Deals and flows analysis in the high yield bond markets
Issuance volume for the week ended May 22, 2015, fell from the previous week. Junk bonds, or high yield debt issuers, slowed debt issuance on the primary junk bond market, though activity in the leveraged loans market continued to remain strong. 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).
According to data from S&P Capital IQ/LCD, dollar-denominated high yield debt amounting to $5.6 billion was issued in the week ended May 22. The issuance volume fell by 33.8% from the week ended May 15. The number of transactions reduced from 18 to nine, week-over-week.
Last week brought the total US dollar issuance of high yield debt to $154.9 billion in 2015 year-to-date (or YTD). This is up 2.5% from the corresponding period of 2014.
Issuers hit the market for refinancing
Refinancing has been the purpose of choice for high yield debt issuers since mid-February 2015. Refinancing-related issues accounted for seven out of nine transactions last week. Among other deals, one was for leveraged buyout and one was for general corporate purpose.
Refinancing deals not only outnumbered other deals, but the category also included the biggest deals of the week. Energy Transfer Equity (ETE) issued high yield bonds worth $1 billion last week, the largest of the period.
Among other deals, JBS USA issued bonds worth $900 million last week. EP Energy Corporation (EPE) issued bonds worth $800 million, Berry Plastics Group (BERY) issued high yield bonds worth $700 million, and Plantronics (PLT) issued bonds worth $500 million.
We’ll analyze some of these deals and pricing trends in detail in the next article.