High Yield Daily Update

It is risk off again today with both equities and high yield corporates lower.  There however is not a big flight to quality, as the 10-year Treasury yield and the rest of the yield curve are pretty flat on the day.  We are seeing outflows from the asset class and Lipper will report the extent of these outflows after the close today.  With outflows we are seeing weakness in retail, broadcasting and telecom sectors leading the way lower.

Despite the outflows and a generally weaker high yield market, new-issues continue to print as the demand for yield will not subside despite some short term volatility.  There were two deals that printed yesterday that traded higher in the secondary.  There are still a dozen deals on the forward calendar.  Given outflows and a temporary risk off mentality these issuers might have to pay a fraction higher to attract fresh money.  Several retailers are reporting today, including Kohl’s, Macy’s and Nordstrom which may add volatility to this sector.

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