CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were $1.7 billion and year to date flows stand at $10.0 billion.  New issuance for the week was $6.5 billion and year to date HY is at $113.2 billion, which is +19% over the same period last year.

(Bloomberg)  High Yield Market Highlights

• Junk bonds look susceptible to weakness in stock futures and oil, following gains in the prior session amid fund inflows.
• Junk yields dropped, spreads tightened across ratings yesterday amid equity and oil strength
• Lipper’s reported inflow into U.S. high yield funds was the biggest in 10 weeks
• Investors demanding appropriate risk premium was evident in pricing of US Renal Care‘s CCC-tranche
• Priced at the wide end of talk to get investors on board and changed issuer-friendly covenants to protect investors
• Junk bond returns YTD stood at 8.89%
• BBs were at YTD peak of 9.229%
• Single-Bs at 8.986%
• CCCs stood at 7.106%
• Energy returns turned negative for the second straight session, with YTD dropping to 6.089%
• Loans were at 5.698%

(Reuters)  Trump blames Iran for tanker attacks, stoking fears of confrontation

• S. President Donald Trump blamed Iran on Friday for attacks on two oil tankers at the entrance to the Gulf despite Tehran’s denials, stoking fears of a confrontation in the vital oil shipping route.
• Iran has dismissed earlier U.S. charges that it was behind Thursday’s attacks that crippled two tankers and has previously threatened to block the Strait of Hormuz, through which a fifth of globally consumed oil passes, if its oil exports were halted.
• Thursday’s blasts followed a similar attacks a month earlier on four tankers, which Washington also blamed on Tehran.

(Bloomberg)  Dish, Charter and Altice Eye T-Mobile and Sprint Assets

• Dish Network Corp., Charter Communications Inc. and Altice USA Inc. are among bidders for assets T-Mobile US Inc. plans to sell to win regulatory approval for its $26.5 billion takeover of Sprint Corp., according to people familiar with the matter.
• The companies are on a shortlist of bidders favored by the Justice Department, said the people, who asked to not be identified because the matter isn’t public. The antitrust division would be comfortable with cable companies buying the assets because they are better positioned to become viable competitors with their own networks, one of the people said.
• T-Mobile and Sprint have agreed to sell prepaid wireless brand Boost to appease the Federal Communications Commission, which also has to approve the deal. To win over the Justice Department, the companies are also discussing offloading another prepaid brand and enough spectrum to help set up a viable fourth competitor if the deal goes through.
• They are working with a shortlist of potential buyers acceptable to the Justice Department with the aim of having the antitrust enforcer sign off on the winner as part of their approval efforts, the people said.

(Business Wire)  The GEO Group Amends Senior Revolving Credit Facility Extending Maturity to May 2024; Size and Pricing Remain Unchanged

• The GEO Group announced the closing of an extension and amendment to its Senior Revolving Credit Facility. The maturity for the amended Revolver has been extended to May 17, 2024. The borrowing capacity under the amended Revolver will remain at $900 million, and its pricing will remain unchanged currently bearing interest at LIBOR plus 2.25%.
• GEO currently has approximately $492 million in outstanding borrowings along with approximately $62 million set aside for letters of credit under the amended Revolver, leaving approximately $346 million in available borrowing capacity.
• George C. Zoley, GEO’s Chairman of the Board, Chief Executive Officer and Founder, said: “The extension and amendment of our senior revolving credit facility, with consistent terms and unchanged pricing, is indicative of our long-standing ability to access cost-effective capital. Our amended revolver will position our company to continue to pursue quality growth opportunities. We remain optimistic about the strong fundamentals and the increasing demand for our high-quality services across GEO’s diversified business segments.”