Morning Commentary: Genesis Energy brings $400 million drive-by; Tuesday deals higher

By Paul A. Harris

Portland, Ore., Jan. 18 – The high-yield bond market was as much as ½ point higher at mid-morning on Wednesday in active trading, according to a bond trader in New York.

With the S&P 500 stock index down 0.26% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.63%, or 48 cents, at $76.86.

Trailing a Tuesday session that cranked out the biggest dollar amount of new issuance in well over a year ($5.3 billion in six tranches), only one deal was announced on Wednesday morning.

Genesis Energy, LP and Genesis Energy Finance Corp. plan to price a $400 million public offering of 7.25-year senior notes (B2/B) in a drive-by. Initial guidance has the deal coming to yield in the low-9% area.

Bonds priced Tuesday were better to a lot better on Wednesday morning, the trader said.

Notes that came in a massively upsized add-on deal from DISH Network Corp. were up a whopping 2 points.

The add-on to the 11¾% senior secured notes due Nov. 15, 2027 (Ba3/B+) changed hands at 104.25 on Wednesday after the $1.5 billion issue (upsized from $500 million) priced at 102 to yield 11.079%.

Wednesday morning saw the Transocean Inc. (RIG) 8¾% senior secured notes due February 2030 (B2/B-) up nearly 2 points from their issue price, trading just under 102, and doing really well, the trader said.

The $1.175 billion issue came at par on Tuesday.

It was the second deal from the Switzerland-based driller in just over a week. On Jan. 9, Transocean Titan Financing Ltd. priced a $525 million issue of amortizing 8 3/8% senior secured notes due February 2028.

Everybody was anticipating RIG's return because the company left a lot of its debt capacity on the table with the Jan. 9 $525 million issue, the trader said, adding that the market perceived the newer 8 3/8% notes as being cheap.

Sealed Air Corp.’s 6 1/8% senior notes due February 2028 (Ba2/BB+) changed hands Wednesday morning at par ¾, the trader said.

The $775 million issue priced at par on Tuesday.

In the euro-junk market, the Tereos Finance Groupe I SA 7¼% senior notes due April 2028 (BB-/BB-) were par ¼ bid, 101 offered on Wednesday, according to a market source.

The upsized €350 million issue (from €300 million) priced Tuesday at par.

Fund flows

The dedicated high-yield bond funds sustained $193 million of net daily cash outflows on Tuesday, according to a market source.

High-yield ETFs saw $177 million of outflows on the day.

Actively managed high-yield funds sustained $16 million of outflows on Tuesday, the source said.

The combined funds are tracking a very modest $41 million of net inflows for the week that is set to conclude with Wednesday’s close, according to the market source.

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