Why High Yield Bond Market Issuance Gained Traction Last Week



Deals and flows analysis in high yield bond markets

High yield bond issuance activity gained traction last week on improved Market sentiment. According to data from S&P Capital IQ/LCD, dollar-denominated high yield debt amounting to $6.9 billion was issued in the week ended May 13, 2016. It was the fourth-largest YTD (year-to-date). In the previous week, high yield issuance stood at $3.8 billion. The number of transactions increased to 11 last week from five the previous week.

Last week brought the total US dollar-denominated issuance of high yield debt to $60.8 billion in 2016 YTD. This is lower by 46.0% compared to the corresponding period of 2015.

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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 exchange-traded funds such as the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG).

Purpose of the deals

The following 11 deals priced last week issued junk bonds for refinancing purposes:

  • Cheniere Corpus Christi Holdings, a wholly owned subsidiary of Cheniere Energy (LNG)
  • NRG Energy (NRG)
  • The Goodyear Tire & Rubber Company (GT)
  • Tesoro Logistics (TLLP), a subsidiary of Tesoro (TSO)
  • Griffon (GFF)
  • Performance Food Group (PFGC)
  • Ryerson Holding (RYI)
  • LifePoint Health (LPNT)
  • AES (AES)
  • Penske Automotive Group (PAG)
  • Teleflex (TFX)

In the next part of this series, we’ll look at the deals priced last week and pricing trends in detail.


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