Morning Commentary: Carpenter Technology, Blue Racer on deck for quiet summer Friday

By Paul A. Harris

Portland, Ore., July 10 – The bustling high-yield new issue market took a bit of breather on Friday morning with no new deals announced, sources said.

Carpenter Technology Corp. is on deck with a split-rated $400 million public offering of eight-year senior notes (Ba3/BBB-) talked to yield 6½% to 6¾%.

An oversubscribed order book, approximately three-times deal size, enabled the company to reel in pricing from initial talk in the high 6% area to 7%, a bond trader said.

Meanwhile Blue Racer Midstream, LLC and Blue Racer Finance Corp. are in the market with a $400 million offering of five-year senior notes (B2/B/BB-).

The deal was talked to yield 9% to 9¼% and was teed up to price Thursday afternoon. However, the execution carried over into the Friday session, and the deal might come a little wider, the trader said, noting that the number the market was hearing was 9½%.

The high-yield index opened the morning unchanged and was unchanged to slightly better at mid-morning, the trader said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 9 cents, or 0.11%, at $82.30 per share.

Among recent issues, the Diebold Nixdorf, Inc. 9 3/8% senior secured notes due 2025 (B3/B-) were par ¾ bid, 101¾ offered on Friday morning, off of Thursday’s highs of 102¼ bid, 102½ offered, the trader said.

The $700 million tranche came at a discount, 99.031, to yield 9 5/8% on Thursday.

Bonds priced in a big Wednesday deal from Macau-based Studio City Finance Ltd. were lagging new issue price heading toward the weekend.

The new Studio City 6% five-year notes and 6½% 7.5-year notes (both rated B1/BB-) were 99 bid, par offered on Friday morning, the trader said.

Both issues came at par in $500 million tranches.

Studio City joined Wynn Macau Ltd. and Macau-based MGM China Holdings Ltd., both of which raised cash in the dollar-denominated junk bond market in June.

The Macau deals tend to trade on emerging markets desks, sources say.

However, they have a following among traditional high-yield investors, they add.

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