High yield moved lower for the sixth consecutive session yesterday pushing yields north of 6% for the first time in over two-months as oil continued to struggle and new issue paper continued to flood the market. The yield-to-worst/spread on the Bank of America High-Yield Index widened 13bps/9bps on the day to close at 6.02%/+388bps, off 45bps/31bps in just the past six trading days. The primary market was hammered with new issue paper for the third consecutive day as eight more deals for $6.65 billion priced, making it the busiest day for issuance since March 2015, as issuers continued to rush to market ahead of the Fed’s decision next week. Investors soured on the high-yield market last week as a Fed hike became near certainty, with retail funds reporting the largest outflow from the asset class since early November totaling $2.1 billion. Oil closed at its lowest level since November at $49.28, down from an 18-month high in just 10 trading days. Treasuries continued to lose ground extending their longest losing streak in five years as the yield on the 10yr Treasury note continued to edge higher closing at 2.61% this morning. US futures are bouncing a touch after what has been a tumultuous week with equity and oil futures pushing higher in early trading. The high-yield market is opening flat, taking a pause from the recent sell-off as investors survey the new landscape after the six-day slide. The forward calendar looks fairly quiet to start the day.
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.