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Morning Commentary: Constellium’s bonds jump on Aleris sale news; fund inflows continue
By Paul A. Harris
Portland, Ore., Aug. 30 – The late August lull continued in the high-yield bond market on Tuesday morning, with trading activity muted and numerous market participants away from their desks.
“Nothing's happening,” a portfolio manager said but added that there is a certain amount of liquidity in the market depending upon what you would like to get done.
High-yield ETFs were slightly lower at mid-morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was off 0.21%, or 18 cents, at $86.81 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $36.65 per share, was down 0.23%, or 8 cents.
The bonds of Paris-based aluminum products manufacturer Constellium NV were up 5 points on news that peer Aleris Corp. is being purchased by Zhongwang USA, a subsidiary of China Zhongwang, for $2.33 billion.
The Constellium 8% senior notes due Jan. 15, 2023 were 103 bid on Tuesday, the portfolio manager said.
Those bonds were 90 bid on Aug. 1.
Among 2016 issues, the Protection 1 9¼% second-priority senior secured notes due May 15, 2023 (B3/B-) were hit above 109, the portfolio manager said, adding that the bonds, used to help fund the buyout of ADT Corp. by Apollo, were clearly outperformers.
The big $3.14 billion deal, via issuing entities Prime Securities Services Borrower, LLC and Prime Finance, Inc., came at par on April 21.
It’s a big, secured, liquid issue with low single B ratings, the portfolio manager remarked.
The daily cash flows of the dedicated high-yield bond funds remained positive on Monday, the manager said.
High-yield ETFs saw $12 million of inflows on the day.
Asset managers saw $50 million of inflows on Monday.
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