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Morning Commentary: Junk opens ½ point lower; Global Partners brings $450 million notes
By Paul A. Harris
Portland, Ore., Jan. 2 – Global Partners LP opened the 2024 high-yield primary market with the announcement of a $450 million offering eight-year senior notes (B2/B+).
Initial guidance has the debt refinancing deal coming to yield 8½% to 8¾%.
Although Global Partners was Tuesday’s sole junk bond deal announcement, new issue volume is expected to be purposeful, or better, during the first half of January, sources say.
Meanwhile, junk was off ½ point as trading got underway in the new year, sources said.
With the S&P 500 stock index off 0.57% at mid-morning and the yield of the 10-year Treasury up more than 2¼%, at 3.994%, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.33%, or 25 cents, at $77.14.
Secondary volumes were low in the early going on Tuesday, a New York-based trader said.
The closing of the merger uniting DISH Network and EchoStar Corp. saw the DISH DBS Corp. 5 7/8% notes due November 2024 active at 94 3/8 bid and drifting higher, the trader said.
The combined company will operate as EchoStar.
Away from headlines, the GTCR W-2 Merger Sub LLC (Worldpay) 7½% senior secured notes due January 2031, a large, liquid, post-Labor Day issue, were 105¼ bid, 105½ offered in odd-lot trading on Tuesday morning, the trader said.
Late in the old year they were 105 bid, 105¼ offered.
The $2.175 billion deal priced at par last September.
Fund flows
High-yield ETFs sustained $137 million of daily cash outflows last Friday ahead of the extended New Year holiday weekend, according to a market source.
Actively managed high-yield funds saw $29 million of inflows on Friday, the source said.
The combined funds are tracking $121 million of net outflows for the week that will conclude with Wednesday’s close, according to the market source.
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