PBF Energy, AMC gain; DirecTV, Ford active but flat; low-grade primary dormant

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 24 – The new issue market remained dormant on Tuesday, leaving some market sources wondering out loud whether the torrid Summer 2021 new issue market has run its course, and will remain quiet until Tuesday, Sept. 6, when the traditional bond market autumn gets underway.

“Never say never,” a trader insisted, suggesting that a prospective issuer, perhaps a one-off name not well-known to the market – a deal that might struggle for attention during a $5 billion-plus jam-up day when the new issue market is running at full steam – could show up before the Labor Day break, and have the spotlight to itself.

Meanwhile, it was a firm day in the secondary space with the market up 1/8 to ¼ point although volume remained light, sources said.

With the new issue calendar drying up, attention turned to outstanding issues.

PBF Holding Co. LLC’s and AMC Entertainment Holdings, Inc.’s senior notes were the major gainers of Tuesday’s session.

DirecTV Entertainment Holdings LLC’s 5 7/8% senior secured notes due 2027 (Ba3/BB/BBB-) and Ford Motor Co.’s 8½% senior notes due 2023 were among the most actively traded names in the secondary space although with little movement in price.

The gainers

PBF Holdings’ and AMC Entertainment’s senior notes were among the major gainers of Tuesday’s session.

PBF Holding’s 7¼% senior notes due 2025 (B3/B+/B+) rose more than 5 points to close the session at 65½, according to a market source.

PBF’s 6% senior notes due 2028 were also up about 5 points to close the day at 60¾. There was more than $12 million in reported volume.

PBF’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) gained 2½ points to close the day at 91¾. The tranche was the most active in the petroleum refinery’s capital structure with more than $22 million in reported volume.

PBF’s junk bonds were under pressure alongside the energy sector the past few weeks. However, the notes have improved in recent sessions.

Tuesday was a strong day for energy names in general as crude oil futures broke out of their rout with concern over slowing growth waning.

WTI crude oil futures settled at $67.54, an increase of $1.90 or 2.89%, and Brent crude oil futures settled at $71.20, an increase of $2.45 or 3.56% on Tuesday.

AMC’s senior notes were also on the rise on a strong day for travel and leisure stocks.

The 5¾% senior notes due 2025 rose more than 3 points to close the day at 71¼, according to a market source.

There was more than $5 million in reported volume.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) also gained more than 3 points.

The notes closed the day at 90½ with more than $16 million in reported volume, according to a market source.

AMC’s stock surged more than 20% on Tuesday, which was a strong day for meme stocks, in addition to travel and leisure companies.

Travel and leisure companies were posting gains across the board on Tuesday following Food and Drug Administration approval of Pfizer’s Covid-19 vaccine.

Active

DirecTV’s 5 7/8% senior secured notes due 2027 and Ford’s 8½% senior notes due 2023 were among the most actively traded in the secondary space on Tuesday although with little movement in price.

The 5 7/8% notes continued to trade on a 104-handle.

They were changing hands in the 104 3/8 to 104 5/8 context heading into the market close, a source said.

There was more than $20 million in reported volume.

The 5 7/8% notes traded up to a 104-handle late last week.

The notes initially traded up to 104 after breaking for trade in late July. However, they were trading in the 103 3/8 to 103 7/8 context for much of August.

DirecTV priced a $2.3 billion issue of the notes at par on July 22.

Ford’s 8½% senior notes due 2023 were also active although with little movement in price.

The 8½% notes closed Tuesday unchanged at 110 7/8, according to a market source.

There was $19 million in reported volume.

The yield on the short-duration notes is 1.834%.

$324 million Monday inflows

The dedicated high-yield bond funds saw $324 million of net daily inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $283 million of inflows on the day.

Actively managed high-yield funds saw $41 million of inflows on Monday, the source said.

The combined funds are tracking $227 million of inflows for the week that will conclude with Wednesday's close, the market source said.

Indexes

The KDP High Yield Daily index gained 9 basis points to close Tuesday at 96.89 with the yield now 3.77%. The index was up 4 bps on Monday.

The ICE BofAML US High Yield index gained 19.1 bps with the year-to-date return now 4.021%.

The index was up 18.9 bps on Monday.

The CDX High Yield 30 index gained 5 bps to close Tuesday at 109.45. The index was up 32 bps on Monday.

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