Morning Commentary: High-yield secondary quiet early; Howard Midstream notes flat

By Abigail W. Adams

Portland, Me., July 3 – The domestic high-yield bond primary market was dormant as expected on Monday with markets closing early for the July 4 holiday in the United States on Tuesday.

While the week ahead will be truncated, the primary market is expected to reactivate when markets resume activity with issuance expected before the week draws to a close.

Sources expect to see some deals generate from the energy services sector.

Meanwhile, the secondary space was quiet and flat early Monday with little expected from the session.

The high-yield market ended the first half of the year on strong footing with spreads closing the quarter near their year-to-date tights, a source said.

Spreads have tightened about 125 basis points since the collapse of Silicon Valley Bank in March sent markets reeling.

While markets rallied on recession relief in the past week, the increasing probability of rate hikes may dampen the rally in the second half, sources said.

Few names were active in the secondary space with liquidity extremely thin.

Howard Midstream Energy Partners, LLC’s recently priced 8 7/8% senior notes due 2028 (B3/B+), the last deal to clear the primary market, were unchanged on Monday.

The notes were marked at par ¼ bid, par ¾ offered, according to a market source.

The $550 million issue priced at par on Thursday.

Fund flows were mixed on Friday, the most recent session the information was available, with ETFs seeing inflows of $891 million while actively managed funds saw outflows of $31 million, according to a market source.

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