Bank paper in focus; First Republic down; Atlas Air hits new low

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 20 – The high-yield new-issue market remained quiet on Monday amid ongoing volatility in the financial sector. The active forward calendar is empty.

Meanwhile, it was a quiet session in the secondary space with the cash bond market either side of unchanged and liquidity thin, a source said.

Bank paper was firmly in focus as investors digested UBS’s emergency buyout of Credit Suisse, which wiped out its AT1 bonds, and First Republic’s slashed credit ratings.

While the market tone improved on Monday, investors remained skeptical that the Credit Suisse deal would prevent further contagion in the banking sector.

The secondary space has seen a dramatic repricing over the past two weeks.

While the broader market was quiet, Credit Suisse Group AG’s securities were moving with its 6½% senior notes due Aug. 8, 2023 (/BB+) skyrocketing while the bank’s AT1 securities sank to pennies on the dollar.

First Republic Bank’s 4 5/8% subordinated notes due 2047 (B2/B-) were again under pressure after the bank’s credit ratings were slashed.

Rand Parent, LLC’s 8½% first-lien senior secured notes due 2030 (Ba1/BB/BB+), backing the buyout of Atlas Air, continued their downward trend with the notes breaking below a 91-handle.

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