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Market heavy as investors take battered names lower; primary quiet
By Paul A. Harris
Portland, Ore., Aug. 23 – With the dynamics of late summer drying up liquidity, the high-yield market was weaker on Wednesday, a trader said.
High-yield ETFs were flat to slightly lower on the morning.
The iShares iBoxx $ High Yield Corporate Bd (HYG) was off 0.08%, or 7 cents, at $87.85 per share.
Erosion driven by headline news has been taking prices of some bonds in the junk universe lower, the trader said.
A selloff in the bonds of PetSmart, Inc. got underway two weeks ago when the company announced that its chief executive officer, Michael J. Massey, resigned.
PetSmart has remained the market’s favorite punching bag since then, with investors – among them hedge funds – shorting the bonds and the term loan, the trader said.
PetSmart’s 8 7/8% notes due 2025 were at 83¼ bid, 84 offered on Wednesday morning.
The $650 million issue priced at par in late May.
Investor sentiment on the movie theater space continues to decline, the trader said.
The bonds of AMC Entertainment Holdings Inc. were down a point on the day at 96 bid, 96¼ offered.
On Tuesday JP Morgan equity analysts cut their price targets and overall outlook on movie theater chains, based on the possibility that movie studios might soon make their hottest content available by means of premium video on demand, allowing viewers to watch new hit movies in their homes.
Among recent issues, Tesla, Inc. bonds were lower on Wednesday morning.
Tesla’s 5.3% senior notes due Aug. 15, 2025 (B3/B-) were at 97½ bid, 98 offered at midmorning, after going out at 98 on Tuesday.
The deal priced at par in an upsized $1.8 billion issue on Aug. 10.
The primary market remained quiet on Wednesday as market watchers continue to forecast that new issue activity will not resume until post-Labor Day.
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