Why Did High-Yield Bond Issuance Fall Last Week?



Deals and flows analysis in the high-yield bond market

High-yield bond issuance activity slowed down last week after recording the highest YTD (year-to-date) volume in the previous week. According to data from S&P Capital IQ/LCD, dollar-denominated high-yield debt amounting to $4.6 billion was issued in the week ending April 15. In the previous week, high-yield issuance stood at $10.9 billion—the highest YTD issuance. The number of transactions fell to seven last week from eight in the previous week.

Last week brought the total US dollar-denominated issuance of high-yield debt to $52.0 billion in 2016 YTD. This is 55% lower compared to the same period in 2015.

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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). It’s also tracked by ETFs like the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG).

Purpose of the deals

Seven deals were priced last week. Five for refinancing, one for general corporate purposes, and one for the spin-off.

Charter Communications (CHTR), GFL Environmental, Virgin Media, The GEO Group (GEO), and Gaming and Leisure Properties (GLPI) issued dollar-denominated junk bonds for refinancing purposes.

Micron Technology (MU) issued dollar-denominated junk bonds for general corporate purposes. Meanwhile, Pinnacle Entertainment (PNK) issued dollar-denominated junk bonds for spin-off purposes.

In the next part, we’ll analyze deals priced last week and pricing trends.


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