Morning Commentary: Appetite for risk increases; Allegiant on deck; funds see inflows

By Paul A. Harris

Portland, Ore., Nov. 30 – The appetite for risk among high-yield investors is increasing, a portfolio manager said on Wednesday morning.

High beta names are seeing strong bids, the source added.

The Laureate Education, Inc. 9¼% notes due Sept. 1, 2019 were 97½ bid on Wednesday morning, up from 90 bid in just two days, the source said.

Oil-related bonds are the clear outperformers on Wednesday, the manager said.

The barrel price of West Texas Intermediate crude oil for January 2017 delivery is up 7.27%, or $3.29, at $48.52, on the day.

Allegiant Travel on tap

In the primary market Allegiant Travel Co. is whispering a $100 million add-on to its 5½% senior bullet notes due July 15, 2019 at 101 to 101.25, according to the portfolio manager, who added that there is some reverse inquiry at play in the deal.

The add-on is set to price Wednesday trailing a late-morning conference call with investors.

Goldman Sachs & Co. is the bookrunner.

Elsewhere in the primary market Ritchie Bros. Auctioneers Inc. began a roadshow for a $500 million offering of eight-year senior notes.

Initial guidance has the notes coming with a yield in the high 5% area, according to a portfolio manager, who added that there is $100 million of reverse inquiry in the deal.

Goldman Sachs is the left bookrunner for the acquisition financing.

HudBay Minerals Inc. is in the market with a $1 billion two-part offering of senior notes.

The deal could upsize and price Wednesday, according to the portfolio managers, who added that talk on both tranches is tightening.

Talk on the six-year notes is at 7 5/8%, down from the 8% area, and talk on the eight-year notes is now about 8%, down from the low-to-mid 8% area, a source said.

Meanwhile AdvancePierre Foods Holdings, Inc. is expected to price its $350 million offering of eight-year senior notes (expected ratings B3/B-) this week.

The deal is shaping up to yield in the mid-to-high 5% context, the manager said.

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