High yield bonds were positive at the start of the day yesterday but faded to a flat level to end the day. Today has opened a touch weaker with technology weighing on the asset class. As we sit here the Dow and S&P are positive, while the tech heavy Nasdaq is getting whacked.
Even with all of the equity volatility and outflows in nine of the last ten weeks from the high yield asset class, new-issues continue to print. Two primary market deals came to market for $1B with four more coming today for ~$4B in proceeds expected.
The high yield market was also stronger qualitatively as the amount of lower rated bonds is declining, with bonds rated B3 and lower by Moody’s dropping to 13%, which is reportedly below the long-term average of 15% for the 6th straight month.
With the 10-year Treasury yield easing to 2.75%, investors in the floating rate loan market have been hitting the exits as outflows have been heavy. Yesterday’s close on the 10-year yield below 2.8% was the first time in 23 trading session that it closed below the 2.8% range.