Over the last week, high-yield bond prices stumbled amid huge outflows from retail mutual and exchange traded funds, lackluster stocks and declining oil. Yields reached a YTD high, only to recover into the weekend as US treasuries rallied, oil bottomed, stocks turned and a record stretch of new issue supply subsided after Fed Chair Yellen’s statement helped calm the jittery market. The yield to worst on the Bank of America High-Yield Index (BAML) tightened 6bps over the past week to close at 5.95% while the spread tightened 2bps to close at +391bps on the move in treasuries. WTI closed at $48.78, down 0.6% on the week. The US 10yr note closed at 2.5% vs 2.57% last Friday and compared to a YTD low of 2.31% and high of 2.63%.
|17-Mar Yield/Level||Weekly Return/Change||MTD Return/Change||YTD Return/Change|
|BAML Spread||391 bps||2 bps||17 bps||-30 bps|
|10yr treasury||2.50%||-7 bps||11 bps||6 bps|
Investors withdrew money from high-yield mutual and exchange traded funds at a record pace totaling $5.683 billion for the reporting week ended March 15, the biggest outflow since the week ended August 6, 2014 when the total was $7 billion. This was the third consecutive weekly outflow after last week’s $2.1 billion negative reading, pushing the total exodus to $8 billion over the two week span. The 2017 total outflow now stands at $6.4 billion. High-yield new issuance kept up the strong pace this past week with 15 deals pricing for $7.55 billion in proceeds, making it the fourth busiest week YTD. Issuers remained in a hurry to price deals amid unsteady oil and investor exodus as high-yield enthusiasm waned. March issuance volume to date is $30.65 billion, up 48% from last year while YTD volume of $69.71 billion is up 88% over last year’s pace.