Morning Commentary: Junk unchanged ahead of July CPI data; Nielsen bonds trade higher

By Paul A. Harris

Portland, Ore., Aug. 9 – As the market awaited the July Consumer Price Index numbers on Tuesday morning, high-yield bonds were unchanged to down perhaps 1/8 of point, depending upon the sector, according to market sources.

Trading volume was low, a sellside source specified.

With the S&P 500 stock index down 0.32% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was 0.4% lower, down 32 cents, at $77.79.

The bonds of Nielsen Holdings plc traded higher on news that the consortium seeking to acquire the company had reached an agreement with the media data firm's largest shareholder, WindAcre, which had been resisting the merger, according to the sellside source.

The Nielsen Co. (Luxembourg) Sarl 5% senior notes due February 2025 traded at par, up 1½ points.

The Nielsen Finance LLC/Nielsen Finance Co. 4¾% senior notes due June 2031 traded at 99, up 5 points, the source said.

The company's stock (NYSE: NLSN) was up 21%.

In late March Nielsen announced it had agreed to be acquired by a private equity consortium led by Evergreen Coast Capital Corp., an affiliate of Elliott Investment Management LP, and Brookfield Business Partners LP for $28 per share in an all-cash transaction valued at approximately $16 billion, including the assumption of debt.

Elsewhere, the deeply distressed bonds of North Carolina-based tech firm Avaya Holdings Corp. took another tumble on Tuesday as the company stated that there is substantial doubt about its ability to continue as a going concern.

The Avaya Inc. 6 1/8% senior secured notes due September 2028 traded at 48½, down 7 points to 8 points, the sellsider said.

Bonds of some of the big cruise lines slipped on Tuesday after Norwegian Cruise Line Holdings cited macroeconomic fluctuations and higher fuel costs as it forecast that it would continue to be unprofitable in the third quarter.

Norwegian Cruise Line bonds were down 2 points to 3 points following the report, the sellsider said.

The bonds of Royal Caribbean Cruises Ltd. and Carnival Corp. were down 1 point to 2 points, the source added.

Bonds priced Monday by NFP Corp. were above new issue price on Tuesday morning, a trader said.

The NFP 7½% senior secured notes due October 2030 (B1/B) were par 1/8 bid, par 5/8 offered.

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

The primary market remained on the sidelines Tuesday morning, and the active forward calendar was empty.

Fund flows

The cash flows of the dedicated high-yield bond funds were mixed on Monday, according to a market source.

High-yield ETFs saw $362 million of inflows on the day.

Actively managed high-yield funds, however, sustained $189 million of outflows on Monday, the source said.

The combined funds are tracking $1.15 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

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