financial restructuring adviser to evaluate its options as it struggles with the nearly 3,000 pending opioid cases against it.

DirecTV active

DirecTV’s 5 7/8% senior secured notes due 2027 (Ba3/BB/BBB-) were active on Tuesday although with little movement in price.

The 5 7/8% notes continued to trade on a 104-handle and stood poised to close the day at 104 5/8, according to a market source.

There was $23 million on the tape.

End-of-month repositioning may have been the catalyst for the trading activity in the $2.3 billion issue.

The notes have traded in the 104 3/8 to 104 5/8 context since mid-August.

CommScope improves

CommScope’s 4¾% senior secured notes due 2029 (Ba3/B) were nominally improved in active trading on Tuesday.

The 4¾% notes rose about 1/8 point to trade in the 101¼ to 101 3/8 context heading into the market close, according to a market source.

There was $17 million in reported volume.

The notes have risen more than 1 point over the past two weeks with strong market conditions and the lack of liquidity in the space driving the notes higher, a source said.

Freeport-McMoRan gains

Freeport-McMoRan’s longer duration notes were among the top gainers of Tuesday’s session.

The 5.45% senior notes due 2043 were up 1½ points to close the day at 128 1/8, according to a market source.

While volume in the issue was lighter, the 5.4% senior notes due 2034 were up a little over 1 point to close the day at 125½.

The activity in the name may have been the result of a commodity play, a source said.

The mining company is active in copper and gold.

While copper futures were largely flat on Tuesday and settled at $4.3655, a decrease of 1 cent or 0.23%, analysts have warned of a pending copper shortage.

The base metal is a necessary part of several green energy projects and electric vehicles.

Gold futures rose to settle at $1,816.40, an increase of 23 cents or 4.2%, on Tuesday.

$432 million Monday inflows

The dedicated high-yield bond funds saw $432 million of net daily inflows on Monday, according to a market source.

High-yield ETFs saw $313 million of inflows on the day.

Actively managed high-yield funds saw $119 million of inflows on Monday, the source said, adding that high-yield mutual funds are seeing their largest retail inflows since the first week of April.

Monday's net inflows follow the $770 million of daily net inflows which the combined funds saw last Friday.

The combined funds are tracking $1.55 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index gained 8 basis points to close Tuesday at 70.23 with the yield now 3.6%.

The index was up 10 bps on Monday.

The CDX High Yield 30 index shaved off 2 bps to close Tuesday at 109.81. The index was flat on Monday.

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