CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were $1.9 billion and year to date flows stand at $15.2 billion.  New issuance for the week was $3.8 billion and year to date HY is at $61.8 billion, which is 4% over the same period last year.

(Bloomberg)  High Yield Market Highlights

• S. junk bonds saw the biggest fund inflow in 10 weeks as the rally extended with yields dropping across the risk spectrum.
• Junk bonds have seen cash inflows for four consecutive weeks and in 10 of the last 12 weeks
• Retail funds have reported net inflows of ~$15b YTD vs the $19b outflows for the same period in 2018
• Yields were near 6-month lows and spreads held firm near the October levels as oil was above $60 and equities rebounded
• On Staples’ aggressive $2.125b 2-part offering to fund a dividend distribution to equity sponsors, a secured tranche had orders of more than $2.5b, while the unsecured tranche was about deal size
• Staples is out with initial price talk of 10% area for a $1.375b 8-year unsecured tranche and about 7.5% on a $750m 7- year secured bond
• Junk bond returns rose to 7.64% YTD making it still the best since 2003
• CCCs slid to 7.54% YTD after posting negative returns yesterday
• Single-Bs beat CCCs with 7.65%
• BBs return is 7.5%
• IG returns are 4.78%
• Loans have gained 4.54%
• The energy sector posted the best 1Q return since 2009 with 8.3% and it continued to be the best performing sector YTD, with 9.32%
• Low default, steady oil, a dovish Fed, strong technicals — reflected in net inflows and slow issuance — boost risk assets

(Reuters)  UGI to buy rest of AmeriGas Partners in $2.44 billion deal

• Energy distributor UGI Corp said on Tuesday it would buy the remaining nearly 75 percent it does not own in retail propane marketer AmeriGas Partners LP in a cash-and-stock deal valued at $2.44 billion.
• Pennsylvania-based UGI also cut its fiscal 2019 profit forecast because of a warmer-than-normal winter in Europe
• In the AmeriGas deal, shareholders will receive 0.50 shares of UGI in addition to $7.63 in cash for each share owned, the companies said in a statement.
• The offer represents a premium of 13.5 percent to AmeriGas’s Monday closing price. The company’s shares were up 13 percent in morning trade on Tuesday.
• “This transaction significantly enhances UGI’s free cash flow, one of the key elements of our long-term success,” UGI Chief Executive Officer John L. Walsh said on a conference call with analysts.
• “It will allow us to increase our dividend by a cumulative 25 percent,” he added.

(Business Wire)  U.S. Department of Energy extends AECOM-led joint venture contract at the Savannah River Site for an additional 18 months

• AECOM, a premier, fully integrated global infrastructure firm, announced today that the U.S. Department of Energy’s (DOE’s) Savannah River Operations Office in Aiken, South Carolina, extended the current liquid waste management contract with AECOM-led Savannah River Remediation LLC. The approximate US$750 million extension will run from April 1, 2019, to September 30, 2020. The value of the contract extension was included in AECOM’s backlog in the second quarter of fiscal 2019.
• “We are pleased that the DOE has decided to extend Savannah River Remediation’s contract,” said John Vollmer, president of AECOM’s Management Services group. “AECOM has a long history of supporting the DOE at the Savannah River Site and extensive experience in liquid waste disposition. We are committed to safely managing the radioactive waste system at the site while reducing the state of South Carolina’s critical environmental risk.”
• During the contract extension period, services that the AECOM-led joint venture will perform are operating the Defense Waste Processing Facility and Saltstone Production Facility, and continuing progress on the Tank Closure Cesium Removal demonstration and construction project and the construction of Saltstone Disposal Unit 7.

(Wall Street Journal)  T-Mobile Spells Out CFO Exit Plan

• T-Mobile US filed an amended employment agreement for its finance chief that spells out a plan for him to leave the company as it awaits regulatory review of a proposed merger with rival Sprint Corp.
• CFO Braxton Carter has been a key figure in the mobile carrier’s pending deal to buy Sprint. A spokeswoman for T-Mobile declined to comment on whether a successor had been chosen.
• Carter’s last day at T-Mobile will be decided by the status of the merger, the company said in a regulatory filing with the Securities and Exchange Commission. Mr. Carter is scheduled to leave at one of three fixed dates, depending which arrives first: the end of 2019; 20 days after the first quarterly filing of the merged company; or 20 days after an announcement the deal is off.
• Analysts speculated about the departure of Mr. Carter in September, when T-Mobile said Sunit Patel would join the company to lead its expected integration with Sprint. Mr. Patel had been chief financial officer at CenturyLink Inc.