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High-Yield Debt Issuance Gathers Steam in Week to April 10

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Deals and flows analysis in high-yield bond markets

Issuance volume for the week ended April 10, 2015, picked up after a lull in the previous week. Junk bonds, or high-yield debt issuers, returned to the primary market the same week the FOMC (Federal Open Market Committee) released its March 2015 meeting minutes.

High yield debt is tracked by the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG).

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According to data from S&P Capital IQ/LCD, dollar-denominated bonds amounting to $11.1 billion were issued across 18 transactions in the week ended April 10. The issuance volume surged by 200.0% from the week ended April 3. Pricing was evenly spread across the week. However, there were no issues priced on April 10.

Last week brought the total US dollar issuance of high-yield bonds to $105.7 billion in 2015 year-to-date. This is up 11.6% from the corresponding period of 2014. The number of transactions rose from nine to 18 week-over-week.

Corporates continue to refinance older debt

Refinancing continued to remain the purpose of choice for the ninth consecutive week. Refinancing-related issues accounted for ten out of 18 transactions in the week. Among other deals, five were for corporate purposes, and three were for acquisitions.

Although refinancing deals outnumbered all others, deals for corporate purposes were the largest of the week. Auto group Fiat Chrysler Automobiles (FCAU) issued dollar-denominated bonds worth $3.0 billion last week – the largest of the period.

GM Financial, the financial services arm of auto major General Motors (GM), issued bonds worth $2.4 billion. Meanwhile, Mallinckrodt International, a subsidiary of specialty pharma company Mallinckrodt PLC (MNK), issued junk bonds worth $1.4 billion.

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

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