Buyers return to HY secondary; BB credits lifted post-Fed minutes; Frontier hits new heights

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 25 – The domestic high-yield primary market remained dormant on Wednesday with prospects for a new deal prior to Friday’s early close diminishing.

While the primary market remained quiet, there was an uptick of activity in the secondary space on Wednesday with buyers returning in force as the market dials back its projection for a prolonged rate hike schedule.

The cash bond market was up 1 point following the release of the Federal Reserve Open Market Committee’s May minute notes.

While the cause for a pause in rate increases may be a recession, the risk-on sentiment was strong during Wednesday’s session with ETFs “buying anything they could get their hands on,” a source said.

Offers-wanted-in-competition lists outnumbered bids-wanted-in-competition lists by three-to-one, another source said.

Rate-sensitive names were the largest benefactors of the influx of buyers with several badly battered BB credits outperforming the market.

Carnival Corp.’s 10½% senior notes due 2030 (B2/B) again fought their way back to par in high-volume activity.

Frontier Communications Holdings, LLC’s recently priced 8¾% first-lien secured notes due 2030 (B3/B/BB+) shot up to their highest level since breaking for trade with the notes closing the day on a 104-handle.

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