Last week’s high yield market
The high yield market was very busy last week. A total of 20 transactions priced a total of $10 billion, slightly down from the $13 billion that rushed the market the week before the Fed’s announcement of delaying tapering.
Year-to-date, the issuance is $241 billion—which is just in line with the same period of the previous year. It seems that the high yield market gained an extra month of strength now that tapering was delayed.
Upsized transactions signal investor appetite
Investor appetite last week remained very healthy. Activision’s bonds to back the majority stake purchased by Vivendi were upsized by $500 million and priced inside the price talk. Whiting Petroleum’s deal was also upsized by $100 million. Ancestry.com’s PIK[1. Pay-in-kind: Bonds that give the issuer the option to pay interest in cash or accrue it to the principal value of the bond] was upsized by $50 million and priced at the middle of the initial guidance range. All these issuances are a clear example of the market’s strength last week.
This week is looking good
As of last Friday, the forward pipeline for this week looked strong. With $4.4 billion of announced deals, that meant an expansion of over a billion dollars versus the previous week. This recovery comes after several weeks with forward pipelines of less than $500 million given the fears of tapering.
The volume for the present week will be dominated by issuances by Dell and Caesars Entertainment. Dell’s bonds priced right at the middle of talk and traded steadily in the secondary market, showing that investors’ appetite for well-known names remains strong. Caesars is scheduled to price $1.5 billion later today.