High yield continued to pullback Wednesday with yields rising to a six-week high as oil struggled, equities fell for the sixth day in the past eight and the market continues to be flooded with new issue paper. The yield-to-worst/spread on the Bank of America High-Yield Index widened 10bps/6bps on the day to close at 5.89%/+379bps. Issuance continued its recent torrid pace yesterday with six deals pricing for $4.1 billion in proceeds, making it the second busiest issuance day since June. Issuers are rushing to the market to price deals ahead of what’s now almost certainly going to be a rate hike in March. Retail investors turned on the high-yield asset class quickly this week with outflows totaling $2.1 billion through Tuesday’s close. WTI closed at $50.28, down 5.38%. Treasuries headed for their longest losing streak in five years after an ADP report surpassed expectations all but assuring a rate hike for next month, with the yield on the US 10yr Treasury note widening 5bps to 2.56%, a new YTD high. This morning US risk markets are trading in the red again as oil prices fall below $50 as US shale producers continue to add production and a rate hike appears imminent. High yield is opening generically down ¼ – ½ of a point across the board while focus remains on a very busy new issue calendar and investor start to show signs of new issue fatigue.
Although information and analysis contained herein has been obtained from sources Peritus I Asset Management, LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only. Any recommendation made in this report may not be suitable for all investors. As with all investments, investing in high yield corporate bonds and loans and other fixed income, equity, and fund securities involves various risks and uncertainties, as well as the potential for loss. High yield bonds are lower rated bonds and involve a greater degree of risk versus investment grade bonds in return for the higher yield potential. As such, securities rated below investment grade generally entail greater credit, market, issuer, and liquidity risk than investment grade securities. Interest rate risk may also occur when interest rates rise. Past performance is not an indication or guarantee of future results. The index returns and other statistics are provided for purposes of comparison and information, however an investment cannot be made in an index.