Breaking a pattern of alternating up and down weeks, the number and value of bonds in the distressed subset of the Morningstar US High-Yield Bond Index declined for the second week in a row. For the five trading days ended Nov. 23, the number of issues fell to 160, from 168 in the prior week, while the issuer tally dipped to 119, from 122.
The face value of distressed issues ticked down to $110.13 billion, from $110.79 billion the prior week, and the market value decreased to $64.87 billion, from $66.27 billion.
The weighted average distressed-subset bond price fell to 58.90, from 59.82 in the prior week, and the weighted average yield to worst rose to 25.69%, from 25.31%.
In line with improving market sentiment, the Morningstar US High-Yield Bond Index’s option-adjusted spread narrowed by 20 bps, to 439 bps, from 459 bps the prior week. The distress ratio fell by four basis points, to 7.99%.
Once again, the healthcare and retail sectors took first and second place in the number of bonds contributing to the distressed subset of the Morningstar US High-Yield Bond Index. Healthcare’s representation ticked up to 22% of all distressed bonds, from 21% in the prior week. Retail inched down to 11%, from 12% in the prior week. The media sector, led by the media content subsector, was in third place, with 9% of the subset’s bonds.
Note: As per Morningstar US High-Yield Bond Index methodology bonds must have a minimum of 12 months to final maturity to remain in the index.
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This article originally appeared on PitchBook News