High-Yield Bond Issuance Rises on Market Sentiment
Analysis of deals and flows in high-yield bond markets
The market tone improved and welcomed quality issuers, leading to a rise in high-yield bond issuance in the week ended November 6. High yield debt is tracked by the SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).
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According to data from S&P Capital IQ’s LCD, a dollar-denominated high-yield debt amounting to $13.6 billion was issued in the week ended November 6. In the previous week, high-yield issuance had stood at $6.1 billion. The number of transactions jumped to 14 last week from five in the previous week.
Last week brought the total US dollar-denominated issuance of high-yield debt to $248.3 billion in 2015 year-to-date (or YTD). This is lower by 12.0% than the corresponding period of 2014.
Majority of deals for refinancing
Out of the 14 deals priced last week, seven deals were for refinancing, five for corporate purposes, and two for acquisition.
First Data Corporation (FDC) issued junk bonds worth $3.2 billion—the largest issuance last week—for refinancing purposes. CCOH Safari—a subsidiary of Charter Communications (CHTR)—issued junk bonds worth $2.5 billion last week for acquisition purposes. T-Mobile (TMUS) issued junk bonds worth $2.0 billion last week for general corporate purposes. The Goodyear Tire & Rubber Company (GT) issued junk bonds worth $1.0 billion last week for refinancing purposes.
We’ll analyze these deals and pricing trends in detail in the next article.