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High-Yield Bond Issuance Remains Robust in 2Q15

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Jul. 16 2015, Published 3:00 p.m. ET

Deals and flows analysis in high-yield bond markets

High-yield bond issuance rose in 2Q15 compared to 1Q15. April led the year with the highest monthly issuance in 2015 year-to-date. Low rates in April led to issuers raising these bonds in a large quantum. High-yield debt is tracked by the SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).

According to data from S&P Capital IQ/LCD, dollar-denominated high-yield debt amounting to $94.0 billion was issued in 2Q15. The issuance volume in the quarter was up 2.7% compared to 1Q15, which saw issuance worth $91.6 billion.

The total US dollar-denominated issuance of high-yield debt stands at $186.2 billion in 2015 year-to-date. This is nearly flat from the corresponding period of 2014.

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Refinancing deals rise in 2Q15

Refinancing was the purpose of choice for high-yield debt issuers in 2Q15. Of the 163 deals priced in 2Q15, 89 were for refinancing. In 1Q15, this figure stood at 73 of 133 total deals. Among other deals, 38 were for acquisitions, 18 were for corporate purposes, eight were for leveraged buyouts, six were for spin-offs, and four were for dividend and recapitalization.

The deals for acquisitions were the biggest in terms of volume in 2Q15. ZF Friedrichshafen, a German car parts maker, issued dollar-denominated bonds worth $3.5 billion in April. It was the biggest deal of 2Q15. It issued these bonds to acquire US-based TRW Automotive Holdings (TRW).

Among other notable deals, Fiat Chrysler Automobiles (FCAU), a designer, manufacturer, and seller of automobiles and components, issued high-yield bonds worth $3 billion in April. Tenet Healthcare (THC) issued junk bonds worth $2.8 billion in June. Tenet used the proceeds of the sale for the acquisition of Aspen Healthcare. Charter Communications (CHTR) issued junk bonds worth $2.7 billion in April.

GM Financial, the financial services unit of automaker General Motors (GM), issued high-yield bonds worth $2.4 billion in April. Australian iron ore producer Fortescue Metals Group issued bonds worth $2.3 billion in April.

We’ll take a closer look at these deals and pricing trends in the next article.

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