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Post-Fed primary ignites, led by upsized Alcoa, Targa megadeals; funds lose $273.5 million
By Paul Deckelman and Paul A. Harris
New York, Sept. 22 – Benign news from the Federal Reserve on interest rates was seen as the catalyst for a renewed high-yield primary market surge as fall got under way on Thursday.
Syndicate sources cited the central bank’s decision to not boost rates at this time as a key factor in reporting that three issuers brought a total of $2.6 billion of new U.S. dollar-denominated and fully junk-rated paper to market during the session.
A pair of upsized two-part megadeals led the parade on Thursday.
Aluminum giant Alcoa Inc. did $1.25 billion of new paper in a regularly scheduled forward-calendar offering consisting of $750 million of eight-year notes and $500 million of 10-year paper.
Earlier, energy operator Targa Resources Corp. brought a quickly shopped $1 billion of new bonds to market, in equally-sized $500 million tranches of slightly longer than eight- and 10-year notes.
Traders saw brisk activity, at generally higher levels, for such recently priced credits as Ziggo Group Holding BV, Cheniere Energy Partners, LP, Callon Petroleum Co. and, going back a little further, Novelis Inc.
Statistical market performance measures remained firmer across the board on Thursday, their second straight upside session.
Another numerical indicator – flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – was in negative territory for a second straight week as $273.555 million more left those weekly-reporting-only domestic funds than came into them during the week ended Wednesday.
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