Morning Commentary: Wednesday deals catch bids in secondary; fund inflows solid for week

By Paul A. Harris

Portland, Ore., April 18 – Amid low market liquidity on Thursday, with players looking to holiday plans ahead of an early close in the bond market heading into the Easter weekend, junk was flat to slightly higher on the morning, according to a hedge fund manager.

The CDX HY 32 index of credit default swaps was 107.585 bid, 107.675 offered, up 0.069 basis point.

High-yield ETF share prices were flat to slightly lower. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 3 cents, or 0.03%, at $86.61 per share.

Deals that came amid a flurry of new issue activity on Wednesday were turning in solid or better performances in Thursday morning trading.

The new Gogo Inc. 9 7/8% senior secured notes due May 2024 (B3/CCC+) were par ½ bid, 101½ offered Thursday morning, the manager said.

The $905 million issue priced at 99.512 to yield 10% on Wednesday, at the wide end of talk.

The Gogo 12½% notes due 2022, which are being redeemed with the proceeds from the new 9 7/8% notes, were 107½ bid, 108 offered on Thursday morning.

New Natural Resource Partners LP 9 1/8% senior notes due June 2025 (Caa1/BB-) soared into the secondary market, trading at 103 bid, 103½ offered on Thursday, the hedge fund manager said.

The $300 million issue priced Wednesday at par, in the middle of talk, after undergoing covenant changes bearing upon how the company may incur additional debt.

Vizient, Inc.'s new 6¼% senior notes due May 2027 (B3/existing B-) also traded to a hefty premium by mid-morning Thursday: 102 3/8 bid, 102 7/8 offered.

The deal came at par on Wednesday in a single $300 million tranche, 12.5 basis points inside of talk.

The new GFL Environmental Inc. 8½% senior notes due May 2027 (Caa2/CCC+) were 101 7/8 bid, 102 3/8 offered at mid-morning, off earlier highs of 102 3/8 bid, 102 7/8 offered, the manager said.

The upsized $600 million issue (from $500 million) priced at par on Wednesday, at the tight end of talk.

Looking to euro junk, the Europcar Mobility Group 4% senior notes due April 2026 (B3/B) were trading above the balk line on Thursday at par bid, par ¼ offered, according to a market source in Europe.

The €450 million deal blew well through original talk in the 4 3/8% area when it priced at par on Wednesday.

Away from Wednesday's deals, the Staples, Inc. 10¾% senior notes due April 2027 (B3/B-) – an issue that has traded vigorously since it priced on April 9, according to sources – slipped somewhat on Wednesday.

The Staples 10¾% notes were 101¾ bid, 102¼ offered on Thursday morning. The price had been on the decline since Wednesday’s open when the bonds were 102½ bid, 103 offered, the hedge fund manager said.

The primary market sat shuttered on Thursday ahead of the early close and the extended holiday weekend.

Mixed Wednesday flows

The daily cash flows of the dedicated high-yield bond funds were flat on Wednesday, according to an investor.

High-yield ETFs sustained $60 million of outflows on the day.

Actively managed high-yield funds saw $35 million of inflows on Wednesday.

As the market awaited a report on the cash flows of the combined funds for the week to Wednesday's close, expected Thursday afternoon from Lipper US Fund flows, the funds are tracking $925 million of net inflows during that period, the trader said.

The weekly inflow, should it materialize as anticipated, would represent the 13th positive weekly flow in the past 15 weeks, the source added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.