Deals and flows analysis in the high yield bond markets
The issuance volume for high yield debt for the week ended June 26, 2015, rose from the previous week. However, the issuance volume remained subdued compared to earlier in the year, as yields have run up quite a bit in June, making it expensive for issuers to raise debt. 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 $5.55 billion was issued in the week ending June 26. The issuance volume rose 63.1% from the week ending June 19, and the number of transactions doubled from the previous week to ten.
Last week brought the total US dollar-denominated issuance of high yield debt to $185.1 billion in 2015 year-to-date. This is up 2.0% from the corresponding period in 2014.
Refinancing deals take a step back
Since mid-February 2015, refinancing has been the purpose of choice for high yield debt issuers, with the exception of a few weeks. Last week was such an exception. Deals for general corporate purposes outnumbered others, accounting for five out of ten transactions. Among other deals, two deals each were for refinancing and acquisition, and one deal was for leveraged buyout.
Although deals for corporate purposes outnumbered others last week, it was an acquisition that was the biggest deal in terms of volume. Specialty healthcare company Endo Pharmaceuticals, a subsidiary of Endo International Plc (ENDP), issued high yield bonds worth $1.635 billion last week—the largest of the period.
Among other issuers, Ball Corporation (BLL) and AerCap Holdings N.V. (AER) issued high yield bonds worth $1.0 billion each. CNH Industrial N.V. (CNHI) noted that CNH Industrial Capital LLC issued junk bonds worth $600 million last week.
We’ll analyze these deals and pricing trends in detail in the next article.