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Junk Bond Issuance Tanked on Mixed Market Developments Last Week

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Junk Bond Issuance Tanked on Mixed Market Developments Last Week PART 2 OF 6

High-Yield Bond Issuance Fell on Mixed Domestic Developments

Deals and flows analysis in high-yield bond markets

The high-yield market was impacted by falling stock prices and commodity prices, weak US retail sales data, and ongoing speculation about the liftoff in December. Uncertainty over global growth, coupled with a slowdown in China, was cemented by negative data coming out of China last week. All these factors led to falling high-yield bond issuance in the week ended November 13. High-yield debt is tracked by the SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).

High-Yield Bond Issuance Fell on Mixed Domestic Developments

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According to data from S&P Capital IQ’s LCD, a dollar-denominated high-yield debt amounting to $3.6 billion was issued in the week ended November 13. In the previous week, high yield issuance had stood at $13.7 billion. The number of transactions fell to seven last week from 14 in the previous week.

Last week brought the total US dollar-denominated issuance of high-yield debt to $250.9 billion in 2015 year-to-date (or YTD). This is lower by 15.7% compared to the corresponding period of 2014.

Majority of deals for corporate purposes

Out of the seven deals priced last week, three were for corporate purposes, two for acquisition purposes, and two deals were for refinancing purposes.

Qorvo (QRVO) and HCA (HCA) each issued junk bonds worth $1.0 billion for refinancing purpose, the largest issuance last week. Sensata Technologies (ST) issued junk bonds worth $750 million last week for acquisition purposes. Also, TeamHealth (TMH) issued junk bonds worth $545 million last week for acquisition purposes.

We’ll analyze these deals and pricing trends in detail in the next article.

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