High yield bonds are a bit weaker in the secondary market today, along with oil and gold. Yesterday saw a down day led by energy, as another oil glut is feared, and by fears of a rising 10-year Treasury yield continuing. Oil is a big story, the combination of record US production and the rising dollar could potentially cause another glut, something producers have been looking to avoid. The 10-year now sits at 2.9%.
Two new issues for $3.5B in proceeds came to market yesterday, making it the first primary market activity in a week. The forward calendar has four issuers trying to get to market today with another dozen lined up for the rest of the week.
Within the high yield market, we continue to see a solid fundamental backdrop. Moody’s is forecasting the global speculative grade default rate to fall to 1.7% by the end of 2018 from 2.9% in 2017, which we see as another sign of a healthy and improving corporate environment.