Junk bond issuance activity fell in December due to the rate hike and holiday season. Junk bonds worth $2.8 billion were issued in December. This was far lower than the $24.0 billion worth of junk bonds issued in a previous month. The number of issues also fell sharply from 33 in November to seven in December.
Mutual Funds like the PIMCO High Yield Fund (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds. The holdings of the PHDAX include Citigroup (C) and Lloyds Banking Group (LYG) while the SPHIX holds junk bonds of Tenet Healthcare (THC) and Citigroup (C).
Deal highlight of December
Mednax (MD) is a national medical group. It had issued junk bonds worth $750 million on December 1, 2015. Mednax would use the proceeds of the loan for refinancing purpose. This was the largest issuance in December.
HCA Holdings (HCA) is a provider of healthcare services. It had issued junk bonds worth $500 million on December 3. HCA Holdings would use the proceeds of the loan for general corporate purpose.
Aramark Services, an indirect wholly-owned subsidiary of Aramark (ARMK), had issued junk bonds worth $400 million on December 3. Aramark intends to use the proceeds of the loan for general corporate purpose.
Group 1 Automotive (GPI) operates as an automotive dealer. It had issued junk bonds worth $300 million on December 3. Group 1 Automotive plans to use the proceeds of the loan for refinancing purpose.
Clear Channel International B.V. is an indirect wholly-owned subsidiary of Clear Channel Outdoor Holdings (CCO). It’s an international outdoor advertising company and had issued dollar-denominated junk bonds worth $225 million on December 7. Clear Channel International would use the net proceeds of the notes for refinancing older debt.
In the next article, we’ll look at flows in high yield bond funds.