QTS Realty, Viking deals price as overall market plunges; funds see $1.68 billion outflow

By Paul Deckelman and Paul A. Harris

New York, July 17 – The day of reckoning that many in Junkbondland have worried about may finally be here.

Whether it was moving downward in tandem with a stock market spooked by the apparently deliberate shoot-down of a Malaysian Airlines jet in the troubled Ukraine region with the loss of all aboard and the widening of fighting in Gaza between Israel and the Palestinians, or if it was reacting to recent comments from Federal Reserve chief Janet Yellen warning about “stretched” valuations among lower-rated corporate issues, the high-yield market saw perhaps its steepest daily downturn so far this year.

Traders were left wondering whether the downturn was just a one-off blip on the radar screen or the beginning of a new retrenchment.

Among specific credits, even recently robust new-deal names like American Energy-Permian Basin, LLC and Rex Energy Corp. were seen down by multiple points.

In new issues, QTS Realty Trust, Inc. priced an upsized $300 million of eight-year notes and Viking Cruises Ltd. brought a downsized $275 million add-on to its existing 2022 notes.

Overall, the junk secondary market was weak, and statistical market-performance indicators turned lower across the board after having been mixed on Wednesday.

And another indicator, the flow of cash into or out of high-yield mutual funds and exchange-traded funds, saw its biggest loss in almost a year and its first after three consecutive weeks on the upside.

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