The U.S. high yield bond market wasted no time getting back to business after a Labor Day break preceded by two weeks without new deal flow.
Indeed, there has been some $12 billion in issuance priced since Monday, the most recorded in a week since May 19, when there was $14 billion of volume, according to LCD’s Matt Fuller. What’s more, this week’s total dwarfs the $3.12 billion seen during all of August.
The quick start to the post-holiday stretch comes amid cautiously improved investor sentiment, marked by three straight weeks of investor cash inflows to the asset class during August (though there was a small, $198 million outflow reported recently).
With this week’s activity the year-to-date issuance in the U.S. is $219.6 billion, compared to $214 billion at this point last year, according to S&P Capital IQ/LCD.
Of note this week:
- BB/Ba3 rated T-Mobile USA placed $3 billion to repay existing debt, back spectrum purchases, and for GCP. The two-part offering priced to yield 6% and 6.375%
- BB-/Ba3 rated Frontier Communications FTR -3.05% completed a $1.55 billion offering backing the acquisition of AT&T T -0.32% wireline assets in Connecticut. The tranches priced to yield 6.25% and 6.875%
- B/B1 rated Linn Energy completed a $1.1 billion offering taking out bridge debt incurred via the acquisition of Devon Energy DVN -0.78% assets. The offerings priced at 6.5%
After a rough stretch for the high yield market – in July and early August institutional investors withdrew $12.6 billion from high yield funds – issuers and leads were looking to get the post-holiday market off on the right foot.
“Underwriters are kicking off September with high-quality, highly liquid names,” writes Fuller. “The banks are lining up their best clients first, and the ones that are easy to place to get the market going,” he adds, quoting a portfolio manager.