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Morning Commentary: Earthstone Energy straddles issue price; Trinity Industries on deck
By Paul A. Harris
Portland, Ore., June 28 – The high-yield bond market opened unchanged on Wednesday, according to market sources.
With the S&P 500 stock index down 0.08% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.12%, or 9 cents, at $74.57.
The new Earthstone Energy Holdings, LLC 9 7/8% senior notes due July 2031 (B3/B+/B+) were straddling their issue price, trading at 97 7/8 bid, 98 3/8 offered, a bond trader said.
The $500 million issue priced at 97.968 to yield 10¼% in a Tuesday drive-by amid document changes favoring investors.
A significant number of those investors were existing holders of Earthstone’s debt, who successfully campaigned for a covenant package mirroring that of the company’s 8% senior notes due April 2027, with particular focus on restricted payment provisions, a sellside source said.
The Viking Cruises Ltd. 9 1/8% senior notes due July 2031 (Caa1/B-) were par bid, par ¼ offered.
That paper was par ¼ bid, par ½ offered on Tuesday.
The $720 million issue came at par in a Monday drive-by.
In the new issue market, Trinity Industries, Inc. talked its $400 million offering of senior notes due 2028 (Ba2/BB+/BB) to yield in the 7 5/8% area, in line with earlier guidance.
The deal is set to price on Wednesday on an accelerated timeline. When the offering was announced early in the week, it was scheduled to remain in the market until Thursday.
Fund flows
The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, according to a market source.
High-yield ETFs saw $109 million of inflows on the day.
However, actively managed high-yield funds sustained $59 million of outflows on Tuesday, the market source said.
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