Junk secondary closes quarter near lows; illiquid issues tank; funds lose $1.59 billion

By Abigail W. Adams and Paul A. Harris

Portland, Me., June 30 – The domestic high-yield primary market remained dormant on Thursday as accounts closed their books on a brutal first half of the year.

The first half of 2022 marked the lowest amount of issuance the market has seen in more than a decade, sources said.

While the domestic market was quiet, the European market has one new offering on deck.

888 Holdings plc (888 Acquisitions) is shopping £600 million of senior secured notes with market watchers awaiting updates on pricing and timing.

Meanwhile, the secondary space closed the last day of the first six months of 2022 near its lows with the cash bond market down another ¼ point and the CDX index retesting its lows.

Small, illiquid issues have been particularly hard hit with liquidity issues compounding recession fears.

With few buyers in the market, small issues such as Forestar Group Inc.’s 3.85% senior notes due 2026 (Ba3/BB-) and Oregon Tool Inc.’s (OT Merger Corp.) 7 7/8% senior notes due 2029 (Caa2/CCC+) have seen outsized losses over the past few sessions.

The market continued to see multibillion-dollar outflows with high-yield mutual and exchange-traded funds losing another $1.593 billion in the week through Wednesday’s close, according to the Lipper Refinitiv Fund Flows Report Newsline.

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