This Week in High Yield

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 HY 5.95% 0.22% -0.93% 1.97%
BAML Spread 391 bps 2 bps 17 bps -30 bps
Dow 20,914.62 0.08% 0.61% 6.47%
S&P 500 2,378.25 0.28% 0.73% 6.72%
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.

The Bank of America Merrill Lynch High Yield Index monitors the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.  Index data sourced from Bloomberg. BAML HY represents the index yield for the designated date, while return/change represent the index return for the period ending date. Yield referenced is the yield-to-worst and spread referenced is the spread-to-worst.  Fund flow data according to weekly reporters to Lipper for the week running Thursday to the following Wednesday.
This entry was posted in HY Updates. Bookmark the permalink.

Comments are closed.