Deals and flows analysis in the high yield bond markets
High yield bond issuance surged last week and was recorded at its highest level in 2016. This was due to recent momentum in the primary market after Federal Reserve chair Janet Yellen announced a “cautious approach” toward the rate hike amid slowing global economic growth and plunging oil prices.
According to data from S&P Global Market Intelligence Leveraged Commentary & Data, dollar-denominated, high yield debt amounting to $8.2 billion—the largest amount since November 13, 2015—was issued in the week ended April 1, 2016. In the previous week, high yield issuance stood at $5.8 billion. The number of transactions fell to six last week from eight in the previous week.
Last week brought the total US dollar-denominated issuance of high yield debt to $38.2 billion in 2016 year-to-date (or YTD). This was 60.0% lower compared to the corresponding period of 2015.
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) and ETFs such as the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG).
Majority of deals were for refinancing purposes
Six deals were priced last week. Three were for refinancing purposes, two were for general corporate purposes, and one was for acquisition purposes.
T-Mobile US (TMUS) and Greystar Real Estate Partners issued dollar-denominated junk bonds for general corporate purposes.
Meanwhile, Western Digital (WDC) issued dollar-denominated junk bonds for acquisition purposes.
We’ll analyze deals priced last week and pricing trends in detail in the next article.