Morning Commentary: Junk opens unchanged as Treasuries rally; three new deals on deck

By Paul A. Harris

Portland, Ore., March 5 – With Treasuries staging a rally that sent the yield of 10-year government paper to its lowest levels in nearly a month, the junk bond market opened unchanged and remained that way – or possibly a touch softer – at mid-morning on Tuesday, according to a bond trader in New York.

With the S&P 500 stock index down 0.87% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.1%, or seven cents, at $77.24.

Traders were focused on issues that priced on Monday, the source said.

Among the week’s freshly printed issues, the Clear Channel Outdoor Holdings, Inc. 7 7/8% senior secured notes due 2030 (B1/B) were the most active, with the bonds wrapped around par, the trader said.

The $865 million issue priced at par, at the tight end of downwardly revised talk (the wide end of initial guidance was 8½%), and playing to $3.5 billion of investor demand ahead of mid-Monday’s downward price talk revision, sources said.

The new USA Compression Partners, LP/USA Compression Finance Corp. 7 1/8% senior notes due March 2029 (B2/B+/BB) were par 1/8 bid, par 3/8 offered.

The $1 billion issue priced at par in a Monday drive-by.

The new Cleveland-Cliffs Inc. 7% senior guaranteed notes due March 2032 (Ba3/BB-/BB-) were wrapped around par in reasonably active trading and basically unchanged from last night’s closing levels, the trader said.

The $825 million issue priced at par, also in a Monday drive-by.

As the lights came up in Tuesday’s primary market, CoreCivic, Inc. talked its $450 million public offering of five-year senior notes (Ba2/BB-) to yield 8¼% to 8 3/8%, in line with initial guidance.

The deal is expected to price later in the session.

Meanwhile, the market awaited news (price talk) on two other deals expected to price on Tuesday.

Rithm Capital Corp. is on deck with a $775 million offering of five-year senior notes (expected ratings B3/B-), with early talk in the mid-8% area.

And New Fortress Energy Inc. expects to price a $500 million offering of five-year senior secured notes (B1/BB/BB-) on Tuesday. Initial guidance is in the high-8% to low-9% area.

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