CAM High Yield Weekly Insights
CAM High Yield Market Note
2/22/2019
Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $0.6 billion and year to date flows stand at $10.7 billion. New issuance for the week was $2.1 billion and year to date HY is at $29.1 billion, which is -12% over the same period last year.
(Bloomberg) High Yield Market Highlights
- S. junk bond spreads and yields were resilient amid wavering stocks as oil prices held steady and funds reported more cash inflows. Spreads continued to tighten after falling below 400 basis points for the first time since mid-November and yields were flat to little changed.
- This was the fourth straight week of inflows and the seventh of the last eight weeks
- Junk bond index rose for eighth straight day to new record high
- Return is 5.7% YTD, making it the best fixed income performer
- CCCs turned negative yesterday, have returned 6.03% YTD
- High yield beats IG, which returned 2.44% YTD, and leveraged loans which are up 3.53%
- Supply continued to trickle in, with a drive by offering from USAC
- Size was increased by $250m after receiving orders of more than $2b for a $500m offering
- Priced at lower end of talk
- Several deals have priced this week, all were drive bys, had orders more than 3x size of offering, suggesting risk appetite is strong
- Supply expected to remain light overall as there has been no big acquisitions or buyouts recently and a good part of refinancing has already been done
- S. junk bonds operate against the backdrop of strong technicals as reflected in slow issuance activity, net cash inflows, low default rate, steady corporate earnings