Overview: Corporate debt—have high yield investors had enough? (Part 3 of 8)
Deals and flows in the high-yield (SJNK) bond market last week
Both new issue volumes and the number of deals dropped in the U.S. high-yield (HYG) primary market for the week ending June 20. New issue volumes came in at $5.9 billion, over 11 deals (Source: S&P Capital IQ/LCD). Although U.S. new issue volumes were down by almost half compared to the week ending June 13, primary market conditions continued to favor high-yield (JNK) issuers, as yields dropped to record lows.
Who were the major issuers last week?
Major issuers last week, included West Corp. and SBA Communications (SBAC). West Corp. privately placed $1 billion in 5.375% senior notes at par. The B3 and B+ rated notes will mature in 2022. The company plans to use the proceeds for refinancing existing debt.
SBA Communications (SBAC) issued $750 million in 4.875% senior notes at a price of 99.18% of face value. The discount notes were rated B3 and B and will mature in 2022. Part of the proceeds will be used for refinancing existing debt and part of it will be used for general corporate purposes. SBA Communications (SBAC) is an owner and operator of wireless communications infrastructure in the Americas. The company is part of the Invesco PowerShares QQQ ETF (QQQ), which includes investments in some of the largest domestic and international companies listed on the NASDAQ.
Other deals included Payment-In-Kind (or PIK) bonds issued by All Aboard Florida ($405 million) and WaveDivision Holdings ($175 million). PIK issues have the option of not paying a cash coupon, and instead compensating investors by issuing them additional securities.
In the next section, we’ll continue our analysis of last week’s trends in the high-yield debt market including why the yield-to-worst on high-debt debt is at historical lows. Please continue reading the next section in this series.
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