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Morning Commentary: Junk opens ¼ point better; bargain hunters lift stressed names
By Paul A. Harris
Portland, Ore., May 13 – The high-yield bond market opened ¼ point better on Friday, according to a trader in New York, as cautious optimism surfaced on China's Covid-19 lockdowns.
With the S&P 500 stock index up 2.19% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.22%, or 17 cents, at $76.89.
Bonds that tumbled earlier in the week on a combination of specific financial misfortunes and general market volatility were being lifted by bargain hunters, the trader said.
Names included were AMC Entertainment Holdings Inc., Carvana Co., Coinbase Global, Inc. and MicroStrategy Inc.
Bonds that opened 3 points to 5 points lower on Thursday recovered around half those losses in the early going on Friday, the source added.
The dollar-denominated primary market remained quiet, while in the euro-denominated new issue market Loarre Investments Sarl was heard to have priced an €850 million two-part offering of seven-year senior secured notes (Ba3//BB) supporting the capitalization of Spanish soccer organization La Liga by CVC Capital Partners. Specific deal terms were not yet available at press time.
The active forward calendar stood empty on Friday morning.
There has been no word, as yet, of primary market activity for the week ahead, a portfolio manager said.
Fund flows
The dedicated high-yield bond funds sustained $512 million of net daily outflows on Thursday, according to a market source.
High-yield ETFs saw $316 million of outflows on the day, while actively managed high-yield funds sustained $196 million of outflows on Thursday, the source said.
News of Thursday's daily cash flows trails a Thursday report that the combined funds saw $168 million of net inflows for the week to the Wednesday, May 11, close, according to Refinitiv Lipper.
However, a breakdown of those weekly flows reveals that only the ETF cohort was positive on the week, posting $850 million of inflows during the period, the market source said.
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