Header image

US Chart of the Week: Mix of HY bond issuance shifts as 2Q20 volume surpasses 1Q20 total

US Chart of the Week: 29th May 2020

US high yield bond issuance has already surpassed the USD 76bn recorded in the first quarter of 2020, with roughly USD 79bn issued since the markets reopened in April. While the market was largely shut down by the coronavirus (COVID-19) pandemic in March, April saw cash-strapped companies pile into the market as USD 41bn of deals priced. The trend has continued throughout May, which has seen more than USD 38bn to date and will likely surpass April issuance by month-end. The influx of companies seeking liquidity in the wake of the pandemic has in turn shifted the focus of the market.

In the first quarter of 2020, roughly 15% of high yield bonds were issued for general corporate purposes (GCP), a figure that has ballooned to 58% since April as many companies have turned to the bond market to address capital needs in the uncertain economic climate. M&A and buyout activity has remained muted, falling to 3% of issuance in 2Q20 from 11% in the first quarter. Refinancing activity has dropped sharply to USD 9.9bn from USD 32.7bn, while the portion allocated to debt repayment has moved higher. Addressing existing debt has remained a significant theme in the overall market, however. The average tenor of new issuance has also fallen to 73 months from 89 during this time as lenders seek to limit long-term exposure to the most at-risk borrowers.

Many issuers tapping the HY market for liquidity operate in industries hit hardest by the COVID-19 outbreak. Notable GCP deals include Uber Technologies’ unsecured bond and subsequent add-on issued to fund GCP and working capital at a 7.5% coupon, Boyd Gaming’s unsecured notes paying 8.625%, Live  Nation’s 6.5% secured bond, and Good Year’s 9.5% guaranteed paper.

by Vincent Daigger

Debtwire Product Trial

Get these unique insights and more with Debtwire

Debtwire gives fixed income professionals an edge in leveraged finance, distressed debt and direct lending.

Request Trial

Debtwire Events
Debtwire transformed the market and quickly became the leading provider of expert news, data and analysis on global leveraged credit. With global breadth and local depth, our end-to-end coverage goes behind the scenes from primary issuance to the first sign of stress through restructuring and beyond. Subscribers trust Debtwire – the pioneer in the industry – for comprehensive coverage across geographies, companies and asset classes. Backed by Debtwire’s team of experts and award-winning content, our events offer attendees an unrivaled perspective.