Junk bonds close with weekly loss; Ford, Royal Caribbean return gains; Charter below par

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 19 – The primary market remained idle on Friday with risk aversion setting in as the market reassessed its rate-hike expectations on the back of hawkish comments from several Federal Reserve officials.

The renewed selling pressure combined with late-summer thin liquidity may put the primary market on hold until after Labor Day, sources said.

Meanwhile, it was a red day in the secondary space with the cash bond market down ½ to ¾ point as the market reassessed the Federal Reserve’s pivot and again priced in more aggressive rate hikes.

While Treasury yields remained inverted, they resumed their climb with the five-year once again pushing past a 3% yield and the 10-year again brushing up against it.

The secondary space logged its first red week of August with the ICE BofAML US High Yield index down more than 1 point – the majority of losses occurring during Wednesday’s and Friday’s sessions.

The strong performance of recent issues began to weaken with Ford Motor Co.’s 6.1% senior green notes due 2032 (Ba2/BB+) falling back to par and Royal Caribbean Group’s 11 5/8% senior notes due 2027 (B3/B) breaking below a 101-handle.

Charter Communications, Inc. subsidiary CCO Holdings, LLC’s recently priced 6 3/8% senior notes due 2029 (B1/BB-) were also under pressure in heavy volume with the notes again falling well below par.

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