CAM High Yield Weekly Insights
(Bloomberg) High Yield Market Highlights
- Urban One Inc. is slated to sell an $825 million seven-year note Friday, which would push issuance this week to about $8 billion. The junk bond primary has been dominated by energy companies, and more deals could emerge with oil prices rallying.
- Energy companies have accounted for more than 60% of the issuance volume this week, fueled by rising oil prices and a drop in energy index yields to below 6% for the first since January 2018, according to data compiled by Bloomberg
- Brent crude topped $55 a barrel, while West Texas Intermediate rose above $51, its highest since February 2020
- The energy index returned 0.39% Thursday, and has gained for 11 straight sessions
- Broader junk bond yields closed at 4.17%, and spreads at +350bps. Spreads were at a new 10-month tights, and yields were just 1bp above the all-time low yield of 4.16%
- Barclays Plc credit strategist Brad Rogoff expects the risk rally to continue as “the probability of increased fiscal support will continue to outweigh any concerns on potentially higher corporate taxes”
(Wall Street Journal) Saudis to Cut Output In Bid to Lift Oil Price
- Saudi Arabia said it would unilaterally cut one million barrels a day of crude production starting next month, a surprise move signaling the kingdom’s worry that a resurgent coronavirus is threatening global economic recovery.
- The announcement Tuesday came after Riyadh agreed earlier in the day with other big producers to keep the group’s collective output flat, after a now-monthly assessment by the Saudi-led OPEC cartel and a group of big producers led by Russia. In that deal, the two groups, collectively called OPEC-plus, agreed to a complex deal to hold production broadly unchanged from current levels.
- Oil prices, which had already risen sharply on news of the OPEC-plus deal, soared on the Saudi announcement. In early-afternoon trading Tuesday, West Texas Intermediate futures, the U.S. benchmark, were up 5.2% a barrel, passing through the $50 mark for the first time since last February.
- Saudi Energy Minister Abdulaziz bin Salman said the unilateral move was made “with the purpose of supporting our economy, the economies of our friends and colleagues, the OPEC-plus countries, for the betterment of the industry.”