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Why High Yield Bond Market Issuance Gained Traction Last Week

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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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