High Yield Debt Issuers Return to Market after a Subdued Week



Deals and flows analysis in the high yield bond markets

Issuance volume for the week ended May 8, 2015, rose from the previous week. Junk bond, or high yield debt, issuers returned to the primary market after looking out for the monetary policy announcement by the Federal Reserve in the previous week. 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 $8.7 billion was issued in the week ended May 8. The issuance volume rose by 69.8% from the week ended May 1. The number of transactions rose from ten to 14, week-over-week.

Last week brought the total US dollar issuance of high yield debt to $140.9 billion for 2015 year-to-date (or YTD). This is up 10% from the corresponding period of 2014.

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Refinancing and acquisition are the primary purposes

Refinancing saw the highest number of deals while acquisition was a close second. Refinancing-related issues accounted for five out of 14 transactions in the week. Among other deals, four were for acquisition, two each for spin-off and general corporate purposes, and one for leveraged buyout.

Though refinancing deals outnumbered others, it was the spin-off deal that emerged as the biggest of the week. The Chemours Company is a subsidiary of DuPont (DD). It issued dollar-denominated high yield bonds worth $2.1 billion last week, the largest of the period.

Among other deals, HCA, a subsidiary of HCA Holdings (HCA) issued bonds worth $1.6 billion last week. Range Resources Corporation (RRC) issued bonds worth $750 million. Boyd Gaming Corporation (BYD) also raised high yield bonds worth $750 million. SM Energy Company (SM) raised bonds worth $500 million.

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


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