Junk swings to green post-Fed; Iliad adds; Aston Martin volatile; PetSmart under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 1 – The dollar-denominated primary market remained sidelined on Wednesday, with no deals pricing.

Avia Solutions Group postponed its $400 million offering of ASG Finance DAC five-year senior notes (BB-/BB).

“They didn’t have a book,” a trader remarked.

The deal launched Tuesday with early guidance in the low 9% area.

Meanwhile, the secondary space had a volatile session on Wednesday as the Federal Open Market Committee delivered their rate decision and chair Jerome Powell held his press conference.

While soft in the morning, the secondary space surged alongside broader markets after the FOMC decision and Powell’s press conference.

The initial surge in markets was a little “head scratching,” a source said, with the Fed holding rates steady and giving little visibility on rate cuts.

However, markets may have been breathing a sigh of relief that rate hikes were not under consideration and the reduction in the Fed’s balance sheet runoff was also a positive.

While the market was lifted post-Fed, swinging from negative to positive territory, it was leaking into the close as the higher-for-longer rate reality began to sink in, a source said.

Iliad Holding SAS’ new 8½% senior secured notes due 2031 (B2/B+/BB-) dipped early in the session but made strong gains into the close with the notes ending the session on a 101-handle

The Aston Martin Lagonda Global Holdings plc 10% senior secured notes due 2029 (B3/B-/B) were volatile with the notes down early after an earnings miss but paring their losses to close the day largely unchanged.

PetSmart LLC and PetSmart Finance Corp.’s 7¾% senior notes due 2029 (B3/B-) were also under pressure after releasing disappointing numbers.

Iliad adds

Iliad’s new 8½% senior secured notes due 2031 continued to add after a strong break in active trade on Wednesday.

While the notes dipped early in the session, they closed with gains with the notes up another 3/8 to ½ point.

The notes traded to a low of par 5/8 early in the session but were trading on a 101-handle into the close, a source said.

The notes ended the day in the 101 to 101½ context.

There was $24 million in reported volume.

Iliad priced a $750 million tranche of the 8½% notes at par on Tuesday as part of a dual-currency offering.

The notes priced at the tight end of talk for a yield of 8½% to 8¾%.

The deal also included an upsized €600 million, from €500 million, tranche of 6 7/8% notes which priced at par at the tight end of talk for a yield in the 7% area.

Aston Martin volatile

Aston Martin’s 10% senior secured notes due 2029 were rocky on Wednesday with the notes undergoing selling pressure early in the session but eliminating losses to close the day largely unchanged.

The notes dropped 1 to 1½ points in early trade after opening the day on a 96-handle.

However, buyers returned for the notes as the session progressed.

The 10% senior secured notes were wrapped around 98 heading into the close with the yield about 10½%, a source said.

There was $30 million in reported volume.

Aston Martin was under pressure early in the session after an earnings miss.

PetSmart under pressure

PetSmart’s 7¾% senior notes due 2029 were under pressure in active trade on Wednesday with earnings dragging the notes lower.

The 7¾% notes sank 1½ points to break below a 94-handle.

They were trading in the 93¾ to 94¼ context heading into the market close, a source said.

There was $22 million in reported volume.

The notes were under pressure after the pet supply retailer released disappointing numbers, a source said.

Fund flows

High-yield ETFs sustained $162 million of daily cash outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $55 million of inflows on the day.

With only Wednesday’s cash flow numbers remaining to go into the tally the combined funds are tracking $13 million of net outflows for the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index inched up 4 basis points to close Wednesday at 49.62 with the yield 7.2%.

The index fell 18 bps on Tuesday after gaining 14 bps on Monday.

The ICE BofAML US High Yield index was up 8.5 bps with year-to-date returns now 0.58%.

The index was down 17.1 bps on Tuesday after gaining 28.9 bps on Monday.

The CDX High Yield 30 index added 11 bps to close Wednesday at 105.95.

The index sank 52 bps on Tuesday and inched up 8 bps on Monday.

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