uploads///Junk Bond Yields in  and

Albertsons and Teck Resources Issued Most Junk Bonds Last Week

By

Jun. 2 2016, Published 3:04 p.m. ET

Pricing trends

Issuance in the high-yield primary market increased significantly ahead of Memorial Day weekend on firm Market conditions. The deal flow increased to 17 deals in the week ended May 27, 2016, from nine deals in the previous week.

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

Article continues below advertisement

Issuance by Albertsons Companies

Albertsons Companies is an American grocery company. It issued junk bonds worth $1.3 billion on May 25, 2016. The senior notes were rated B3/B+ and carried a coupon of 6.6%. The bonds will mature on June 15, 2024. They were issued at 100% of the aggregate principal amount at a yield to worst of 6.6%. The company intends to use the proceeds of the loan for refinancing purposes.

Issuance by Teck Resources

Teck Resources (TCK) is a mining and mineral development company headquartered in Vancouver, Canada. It issued B1/BB- rated junk bonds worth $1.3 billion on May 26, 2016. The two-tranche issue consisted of the following:

  • $650 million in 8.0% senior notes due on June 1, 2021 – The notes were issued at 100% of the aggregate principal amount at a yield to worst of 8.0%.
  • $600 million in 8.5% senior notes due on June 1, 2024 – The notes were issued at 100% of the aggregate principal amount at a yield to worst of 8.5%.

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

Article continues below advertisement

Issuance by Hertz Equipment Rental

Hertz Equipment Rental, a wholly owned subsidiary of Hertz Global Holdings (HTZ), issued B1/B+ rated junk bonds worth $1.2 billion on May 26, 2016. The two-tranche issue consisted of the following:

  • $610 million in 7.5% senior secured second-lien notes due on June 1, 2022 – The notes were issued at 100% of the aggregate principal amount at a yield to worst of 7.5%.
  • $625 million in 7.8% senior secured second-lien notes due on June 1, 2024 – The notes were issued at 100% of the aggregate principal amount at a yield to worst of 7.8%.

The company intends to use the proceeds of the loan for its spin-off from Hertz Global Holdings (HTZ). It will be renamed Herc Rentals upon separation.

Issuance by TransDigm Group

TransDigm Group (TDG) designs, produces, and supplies engineered aircraft components, systems, and subsystems for commercial and military aircraft. It issued junk bonds worth $950 million on May 25, 2016. The senior subordinated notes were rated B3/CCC+ and carried a coupon of 6.4%. The bonds will mature on June 15, 2026. They were issued at 100% of the aggregate principal amount at a yield to worst of 6.4%.

The company intends to use the proceeds of the loan for its acquisition of the stock of ILC Holdings, the parent company of Data Device, and for general corporate purposes, including potential future acquisitions or dividends.

In the next part, we’ll look at high-yield bond fund flows and yield movement of bond funds.

Advertisement

More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.