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Who Issued the Most Junk Bonds in the Week Ended May 20?

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Pricing trends

Issuance in the high yield primary market gained traction due to an improved market environment. Junk bond issuance rose last week compared to the previous week.

However, the deal flow fell from 11 deals priced in the previous week to nine priced in the week ended May 20, 2016.

Funds such as the PIMCO High Yield Fund Class A (PHDAX) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) invest in junk bonds.

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Issuance by NXP Funding

NXP Funding, a wholly owned subsidiary of NXP Semiconductors (NXPI), issued Ba2/BB+ rated junk bonds worth $1.8 billion on May 18, 2016. The two-tranche issue consisted of:

  • $850 million in 4.1% senior add-on notes due on June 1, 2021. The notes were issued at 100% of the aggregate principal amount at a yield to worst (or YTW) of 4.1%.
  • $900 million in 4.6% senior notes due on June 1, 2023. The notes were issued at 100% of the aggregate principal amount at a YTW of 4.6%.

The company intends to use the proceeds of the loan for refinancing purposes.

Issuance by Aramark

Aramark (ARMK) provides food service, facilities, and uniform services to hospitals, universities, school districts, and stadiums. It issued B2/BB- rated junk bonds worth $1.0 billion on May 16, 2016. The two-tranche issue consisted of:

  • $500 million in 5.1% senior add-on notes due on January 15, 2024. The notes were issued at 103.8% of the aggregate principal amount at a YTW of 4.4%.
  • $500 million in 4.8% senior notes due on June 1, 2026. The notes were issued at 100% of the aggregate principal amount at a YTW of 4.8%.

The company intends to use the proceeds of the loan for refinancing purposes.

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Issuance by AerCap Ireland Capital

AerCap Ireland Capital, a subsidiary of AerCap Holdings (AER), issued junk bonds worth $1.0 billion on May 17, 2016. The senior notes were rated Ba1/BBB- and carried a coupon of 4.0%.

The bonds will mature on February 1, 2022, and were issued at 99.8% of the aggregate principal amount at a YTW of 4.0%. The company intends to use the proceeds of the loan for general corporate purposes.

Issuance by VEREIT

VEREIT (VER) is a full-service real estate operating company with investment management capability. It issued Ba1/BB+ rated junk bonds worth $1.0 billion on May 18, 2016. The two-tranche issue consisted of:

  • $400 million in 4.1% senior notes due on June 1, 2021. The notes were issued at 100% of the aggregate principal amount at a YTW of 4.1%.
  • $600 million in 4.9% senior notes due on June 1, 2026. The notes were issued at 100% of the aggregate principal amount at a YTW of 4.9%.

The company intends to use the proceeds of the loan for refinancing purposes.

In the next article, we’ll look at high yield bond fund flows and the yield movements of bond funds.

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