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Morning Commentary: Junk lower, led by commodities; Glencore bonds yielding 9%; primary quiet
By Paul A. Harris
Portland, Ore., Sept. 29 – Equities opened higher on Tuesday but junk bonds were generally not trailing in the slipstream, according to a trader on the East Coast of the United States.
“There are some names up a couple of points, but despite the newscasts, everything is not better,” the trader said.
“Minerals and mining continue to seek new levels.”
Among the notable names being watched by high-yield participants, the split-rated bonds of Teck Resources Ltd. and the barely investment grade notes of Freeport-McMoRan Inc. remain under pressure, the trader said.
Glencore AG’s 4% notes due 2025 were at 68 bid and yielding 9% heading at late morning.
The notes were up a couple of points from Monday on the company’s reassurances that it remains financially robust, the source added. They had plunged 8 to 10 points in trading on Monday.
High-yield ETFs were unchanged to slightly better heading into midday in New York.
iShares iBoxx $ High Yield Corporate Bd (HYG) was up 16 cents at $82.94 per share.
SPDR Barclays High Yield Bond ETF (JNK) was trading at $35.60, up a penny.
Quiet in the primary
Tuesday morning brought no new deal announcements.
Two deals are on the active calendar.
Books are scheduled to close for NN, Inc.'s $300 million offering of eight-year senior notes (Caa1/B). SunTrust is the left bookrunner. KeyBanc and Regions are joint bookrunners.
And SunOpta Foods Inc. began marketing a $330 million offering of senior secured second-lien notes due 2022 (B3) on Monday. The deal, via joint bookrunners BMO, Jefferies and Rabobank, is set to price in the week ahead.
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