Deals, flow analysis in the high yield bond market
High yield bond issuance activity gained traction last week due to a favorable market environment. According to data from S&P Capital IQ Leveraged Commentary & Data, dollar-denominated high yield debt amounting to $8.2 billion was issued in the week ended May 20, 2016. This was the fourth-largest issuance year-to-date (or YTD).
In the previous week, high yield issuance stood at $6.9 billion. The number of transactions fell to nine last week from 11 in the previous week.
Last week brought the total US dollar-denominated issuance of high yield debt to $66.2 billion YTD in 2016. This was 43.0% lower than in the corresponding period in 2015.
Mutual funds such as the PIMCO High Yield Fund Class A (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds. High yield debt is tracked by ETFs such as the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).
Purposes of the deals
Nine deals were priced last week. Seven were priced for refinancing purposes, one was priced for acquisition purposes, and one was priced for corporate purposes.
Universal Health Services (UHS), Tempur Sealy International (TPX), Vivint/APX Group, VEREIT (VER), Sirius XMRadio, Aramark (ARMK), and NXP Funding—a wholly owned subsidiary of NXP Semiconductors (NXPI)—issued junk bonds for refinancing purposes.
We’ll analyze deals priced last week and detailed pricing trends in the next article.