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Bond Prices Drop To Lowest Level In 2014

The average bid of high-yield flow-name bonds fell 46 bps in today’s reading, to 103.02% of par, yielding 6.18%, which is the lowest level recorded in 2014 and compares to 103.48 for a yield of 6.07%, on Sept. 18, according to LCD.

Gainers slightly outpaced decliners by eight to six, but two of the decliners dropped more than three points each to account for the overall decline this week. One constituent of the 15-bond sample was unchanged.

This is a return to the red after a single positive reading. Prior to that, LCD recorded a three-week slide, wherein the average slumped to 103.19 on Sept. 16, from 105.58 on Aug. 20.

Recall measurements were taken once a week during the unofficial market break in late August. That said, the average is now down 120 bps dating back two weeks and off 205 bps dating back four weeks.

The average is now down 401 bps from the 2014 peak of 107.03 on Feb. 27, and has broken through the 2014 trough of 103.08 on Aug 5. As for the year-to-date observation, the average is up 126 bps, versus a decline of 463 bps during all of 2013.

The average fell 390 bps in July – technically to 103.08 on Aug. 5 from 106.98 on June 24 – before rebounding by 250 bps to 105.58 on Aug. 20. Today’s reading put the average down 256 bps from that recent peak, wiping out the August's froth.

The fresh decline after last week’s attempt at a rebound comes amid geopolitical concerns, negative economic data overseas, and global financial market weakness. Deteriorating valuation stands out amid signs of fresh cash inflows to the asset class. Traders note large gaps in trading without deal-desks supporting the market.

With the drop in price today, the average yield to worst gained 11 bps, to 6.18%, but the average option-adjusted spread to worst widened 19 bps, to T+471.

The average bid of high-yield flow-name bonds fell 46 bps in today’s reading, to 103.02% of par, yielding 6.18%, which is the lowest level recorded in 2014 and compares to 103.48 for a yield of 6.07%, on Sept. 18, according to LCD.

Gainers slightly outpaced decliners by eight to six, but two of the decliners dropped more than three points each to account for the overall decline this week. One constituent of the 15-bond sample was unchanged.

This is a return to the red after a single positive reading. Prior to that, LCD recorded a three-week slide, wherein the average slumped to 103.19 on Sept. 16, from 105.58 on Aug. 20.

Recall measurements were taken once a week during the unofficial market break in late August. That said, the average is now down 120 bps dating back two weeks and off 205 bps dating back four weeks.

The average is now down 401 bps from the 2014 peak of 107.03 on Feb. 27, and has broken through the 2014 trough of 103.08 on Aug 5. As for the year-to-date observation, the average is up 126 bps, versus a decline of 463 bps during all of 2013.

The average fell 390 bps in July – technically to 103.08 on Aug. 5 from 106.98 on June 24 – before rebounding by 250 bps to 105.58 on Aug. 20. Today’s reading put the average down 256 bps from that recent peak, wiping out the August's froth.

The fresh decline after last week’s attempt at a rebound comes amid geopolitical concerns, negative economic data overseas, and global financial market weakness. Deteriorating valuation stands out amid signs of fresh cash inflows to the asset class. Traders note large gaps in trading without deal-desks supporting the market.

With the drop in price today, the average yield to worst gained 11 bps, to 6.18%, but the average option-adjusted spread to worst widened 19 bps, to T+471.

Follow Matthew on Twitter @mfuller2009 for leveraged debt deal-flow, fund-flow, trading news, and more.

The data:

  • Bids fall: The average bid of the 15 flow names fell 46 bps, to 103.02.
  • Yields rise: The average yield to worst increased 11 bps, to 6.18%.
  • Spreads widen: The average spread to U.S. Treasuries tightened by 19 bps, to T+471.
  • Gainers: The largest of the 8 gainers were Sprint Corp. 7.875% notes due 2023, which added three quarters of a point, to 108, and Dish Network 5.875% notes due 2022, which gained half of a point, to 103.75.
  • Decliners: The largest of the six decliners were Alpha Natural Resources 6.25 notes due 2021, which shed 5.5 points, to 61.50, and Samson Investment 9.75% notes due 2020, which fell 3.125 points to 94.375.
  • Unchanged: Reynolds Group 5.75% notes due 2020 were unchanged.
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