This week, the high yield mutual funds and exchange traded funds reported a massive inflow of $1.04billion (according to the Lipper data). This puts the total year-to-date inflows at $6.634billion. This swelling interest in the high yield market has helped move yields down to 6.93% (J.P. Morgan High Yield Index).¹

The new issue market was strong this week, with a robust forward calendar remaining.  Among the names that issued bonds were AEP Industries, Gap Stores (crossover from investment grade), Mirabela Nickel, Kennedy-Wilson (an add-on issue), Oppenheimer, Navios, Fufeng, Matalan, Sappi Papier and Penn Virginia.

During the week, the most recent results for the liquidity stress text index, seen by many as an indicator of stress in the U.S. high yield market, were reported.  “The forgiving debt markets are improving liquidity for junk-rated companies, according to an April 1 report from Moody’s Investors Service. Junk-rated companies with the weakest liquidity ratings shrank to 4.4 percent in March from 4.7 percent the month before, Moody’s said. The liquidity-stress index is the lowest since June 2005.” ²

It is obvious the strength in the high yield space continues and the wide open new issue market allows many companies to improve their liquidity positions.

Sources:
¹ Acciavatti, Peter, Tony Linares, Nelson Jantzen, CFA and Alisa Meyers.  “Credit Strategy Weekly Update.”  North American High Yield and Leveraged Loan Research, April 8, 2011.
² Rochelle, Bill and John Pickering.  “Nortel, WaMu, Lehman, Blockbuster, Borders, A&P: Bankruptcy.” Bloomberg news.