Morning Commentary: Junk sags in light pre-holiday trading; Autodis markets €175 million floaters

By Paul A. Harris

Portland, Ore., July 2 – Higher quality high-yield bonds were down ¼ point to ½ point in light pre-holiday trading on Monday morning, according to a trader, who was chalking up the light volume to a scarcity of participants ahead of Tuesday’s early market close and the ensuing July 4 Independence Day holiday in the United States on Wednesday.

High-yield ETFs were flat at mid-morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down a penny, or 0.01%, at $84.69 per share.

Crude oil prices were lower on the morning. The barrel price of West Texas Intermediate crude for August 2018 delivery was down 42 cents, or 0.62%, at $73.69.

Among recent issues, the Stars Group Holdings BV 7% senior notes due July 2026 (Caa1/B-/B-) were par 7/8 bid, a trader said.

The upsized $1 billion issue (from $750 million) priced at par in a big burst of issuance last Thursday.

The deal played to an order book that was four-times oversubscribed and came in the middle of yield talk in the 7% area and tight to initial price talk in the low to mid 7% area.

The AmWINS Group, Inc. 7¾% senior notes due July 2026 (Caa1/B-) were up about a point, the trader said.

The $300 million issue priced on Thursday at par, in the middle of yield talk in the 7¾% area.

The CHS/Community Health Systems 8 5/8% senior secured notes due January 2024 (B3) were par bid, par ½ offered on Monday.

The upsized $1,032,607,000 issue (from $1,027,000,000) priced at 99.457 to yield 8¾% on Thursday, playing to orders that were said to be 1.5-times to two-times deal size, with at least $300 million of reverse inquiry, sources said.

The McClatchy Co. 9% senior secured notes due July 15, 2026 (B1/B-) – the most recent dollar-denominated deal to clear the market – were 98 bid, 99 offered on Monday.

The $310 million issue priced at 97.242 to yield 9½% on Friday.

Autodis on roadshow

Activity in the dollar-denominated high-yield primary market was muted with the approach of the July 4 holiday.

In Europe, Autodis SA started a roadshow on Monday for a €175 million offering of Euribor plus 437.5 basis points senior secured floating-rate notes due May 2022 (expected ratings B2/B).

Initial price talk is 99.25 to 99.5.

The roadshow wraps up Wednesday.

Left lead bookrunner BNP Paribas will bill and deliver.

There is one dollar-denominated offering carried over from the June 25 week.

Tribal gaming concern Enterprise Development Authority is heard to still be in the market with its $440 million offering of five-year senior secured notes (S&P: expected B-) via Wells Fargo Securities LLC.

The roadshow wrapped up in the middle part of the June 25 week.

Mixed Friday flow

The daily cash flows of the dedicated high-yield bond funds were mixed on Friday, according to a trader.

High-yield ETFs saw $47 million of inflows on the day.

However actively managed high yield funds sustained $33 million of outflows on Friday, the trader said.

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