Global Junk-Bond Sales Volume Hits Monthly Record, BofA Says
30 3월 2011 - 6:14AM
Dow Jones News
Companies have issued a record $41.2 billion of
speculative-grade debt globally so far this month--surpassing every
other month since at least 1996, according to data from researchers
at Bank of America Merrill Lynch.
The previous monthly record for junk-bond sales was in March
last year with $40.9 billion, followed by September 2010 with $39.2
billion, BofA said. There are still two trading days left this
month, with $1.79 billion of high-yield offerings expected through
Friday.
Fueling the wave of deals this March was a preceding slump in
supply as companies focused on earnings season and subsequently
decided to come back to market, as well as several high-yield
offerings previously being shelved as investors became unnerved by
geopolitical events.
Once concern over the nuclear crisis and natural disasters in
Japan began to ease, and political turmoil in the Middle East
stopped spreading, the window for issuance creaked open again.
"A lot of companies were waiting for some stability," said John
Cokinos, co-head of leveraged finance capital markets in the
Americas at BofA. "Two weeks ago, investors were preoccupied with
world events and increased volatility. It wasn't until last Monday
we saw investors refocus."
The broad sentiment now, Cokinos added, is that while there is
still uncertainty among buyers, recent events won't derail the
credit markets--even sales of low-rated corporate bonds.
Investors pulled $677 million out of mutual funds and
exchange-traded funds focusing on high-yield corporate debt through
the week ended last Wednesday, compared with $471 million of
outflows the week before, said Lipper FMI, a unit of Thomson
Reuters. That followed 14 straight weeks of inflows, when investors
had been clamoring for high-yield bonds because of the premium they
can earn over low-yielding government debt.
Market volatility sent premiums on high-yield bonds to 5.10
percentage points over Treasurys as of March 17, compared with 4.76
percentage points over Treasurys now, according to the Merrill
Lynch High Yield Master II index. Now, companies are back with a
pipeline of offerings, many of which will be used to refinance
existing debt.
"With overall high-yield yields not far above record lows,
issuers are taking advantage and coming to market," said Anthony
Valeri, a fixed-income strategist at LPL Financial in Boston.
Refinancing has been responsible for more than 60% of new issuance,
Valeri added.
Auto parts supplier Visteon Corp. (VC) is planning a $500
million sale of eight-year senior bonds, with pricing expected
later this week. Proceeds will be used to help the company retire a
term loan due in 2017.
Also marketing new high-yield debt sales are CNL Lifestyle
Properties Inc., a real-estate investment trust, and Ferrexpo
Finance PLC, a unit of Swiss iron-ore pellet maker Ferrexpo Plc
(FXPO.LN, FEEXF). Both are inaugural offerings for the issuers.
CNL Lifestyle is planning to sell $400 million of eight-year
senior bonds to qualified investors, with early price guidance in
the area of 7%, according to one investor. Ferrexpo Finance wants
to sell $500 million of five-year bonds.
The largest of this month's $41.2 billion junk-debt sales was a
$3.2 billion offering from Kabel Baden-Wurttemberg GmbH & Co.
KG, followed by a $3 billion sale from Fiat Industrial Finance
Europe SA and a $2.65 billion deal from Intelsat Jackson Holdings
SA, said BofA.
The overall tally excludes emerging-market offerings and issuers
that are split-rated, meaning the ratings agencies don't agree on
whether it should be speculative grade or investment grade.
-By Katy Burne, Dow Jones Newswires; 212-416-3084;
katy.burne@dowjones.com
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