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Morning Commentary: Michaels Stores up post-earnings; junk higher in spotty trading
By Paul A. Harris
Portland, Ore., June 28 – After opening unchanged on Tuesday, the high-yield bond market improved by as much as ¼ point by mid-morning in spotty trading, a New York-based bond trader said.
With the Dow Jones industrial average up 0.5% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.25%, or 19 cents, at $74.39.
The junk bonds of privately held Michaels Stores, Inc. were up 1 point to 2 points in active trading following an earnings report that was not as awful as it could have been, the trader said.
Magic MergerCo, Inc. (Michaels Cos., Inc.) 7 7/8% senior notes due May 2029 were up slightly more than a point at 70 1/8 bid.
The arts and crafts retailer went private in April 2021 when Apollo Global Management acquired it in a $3.3 billion leveraged buyout that valued the company at $5 billion.
In the primary market, Fortress Transportation and Infrastructure Investors LLC is marketing a $500 million offering of FTAI Escrow Holdings, LLC five-year senior secured notes (B2/B-).
Initial guidance has the deal coming with a coupon of 10¼% to 10½% at an original issue discount to yield 11%.
The notes, backing the spinoff of FTAI Infrastructure Inc., are expected to price on Wednesday.
The FTAI offer is shaping up as a deal that will be priced to trade, the New York-based trader said, adding that real-money accounts as well as hedge funds will be engaged in the transaction.
Monday outflows
The dedicated high-yield bond funds sustained $623 million of net outflows on Monday, according to a market source.
The high-yield ETFs saw $466 million of outflows on the day.
Actively managed high-yield funds sustained $157 million of outflows on Monday, the source said.
The combined funds are tracking $529 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.
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