Junk Investors Branded ‘a Bunch of Babies' After NRG Pulls Its OfferingBy
Peter Boockvar, chief market analyst at Lindsey Group, isn’t impressed by NRG Energy Inc.’s decision to withdraw an $870 million bond offering as investors fret over the state of the high-yield market.
While oil was closing out its best weekly run in a year, the junk-rated independent power producer cited “broader market conditions” for pulling the 6.625 percent senior notes set to mature in 2023. It was the first U.S. junk bond deal of its kind to be withdrawn since June.
“Really? The market is this sensitive?” Boockvar wrote in a note to clients Friday. “Granted high yield is egregiously overvalued but what a bunch of babies!”
Even as the SPDR Bloomberg Barclays High Yield Bond exchange-traded fund, ticker JNK, has fallen more than 2 percent since junk spreads hit their tightest level of the year, the widening in option-adjusted spreads for energy companies has been moderate compared with the asset class as a whole.