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Intelsat Jackson Issued Most Junk Bonds in the Week Ended March 24

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Pricing trends

Continuous improvement in market conditions resulted in the highest year-to-date (or YTD) high-yield bond issuance in the primary market last week. The primary market saw eight deals priced last week, which was the highest YTD.

Mutual funds like the PIMCO High Yield Fund – Class A (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds. Meanwhile, exchange-traded funds like the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) also invest in junk bonds.

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Issuance by Intelsat Jackson Holdings

Intelsat Jackson Holdings S.A., a subsidiary of Intelsat S.A. (I), dissued dollar-denominated junk bonds worth $1.25 billion on March 21. The senior secured first-lien notes were rated B1/B- and carried a coupon of 8.0%. The bonds will mature on February 15, 2024, and were issued at 100% of the aggregate principal amount at a yield to worst of 8.0%.

Intelsat Jackson intends to use the proceeds of the loan for general corporate purposes.

Issuance by AMC Networks

AMC Networks (AMCX) is an entertainment company that issued dollar-denominated junk bonds worth $1.0 billion on March 23. The senior notes were rated Ba3/BB and carried a coupon of 5.0%. The bonds will mature on April 1, 2024, and were issued at 100% of the aggregate principal amount at a yield to worst of 5.0%.

AMC Networks intends to use the proceeds of the loan for refinancing purposes.

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Issuance by CenturyLink

CenturyLink (CTL) is a global communications, hosting, cloud, and IT services company. It issued dollar-denominated junk bonds worth $1.0 billion on March 22. The senior notes were rated Ba3/BB and carried a coupon of 7.5%. The bonds will mature on April 1, 2024, and were issued at 100% of the aggregate principal amount at a yield to worst of 7.5%.

CenturyLink intends to use the net proceeds from this offering, together with additional borrowings under its revolving credit facility and available cash, if any, to retire notes. This would provide the total amount of funds required to fully retire at maturity on June 1, 2016, the $1.184 billion aggregate principal amount of 7.082% notes issued by its wholly owned subsidiary, Embarq Corporation (EQ).

Issuance by Boyd Gaming

Boyd Gaming (BYD) owns and operate hotels, casinos, and restaurants across the US. It issued dollar-denominated junk bonds worth $750 million on March 22. The senior notes were rated B3/B- and carried a coupon of 6.375%.

The bonds will mature on April 1, 2026, and were issued at 100% of the aggregate principal amount at a yield to worst of 6.375%. The company intends to use the net proceeds from the notes offering in the future for working capital and general corporate purposes.

In the next article, we will look at high-yield bond fund flows and the yield movement of bond funds.

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