Deals and flows analysis in the high-yield bond markets
High-yield bond issuance surged last week and recorded its highest level in 2016 due to improved primary market sentiment. Investor confidence has been lifted due to a rebound in equity markets and a positive outlook for the markets.
According to data from S&P Capital IQ/LCD, dollar-denominated high-yield debt totaled $5.8 billion—the highest in 2016 so far and the largest since November 13, 2015—was issued in the week ended March 24. In the previous week, high-yield issuance stood at $2.5 billion. The number of transactions rose from to eight last week from six in the previous week.
Last week brought the total US dollar-denominated issuance of high-yield debt to $29.8 billion in 2016 year-to-date (or YTD). This is lower by 66.0% compared to the corresponding period of 2015.
High-yield debt is tracked by mutual funds like the Prudential Short Duration High-Yield Income Fund – Class A (HYSAX) and the TIAA-CREF High-Yield Fund – Retail Class (TIYRX), as well as exchange-traded funds like the SPDR Barclays Capital High-Yield Bond ETF (JNK) and the iShares iBoxx $ High-Yield Corporate Bond Fund (HYG).
Purpose of the deals
Eight deals were priced last week, four for refinancing purposes and four for general corporate purposes.
AMC Networks (AMCX), iStar Financial (STAR), and Aleris International—a wholly owned subsidiary of Aleris Corporation (ARS) and CenturyLink (CTL)—issued dollar-denominated junk bonds for refinancing purposes.
Meanwhile, Intelsat Jackson Holdings S.A.—a subsidiary of Intelsat S.A (I), Boyd Gaming Corporation (BYD), Constellium (CSTM), and Aircastle Limited (AYR)—issued dollar-denominated junk bonds for general corporate purposes.
We’ll analyze the deals priced last week and pricing trends in detail in the next article.