CAM High Yield Weekly Insights
Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $0.1 billion and year to date flows stand at $48.4 billion. New issuance for the week was $8.7 billion and year to date issuance is at $357.4 billion.
(Bloomberg) High Yield Market Highlights
- Apollo Global Management Inc. and Platinum Equity may sell risky PIK toggle notes Friday to fund dividends to the private equity firms. Fund inflows may have tapered off, but U.S. junk bonds are set to post gains for the fourth straight week, led by the riskiest CCC tier.
- Investors are said to be pushing for changes on a $500m junk bond sale for Platinum Equity’sMulti-Color Corp.
- Lenders are resisting the deal’s call structure, which currently allows the label-maker to buy back the five-year bonds just one year after being sold
- Early pricing discussions for the five-year offering are 12% if interest is paid in cash, and an additional 0.75 percentage point if paid with more debt
- Apollo’s Aspen Insurance Holdings Ltd. is selling $500m of PIK toggle notes. Early pricing discussions for the five-year issue are in the high-7% range
- U.S. corporate high-yield funds saw incoming cash of about $100 million for the week
- Yields rose 3bps to 5.34%, and may retreat again with credit risk falling and equity futures rising this morning
- The index posted a modest loss of 0.005% on Thursday
- CCCs bucked the trend, posting gains of 0.02%, and are on track to be best performing asset class for the week with 0.15% returns
- Three years after saddling PetSmart Inc. with debt to acquire online rival Chewy Inc., a group led by private equity firm BC Partners is splitting them in two
- The group plans to recapitalize PetSmart with $1.3b of equity and $4.65b of debt raised from institutional money managers
- Business development companies are tweaking their credit agreements to allow their borrowers to defer interest payments
- Known as turning the loans into PIK obligations, the change can help borrowers conserve cash in the near term, but boost their debt loads in the process