Trading light; Altice USA backs off gains; Teva active but flat; funds add $800 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 5 – The domestic high-yield primary market was again dormant on Friday with sources not expecting a resurgence of activity until midway through the July 8 week.

Meanwhile, the secondary space was at a standstill on Friday with reported volume of less than $800 million towards the market close.

Few names saw concentrated trading active and those that did were largely flat.

However, the overall space ended the week on soft footing as better-than-expected payroll data called into question whether the Federal Reserve would cut rates at the end of July.

While volume was light compared to previous sessions, Altice USA, Inc. subsidiary CSC Holdings, LLC’s recently priced 5¾% senior due 2030 (B3/B) were again the major volume mover in the secondary space, as they have been for most of the week.

The notes were backing off their gains in light volume on Friday, although the lack of liquidity made a true change in their level difficult to determine, a source said.

Teva Pharmaceutical Industries Ltd.’s 6¾% senior notes due 2028 were among the few issues to see concentrated trading activity although the notes were largely flat.

United States Steel Corp.’s 6¼% senior notes due 2026 remained active on Friday with the notes coming in slightly from their previous gains.

Meanwhile, the high yield space continued to see money that was ready and willing to be put to work.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw their fourth consecutive inflow with $800 million entering the space for the week ended Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

ETFs lower

Non-farm payroll numbers from June exceeded analyst’s expectations, suggesting that the American economy is reasonably fit, according to a market source.

The news, which could mitigate against a cut in the Fed Funds rate when the Federal Open Market Committee convenes in late July, sent the capital markets in Europe and the United States sliding on Friday.

The Dow Jones industrial average was down half a percent mid-morning but pared its losses to close the day down 0.16%.

High-yield ETFs were likewise in the red with the iShares iBoxx $ High Yield Corporate Bd (HYG) closing the day at $86.99, a decrease of 35 cents, or 0.40%.

Altice weakens

While volume was light, Altice USA’s recently priced 5¾% senior notes due 2030 remained the most active issue in the secondary space on Friday – a day sources described as “dead.”

The 5¾% notes saw about $12 million in reported volume.

While liquidity was light, the notes were backing off their gains from earlier in the week.

They were down about 3/8 point to close Friday at par 7/8, according to a market source.

The notes have seen steady gains since pricing on Monday, despite upsizing and pricing at the tight end of talk.

The 5¾% notes rose to a 101 handle during Wednesday’s truncated session, closing the day at 101¼, sources said.

Altice priced an upsized $1 billion issue of the 5¾% notes at par in a Monday drive-by.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk and tighter than initial guidance in the 6% area.

Altice Luxembourg’s 7½% senior notes due 2026 also saw some activity on Friday although the notes were largely flat.

The 7½% senior notes continued to change hands just shy of 101 7/8. The notes saw more than $7 million in reported volume, according to a market source.

Teva flat

Teva’s 6¾% notes were also among the issues to see more than $5 million in reported volume on Friday.

However, the notes were largely trading flat and closed the day flush at 93, according to Trace data.

More than $6 million of the bonds were on the tape by the late afternoon.

While Teva unveiled positive data earlier in the week from its phase 3 clinical trial for a preventative migraine treatment, there was no news on Friday to spark the trading activity.

However, the 6¾% notes are a large liquid issue with about $1.25 billion outstanding, according to Trace data.

U.S. Steel comes in

U.S. Steel’s 6¼% senior notes due 2026 were among the more active issues on Friday with $5 million of reported volume on the tape.

The notes were coming in slightly after posting gains on Wednesday following news of increased duties on Vietnam steel.

While volume was light, making their true level difficult to determine, the notes shaved off about ¼ point to trade down to 89¼ by the late afternoon, according to a market source.

The notes rose about ½ point in active trading on Wednesday on news the United States would collect duties of up to 456.23% on imports of steel products from Vietnam.

Indexes mixed

While indexes were mixed on Friday, as they have been for most of the week, each saw cumulative gains on the week.

The KDP High Yield Daily index gained 2 basis points to close Friday at 70.93 with the yield now 5.41%.

The index was up 1 bp on Wednesday, 3 bps on Tuesday and 8 bps on Monday for a 14-bps gain on the week.

The ICE BofAML US High Yield index shaved off 4.8 bps with the year-to-date return now 10.357%.

The index gained 9.1 bps on Wednesday, dropped 3.9 bps on Tuesday and gained 23.5 bps on Monday for a cumulative gain of 23.9 bps on the week.

The index popped back above 10% returns on June 28 after sinking below it on June 26.

The index initially shot past 10% returns on June 20.

The CDX High Yield 30 index dropped 29 bps to close Friday at 107.70. The index gained 23 bps on Wednesday, 7 bps on Tuesday and 10 bps on Monday.

The index posted a cumulative gain of 11 bps on the week.

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