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Morning Commentary: Junk opens unchanged as equities waver; cash outflows continue
By Paul A. Harris
Portland, Ore., Aug. 31 – The high-yield bond market opened unchanged as the final day of August got underway, according to a bond trader.
As the stock indexes in the United States slipped into negative territory at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.05%, or 4 cents, at $74.90.
In the primary market, an investor conference call was scheduled to start late Wednesday morning for the Tellurian Inc. $1 billion notes/warrants project financing deal, comprised of units that include an 11¼% senior secured note due 2027 (initial talk 95.5 area), with attached warrants for the company’s common stock.
The units are set to price in the post-Labor Day week. However, timing could be accelerated, according to an informed source.
Sole bookrunner B. Riley Securities, Inc. makes its debut at the helm of a public high-yield deal with this offering.
In Europe, with workers in the financial markets returned from summer holiday, the investment-grade new issue market has reopened; however, there was no Wednesday news from the European speculative-grade primary market.
One deal, a dollar-denominated offering of senior secured sustainability-linked notes (B2/B) from NES Fircroft, is being pitched to investors in a $300 million Nordic transaction from deal-runners ABG Sundal Collier and Pareto Securities.
The U.K.-based staffing solutions company is issuing via its Norway-based subsidiary NES Fircroft Bondco AS.
Tuesday outflows
The dedicated high-yield bond funds sustained $810 million of daily net outflows on Tuesday, according to a market source.
High-yield ETFs saw $520 million of outflows on the day.
Actively managed high-yield funds sustained $290 million of outflows on Tuesday, the source said.
With only Wednesday’s daily fund flow numbers remaining to go into the tally, the combined funds are tracking $2 billion of net outflows for the week that will conclude with Wednesday’s close, according to the market source.
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