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Morning Commentary: Avient launches blowout deal at 7 1/8%; junk firms ahead of Fed
By Paul A. Harris
Portland, Ore., July 27 – In a high-yield new issue market nearly shuttered by risk aversion, a blowout acquisition financing deal is teed up for Wednesday execution on an accelerated timeline, sources say.
Avient Corp. launched its $725 million offering of senior notes due 2030 (Ba3/BB-) at 7 1/8%, tighter than the 7¼% to 7½% yield talk.
The deal is heard to have $3 billion of orders.
Dealers have reeled in pricing since the notes were pre-marketed in the high 7% area last week, then launched into the market on Tuesday with initial guidance in the 7½% area.
The bonds are coming in support of Avient's acquisition of Royal DSM’s Dyneema protective materials business, and are on an accelerated timeline that has them pricing later on Wednesday. The deal had previously been expected to remain in the market until Friday.
Reverse inquiry on the offering ran to 1.5-times deal size, the sellside source said.
Away from new issues, junk was firmer on Wednesday morning as the market awaited an announcement on the benchmark Fed Funds interest rate, with the expectation that the Federal Reserve Bank's rate-setting Federal Open Market Committee will announce a 75 basis point increase to that rate later in the session.
With the S&P 500 stock index up 1.3% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.7%, or 53 cents, at $76.86.
Among existing issues, the T-Mobile USA Inc. 3½% notes due April 2031 were up ¼ of a point to 3/8 of a point at 91 in notably active trading, a bond trader said.
On a Wednesday earnings call, the Bellevue, Wash.-based wireless network operator said its second-quarter subscriber growth and quarterly profit exceeded analysts' expectations.
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