High Yield Bond Issuance Rose Again in Week Ended August 14
CLO deals volume rises
The volume of collateralized loan obligation, or CLO, deals rose last week. Three CLO deals worth $1.8 billion came through in the week ended August 14. That’s more than the deals worth $924 million in the previous week. Year-to-date, CLO deals worth $69.7 billion have been struck through 130 deals, according to S&P Capital IQ’s Leveraged Commentary and Data.
Leveraged loan funds see outflows
According to data from Lipper, leveraged loan funds saw outflows for the week ended August 14, making it the third such week in the last six. Outflows totaled $745 million—the most since the week ended December 31, 2014. In the previous week, net outflows totaled $594 million. With last week’s outflows, the year-to-date outflows from leveraged loan funds stand at $6.3 billion.
Senior loans are tracked by the Invesco PowerShares Senior Loan Portfolio (BKLN) and the Highland/iBoxx Senior Loan ETF (SNLN). Loans related to Avago Technologies (AVGO), PetSmart (PETM), and DaVita HealthCare Partners (DVA) are among BKLN’s top holdings.
In comparison, high yield bond (JNK) (HYG) funds recorded outflows of $1.2 billion, while equity (SPY) funds recorded inflows of $936 million, respectively, last week. Equity funds witnessed outflows of $3.6 billion in the previous week.
The primary market issuance in the leveraged loan space fell last week. Property services firm DTZ Holdings issued the greatest volume of leveraged loans in the week ended August 14. Owens-Brockway Glass Container, an indirect subsidiary of Owens-Illinois (OI), Hudson’s Bay Company (HBAYF), ServiceMaster Company, a subsidiary of ServiceMaster Global Holdings (SERV), and AMAG Pharmaceuticals (AMAG), were among the other issuers of considerable leveraged loans. You can read more about the primary market activity in leveraged loans in Part 5 of this series.
Returns on leveraged loans
Returns on leveraged loans fell in the week ended August 14. The S&P/LSTA U.S. Leveraged Loan 100 Index fell 0.3% from a week ago. The index is up by 0.8% year-to-date. Meanwhile, the PowerShares Senior Loan Portfolio (BKLN), which provides exposure to senior loans, fell 0.3% week-over-week. Year-to-date, the ETF has returned -0.6%.
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