Morning Commentary: RingCentral accelerates timing; junk softens post-PPI

By Paul A. Harris

Portland, Ore., Aug. 11 – RingCentral Inc. disrupted what had been expected to be just another sleepy summer Friday in the primary junk bond market, sources said.

The Calif.-based provider of cloud-based communication services for businesses accelerated timing on its $400 million offering of seven-year senior notes (B1/BB/BB), setting price talk at 8½% to 8¾%, on top of early guidance.

Pricing is set for Friday, whereas previously announced timing had the deal remaining in the market into the week ahead.

The market heard that there was $500 million of demand for the deal on Friday morning, according to a trader who remarked that “They have the book, so why wait?”

Elsewhere, the primary market remained in the throes of a typical summer Friday torpor, sources said.

In the secondary market, as the busiest week for issuance since mid-June winds down, trading prices of recent issues tend to be sturdy, if not spectacular, traders concede.

The week’s biggest deal, the TransDigm Inc. 6 7/8% senior secured notes due December 2030 (Ba3/B+) is a case in point, a trader said.

Although those notes have failed to stage a stratospheric rally in the secondary market they were holding at issue price on Friday morning: par bid, par 1/8 offered.

They were wrapped around par on Thursday, the trader noted.

The $1.45 billion deal – the biggest, so far, of 2023’s third quarter – played to $2.5 billion of demand as it priced at par on Wednesday.

Elsewhere, the Dream Finders Homes, Inc. 8¼% senior notes due August 2028 (BB-/BB-) enjoyed the trader’s nomination for “outperforming deal of the week,” trading at 101¼ bid, 101½ offered on Friday morning.

The $300 million issue priced at par on Tuesday.

Away from recent issues, the bonds of serial high yield issuer DISH Network Corp. came into conspicuous motion earlier in the week upon the announcement that DISH will be merged with satellite services provider EchoStar, sources said.

The DISH Network 11¾% senior secured notes due November 2027 were up ¼ point on Friday morning at 103 bid, 103½ offered, said a trader who noted that right after the merger news, on Tuesday, those bonds were trading in the context of 101.

Fund flows

The dedicated high-yield bond funds sustained $233 million of net daily cash outflows on Thursday, according to a market source.

High-yield ETFs had $199 million of outflows on the day.

Actively managed high-yield funds sustained $34 million of outflows on Thursday, the source said.

News of Thursday’s daily cash flows follows a Thursday afternoon report that the combined funds sustained $559 million of net outflows during the week to the Wednesday, Aug. 9 close, according to fund-tracker Refinitiv Lipper.

It was the third consecutive weekly outflow from the junk funds, and the sixth outflow in the past seven weeks, representing net outflows of $1.1 billion for that interval, according to the market source.

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