Morning Commentary: Avient brings $725 million unsecured notes; funds see strong inflows

By Paul A. Harris

Portland, Ore., July 26 – The high-yield bond market opened 1/8 of a point lower on Tuesday, according to a bond trader in New York.

With the S&P 500 stock index down 0.8% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.36%, or 28 cents, at $76.59.

The lights came up Tuesday morning in the lately dormant new issue market as Avient Corp. announced a deal that had been telegraphed to investors for more than a week.

The Avon Lake, Ohio-based specialized polymer materials manufacturer set a Wednesday investor call for its $725 million offering of senior notes due 2030 (Ba3/BB-) coming in support of its acquisition of Royal DSM’s Dyneema protective materials business.

With pricing expected Friday, initial price talk is in the 7½% area.

Meanwhile, Patagonia Holdco LLC is on deck with a $500 million offering of seven-year senior secured first-lien notes (B1/B+) supporting the buyout of Lumen Technologies' Latin American operations by Stonepeak.

Pending official price talk, initial guidance specifies a 7½% coupon at OID 86.

Books were scheduled to close Tuesday, but there had been no updates by mid-morning, according to a sellside source, who added that emerging markets bond accounts comprise the most conspicuous presence in the Patagonia order book.

Among existing issues, the deeply distressed bonds of Coinbase Global Inc. took another tumble on Tuesday on news of a probe by the Securities and Exchange Commission into the possibility that the company might have improperly let Americans trade digital assets that should have been registered as securities.

The bonds were off a couple of points on that news, the sellsider said, marking the Coinbase 3 3/8% senior guaranteed notes due October 2028 at 66½ bid, 67½ offered and the 3 5/8% senior guaranteed notes due October 2031 at 61 bid, 62 offered.

Elsewhere the Uber Technologies, Inc. 7½% senior notes due September 2027, at par ½ bid, were slightly lower on the morning, the sellsider said.

The San Francisco tech-based mobility company is laboring against the fallout from news that customers' and drivers' personal information was compromised in a 2016 data breach.

Big inflows continue

The dedicated high-yield bond funds saw $603 million of net daily inflows on cash on Monday and are so far tracking huge inflows on the week, according to a market source.

High-yield ETFs saw $483 million of inflows on the day.

Actively managed high-yield funds saw $120 million of inflows on Monday, the source said.

Monday marked the third consecutive session in which the dedicated junk funds saw big inflows, trailing $1.104 billion of net daily inflows last Friday and $1.82 billion of net inflows last Thursday (the first session that will figure into the present reporting week's tally).

The combined funds are tracking a whopping $4.36 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

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