High Yield Daily Update

After the Bloomberg Barclays US High Yield Index was up 0.08% yesterday1, high yield bonds are opening weaker today along with equities and oil.  The banter around the OPEC meeting is for an increase in production of 600k bpd.  Even though the US has increased production, the US is struggling here because of the lack of pipelines and transportation to the export terminals.

One high yield bond new-issue priced yesterday and there remains 10 deals for ~$7.5B on the forward calendar.  JP Morgan estimates that the high yield bond new issue supply will only total $265B this year, down from the prior estimate of $315B.  Outflows came back to the high yield bond market yesterday, while inflows continue to come into floating rate loans.

Even though there has been a tremendous amount of inflows into the floating rate loan market so far this year, the percentage of loans trading above par ($100) has declined by 30% since the beginning of May to 45.2%. The percent above par reached a year-to-date high of 80.5% on February 2nd.2

1 Bloomberg Barclays U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt (source Barclays Capital).
2  Jantzen, Nelson, CFA and Peter Acciavatti, “JPM High-Yield and Leverage Loan Morning Intelligence,” J.P. Morgan North American Credit Research, 6/21/18, https://markets.jpmorgan.com.
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