High Yield Daily Update

The high yield bond market is slightly better today following a mixed close on Friday, with the Bloomberg Barclays US Corporate High Yield Index flat on Friday.*  Despite oil prices dropping nearly $6 over the past two weeks, high yield credits in this space are steady.  Russia again seems to be one of the culprits behind the price drop as they pumped more than their quota, but as usual they say they will come back into compliance at next week’s OPEC meeting.

Only one high yield bond new-issue priced on Friday, bringing the month-to-date total for June to six deals for $2.9B in proceeds.  We don’t expect much until after the Fed meeting on Wednesday, where the odds-makers say it is a lock they raise rates again.  Even with this backdrop, we see the 10-year Treasury yield staying below the 3% level, at 2.95% today.

* Bloomberg Barclays U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt (source Barclays Capital).
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