News Digest: High-yield bond deals on course to recovery
June 30, 2023
News Digest:
Activity in the high-yield bond market, which had hit rock bottom in 2022 following the rate hikes by the US Federal Reserve, is now looking up. Analysts describe this as good news as this is the segment of the corporate debt market where signs of a credit crunch are seen first.
At this point, the lowest rung of the junk-rated bonds (with CCC ratings) seem to have been locked out of the market. In the April-June quarter, just 1.6% of the $52 billion in high-yield bonds issued carried this rating, as per data from PitchBook, says a published report.
Takeaway:
The average yield of these bonds at this lower end stood at 14% as against just 6.5% during the same period of 2021. Analysts said bonds with better ratings are now coming to the market with issuance growing over the first two quarters, though they remain below the 2019 levels.