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Morning Commentary: Junk drops as stocks slide, Treasury yields spike; ETFs see outflows
By Paul A. Harris
Portland, Ore., Sept. 23 – The high-yield bond market opened ½ point lower on Friday morning as share prices around the globe were on the decline, according to market sources.
Market conditions were dire or worse, said a high-yield bond trader in New York.
The Ford Motor Co. 6.1% senior green notes due August 2032 (Ba2/BB+) were sharply lower at 90¾ bid, 91¼ offered, the trader said.
They were trading in a 93 bid, 94 offered context on Thursday, sources said.
The Ford 6.1% green notes came at par on Aug. 16 in a $1.75 billion high-grade-style execution.
Bonds that priced earlier in the week in a $4 billion megadeal from Citrix Systems Inc./Tibco Software Inc., the 6½% senior secured notes due March 2029 (B2/B), slipped below their deeply discounted 83.561 new issue price on Friday morning, according to the trader, who marked them at 83¼ bid.
The massive deal, part of the financing for the buyout of Citrix by Evergreen Coast Capital Corp. and Vista Equity Partners, limped across the finish line with help from some of the venture capital firms involved in the buyout, which took down around $1.5 billion of the bonds, market sources say.
The dollar-denominated new issue market sat idle on Friday.
Fund flows
High-yield ETFs sustained $1.01 billion of daily cash outflows on Thursday, according to a market source.
Actively managed high-yield funds, meanwhile, saw $45 million of inflows on the day.
News of Thursday's daily flows followed a Thursday afternoon report that the combined funds sustained $1.663 billion of net outflows for the week to the Wednesday, Sept. 21 close, according to fund tracker Refinitiv Lipper.
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