News Digest: Are high-yield bonds back in favor?

November 7, 2022

News Digest:

Amidst early signs of inflation cooling off, US Treasury yields tumbled last week causing risk appetite to surge. At least two cash-strapped corporate borrowers slipped through the high-yield new issue pipeline in the second week of November, placing deals ahead of the announcement around the consumer price index that came a day later.

Yahoo Finance reports this resurgent risk appetite lifted Ball Corp’s new 6.875% 5.5-year senior notes to highs of 101.5, after oscillating on either side of the par pricing. S&P Global Ratings deemed the BB+ / Ba1 deal to be neutral to the company’s leverage amidst concerns about the free cash flow over the final months of 2022.

 

Takeaway:

The company narrowly missed Wall Street earnings expectations with its Q3 numbers, which it attributed to a 20% drop in revenue on an unfavorable currency impact, higher costs and lower-than-expected demand for aluminum packaging. What was interesting though is Ball Corp bonds fell 1.625 points after the report, but recouped half of it in subsequent sessions.