Junk bond issuance saw minimal activity in the primary market last week. The number of issues rose from zero in the previous week to two last week. Mutual Funds like the PIMCO High Yield Fund – Class A (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds. The holdings of the PHDAX fund include Citigroup (C) and Lloyds Banking Group (LYG). Meanwhile, the SPHIX fund holds junk bonds of Tenet Healthcare Corporation (THC) and Citigroup (C).
Deal highlight of the week
Microsemi Corporation (MSCC) issued dollar-denominated junk bonds worth $450 million on January 7, 2015. The senior notes were rated B2/B+ and carried a coupon of 9.13%. The bonds will mature on April 15, 2023.
Kraton Performance Polymers Inc (KRA) is a leading global producer of styrene block copolymers, specialty polymers, and high-value performance products derived from pine wood pulping coproducts. It issued junk bonds worth $440 million on January 5, 2016. The senior notes were rated B3/CCC+ and carried a coupon of 10.5%. The bonds will mature on April 15, 2023.
Kraton Performance Polymers Inc (KRA) intends to use the proceeds of the loan for the acquisition of Arizona Chemical Holdings Corporation.
In the next article, we’ll look at high yield bond fund flows and the yield movement of bond funds.