Yahoo Finance Junk Bond Issuance Gained Traction: 5 Key Deals
Why Did Junk Bond Issuance Gain Traction amid Declining Oil?
Pricing trends
Last week, five junk bond deals were priced in the primary market. Despite oil price volatility and the falling stock market, junk bond investors gained confidence to take positions in low quality and highly leveraged junk bonds. High-yield issues had strong secondary market performance. The number of issues rose from four in the previous week to five last week.
Mutual funds like the PIMCO High Yield Fund – Class A (PHDAX) and the Fidelity High Income Fund (SPHIX) invest in junk bonds. PHDAX’s holdings include Citigroup (C) and Lloyds Banking Group (LYG). SPHIX holds junk bonds of Tenet Healthcare (THC) and Citigroup.
Deal highlight of the week
Charter Communications (CHTR) is a leading broadband communications company. It’s the fourth-largest cable operator in the US. It issued dollar-denominated junk bonds worth $1.7 billion on February 4. The senior notes were rated B1/BB- and carried a coupon of 5.9%. The bonds will mature on April 1, 2024. The company intends to use the proceeds of the loan for refinancing purposes. It will fund a portion of the incremental cash proceeds to Time Warner Cable (TWC) stockholders.
Issuance by Vizient Manufacturing Solutions
Vizient Manufacturing Solutions provides robotic integration solutions. It issued dollar-denominated junk bonds worth $600 million on February 4. The senior notes were rated Caa1/CCC+ and carried a coupon of 10.4%. The bonds will mature on March 1, 2024. The company intends to use the proceeds of the loan in connection with the acquisition of MedAssets’ (MDAS) Spend and Clinical Resource Management segment, including Sg2, from Pamplona Capital Management.
Issuance by Manitowoc Foodservice
Manitowoc Foodservice is a division of The Manitowoc Company (MTW). It designs, manufactures, and supplies food and beverage equipment for the global foodservice market. It issued dollar-denominated junk bonds worth $425 million on February 5. The senior notes were rated Caa1/B and carried a coupon of 9.5%. The bonds will mature on February 15, 2024. Manitowoc Foodservice intends to use the proceeds of the loan for its spin-off from the parent company.
Issuance by Acadia Healthcare
Acadia Healthcare (ACHC) is a provider of inpatient behavioral healthcare services. It issued dollar-denominated junk bonds worth $390 million on February 4. The senior notes were rated B3/B and carried a coupon of 6.5%. The bonds will mature on March 1, 2024. The company intends to use the proceeds from the offering to fund a portion of the planned acquisition of the Priory Group.
In the next part, we’ll look at high-yield bond fund flows and bond funds’ yield movement.
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