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Morning Commentary: New issue market reopens with two drive-bys; junk funds see inflows
By Paul A. Harris
Portland, Ore., May 31 – The high-yield primary market reopened on Tuesday following a 10-day recess as a pair of issuers appeared with drive-by deals.
Equitrans Midstream Corp. plans to price an $800 million two-part offering of senior notes (expected ratings Ba3/BB-/BB) via subsidiary EQM Midstream Partners, LP.
The deal features $400 million of five-year non-call three-year notes and $400 million of eight-year bullet notes.
Initial guidance has the notes in both tranches coming to yield in the low 8% area, a sellside source said.
The deal was telegraphed at an overall $1 billion size, so an upsize is a possibility, according to a bond trader.
Meanwhile Darling Ingredients, Inc. plans to price a $500 million offering of eight-year senior notes (Ba3/BB+/BB+) in a Tuesday drive-by.
Initial guidance has the notes coming to yield 6¼% to 6½%.
BofA Securities Inc. is left bookrunner for both the Equitrans and Darling deals.
Away from new issue news, the junk bond market opened up 1/8 of a point following the extended Memorial Day holiday weekend, a trader said, adding that the junk ETFs have seen inflows and that offers-wanted-in-competition (OWICs) were outnumbering bids-wanted-in-competition (BWICs) four to one in the early going on Tuesday.
With equites once again in the grip of volatility at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was off by a hefty 0.83%, or 67 cents, at $79.53.
The most recent deal to clear the market, the Carnival Corp. 10½% senior notes due June 2030 (B2/B), were lower on the morning at 102 bid, 102¼ offered, a trader said.
They changed hands late last week at 102 ¾, the source added
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