Junk secondary rally cools; new Seadrill trades above issue price; Frontier under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 14 – The dollar-denominated junk bond new issue market had its first July deal price this past week with more expected in the week to come.

Meanwhile, the rally in the secondary space cooled on Friday with outflows and profit-taking dragging down the market, a source said.

However, the market closed Friday with strong weekly gains and the cash bond market up 1½ and the ICE BofAML US High Yield index year-to-date returns rising to a 6% handle.

With the market rally taking a breather on Friday, new issues and topical news were the drivers of activity in the space.

Despite some weakness in the broader market, Seadrill Finance Ltd.’s 8 3/8% senior secured second-lien notes due 2030 (B2/BB/B+) were trading at a strong premium to their issue price in heavy volume.

However, topical news dragged down Frontier Communications Holdings, LLC’s senior notes with several tranches hitting new all-time lows following news report of leaching lead cables that were part of early landline networks.

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