Deals, flow analysis in high-yield bond markets
High-yield bond issuance rose last week, with three deals being priced as stock markets rebounded on positive corporate earnings results. Further, there is strong demand for high-quality debt.
High-yield debt is tracked by mutual funds such as the Prudential Short Duration High-Yield Income Fund Class A (HYSAX) and the TIAA-CREF High-Yield Fund Retail Class (TIYRX). The weekly returns of HYSAX and TIYRX rose by 0.3% and 1.3%, respectively.
According to data from S&P Capital IQ Leveraged Commentary & Data, dollar-denominated, high-yield debt amounting to $1.9 billion was issued in the week ended February 19, 2016. In the previous week, high-yield issuance stood at $610.0 million. The number of transactions rose to three last week from two in the previous week.
Purpose of the deals
Three deals were priced last week, two for acquisition purposes and one for refinancing purposes.
Standard Industries (SIL.NS) and Prestige Brands Holdings (PBH) issued dollar-denominated junk bonds worth $1.0 billion and $350.0 million, respectively, for acquisition purposes. Medical Properties Trust (MPW) issued dollar-denominated junk bonds worth $500.0 million for refinancing purposes.
In the previous week, Endurance International Group Holdings (EIGI) issued junk bonds for acquisition purposes. Manitowoc Cranes Escrow, a wholly owned subsidiary of The Manitowoc Company (MTW), issued junk bonds for spin-off purposes.
We’ll analyze deals priced last week and pricing trends in detail in the next article.