High yield ends week in negative territory; GM Financial gains on S&P upgrade

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Sept. 26 – Most markets turned positive Friday after new GDP data indicated that the U.S. economy grew at its fastest pace in more than two years – but high-yield missed out on the broader rally.

Rather than looking at the economic statistics, junk was more shaken by the news that Bill Gross was leaving Pimco for a competitor, Janus Capital Group.

Gross’ departure comes as Pimco has suffered from massive outflows. Chatter is that Pimco was considering firing Gross before he resigned.

But the high yield space, though it remained weak, did show some signs of rallying.

“It was very heavy in the morning,” one trader said. “But everything seemed like it was going to bounce a little bit.”

Friday’s session in the dollar-denominated high yield primary saw a thin news flow and no deals priced.

In trading General Motors Financial Co.’s debt – including a $2 billion two-tranche deal that came Monday – was pushing higher during the session. The bonds were reacting positively to Standard & Poor’s upgrading of the name to investment grade.

In junkier names, 21st Century Oncology’s notes got a huge boost at the end of the week on news the company had received a $325 million investment. The company plans to use some of the proceeds to pay down debt.

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