High yield bond issuance in the U.S. totaled $6.75 billion this week, which was interrupted by a widely populated leveraged finance conference courtesy J.P. Morgan. With the recent activity, year-to-date high yield issuance totals $53 billion, more than 20% ahead of volume seen at this point in 2014.
Interestingly, much of the week’s activity is via a sector that brought the high yield market to a halt during the fourth quarter.
Energy and energy servicer names, including Comstock Resources, Sabine Pass Liquefaction, and MarkWest Energy Partners, are approaching the market as issuers take note of a drop in Treasury yields this week and more than a month of strong inflows of retail investor cash into U.S high yield funds, according to LCD’s Joy Ferguson.
Indeed, U.S. high yield bond funds saw another $1.1 billion net inflow of retail investor cash during the week, the fifth straight period of at least $1 billion in inflows.
That healthier tone is evident in yields, which have slipped to 5.75% as of yesterday from 5.94% a week ago, according to the S&P U.S. Issued High Yield Corporate Bond Index (SPUSCHY). Those numbers are a yield-to-worst.
As for deals, Cheniere Energy Partners, via issuer entity Sabine Pass, made the biggest splash this week with an offering originally planned for $1 billion, but which was doubled in size due to a market that was especially accommodating to the issue’s near-investment grade rating of BB+/Baa3, as well as the deal’s hi grade-style par call three months prior to maturity, according to LCD’s Matt Fuller.
For more high yield bond news and analysis check out www.highyieldbond.com, LCD's free website promoting the asset class.
