The high-yield selloff picked up momentum this week amid more cash outflows from mutual and exchange traded funds and a free fall in oil prices, now down over 20% year to date, leading to a global rout in equities as China continued to show signs of weakness with its plunging stock market and weakening currency. The yield to worst and spread on the Bank of America High-Yield Index (BAML) widened 52bps and 66bps over the past week to close at 9.43% and +789bps, both new 2016 highs. The Bank of America High-Yield Energy Index spread and yield set new record wides this week closing at 18.26% and +1676bps, surpassing the previous record set back in 2008 during the financial crisis. Year to date the BAML HY index is down 2.79%, still outperforming equities by a large margin with the Dow and S&P 500 Index down 8.16% and 7.93%, respectively.

High-yield exchange traded and mutual fund flows remained negative for the second straight week, and fifth out of the last six weeks, totaling -$2.1 billion for the week ending January 13^th. The total outflow over the past six weeks now totals $11.3 billion as money continues to leave the asset class. The only new issue over the past week was brought by Pinnacle Foods on Wednesday, pricing $350 million of new debt at par to yield 5.875%. This was only the year’s second deal as issuers remain on the sidelines for now waiting for calmer market conditions.

The Bank of America Merrill Lynch High Yield Index monitors the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.  Index data sourced from Bloomberg. BAML HY represents the index yield for the designated date, while return/change represent the index return for the period ending date. Yield referenced is the yield-to-worst and spread referenced is the spread-to-worst.