The securitization markets have opened up and there is tremendous demand for the high -
yield debt issued by specialty finance companies.
The securitization markets have opened up and there is tremendous demand for the high -
yield debt issued by specialty finance companies.
Oil prices have fallen more than 15 percent since March 4 to a six - year low of $ 42.3, wiping out $ 7 billion of market value of high -
yield debt issued by energy companies.
«And just one example might be 18 percent of the high -
yield debt issued in the last year is energy.
Not exact matches
Energy companies have made up a good portion of
debt issued in the high
yield market over the past few years.
Perth - based mining contractor Barminco has refinanced its existing
debts through an
issue of high -
yield notes in the United States.
But cross-country differences in equity returns declined to pre-crisis levels while the range of
yields on
debt securities
issued by banks and by non-financial corporations also narrowed, suggesting that there is some integration at least in prices of financial instruments.
debt obligations of the U.S. government that are
issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and / or refund outstanding
debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower
yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions
To fund those programs, the U.S. would need to
issue more
debt which could also send
yields higher.
So while these «fallen angel» bonds have the potential to be intrinsically higher quality than
debt originally
issued at the junk or high -
yield level, undue structural selling pressure from the downgrade can cause them to sell at a discount.
The risk in higher
yielding junk bonds first and foremost is derived from fact that any company paying north of 5 % to
issue debt has a high probability of never paying back the investors who by the
debt.
The fund's index tracks the 100 largest bank loan facilities — floating - rate, high -
yield senior
debt issued by banks to companies.
Over the past five years, the more worrisome government -
issued debt in Europe has made significant progress in managing the normal mechanism of higher - perceived risk equaling higher
yields.
The
issue was the second largest offering of high -
yield debt this year after Stamford, Connecticut — based Frontier Communications» $ 3.2 billion note sale in March.
Are gold and silver purchases more sensible than investing in overpriced paper
debts that guarantee a negative
yield in a devaluing currency
issued by a dodgy government or central bank?
Greece is the rare sovereign that
issues sovereign
debt at a higher
yield than some Greek corporates.
The new
issue yields 4.65 % versus some recently
issued corporate
debt with a 3.1 %
yield.
When investor preferences are risk - seeking, overly loose monetary policy can have a disastrous effect by promoting reckless speculation and enhancing the ability of low - quality borrowers to
issue debt to
yield - starved investors.
HYHG tracks an index that goes long on recently
issued, high -
yield USD
debt from US and Canadian issuers, while shorting a duration - matched combination of 2 -, 5 - and 10 - year US Treasurys.
The chart below shows the volume of proceeds and number of new
issues of global high
yield debt in recent quarters (source: Thomson Reuters).
Floating rate bank loans are loans
issued by below investment grade companies for short term funding purposes with higher
yield than short - term
debt and involve risk.
For the first time ever, Germany's 10 - year government bond
yield recently fell below zero, joining negative government
debt issued by Japan, Switzerland and other countries.
BofA Merrill US High
Yield Index: Tracks the performance of U.S. dollar denominated below investment grade corporate
debt publicly
issued in the U.S. domestic market.
So you have $ WFC - L preferreds, rated BBB, offering a
yield of 6.15 %, and then you have $ KSU - preferreds, with no rating,
issued by a company whose senior
debt is rated BBB -, offering a
yield of 3.45 %, 260 bps lower — in the same market, on the same exchange.
Reflexively, these worries are causing them to come to true — as pessimism increases,
yields on Spanish bonds increase, and Spain will have to pay higher rates on new
debt issued.
Borrowers
issued the fewest bonds in Australia in almost three years last quarter as Europe's budget crisis roiled markets, driving up
yield premiums, while the nation's banks used record term deposits to cut
debt offerings.
The cause is always speculative distortion that was well - known for quite some time: elevated valuations, often accompanied by speculation and new
issues of low - quality stocks representing some «new economy» theme, or
yield - seeking speculation and heavy issuance of low quality
debt.
Essentially, the new rental income generated by the properties bought with new
debt or
issued shares isn't high enough (due to low cash
yields on new properties) to offset the greater share count, which raises the cost of the dividend.
The past several years have featured little more than a gigantic asset swap, the short description being that massive volumes of government
debt have been swapped by central banks for massive volumes of idle bank reserves, while massive volumes of low -
yielding, covenant - lite
debt have been
issued into the hands of
yield - seeking investors, in order to retire massive volumes of corporate equities at elevated valuations through buybacks.
Since 2012, there has been USD 1.3 trillion [2] of U.S. high -
yield corporate
debt issued — more than the total amount
issued in the prior 10 - year period (2002 - 2011).
Yields are also higher for the S&P U.S.
Issued High
Yield Corporate Bond Index than for the S&P / LSTA Leveraged Loan 100 Index (6.5 % versus 5.05 %, respectively), implying that market participants are willing to hold bank loans for less of an interest return than high - yield corporate
Yield Corporate Bond Index than for the S&P / LSTA Leveraged Loan 100 Index (6.5 % versus 5.05 %, respectively), implying that market participants are willing to hold bank loans for less of an interest return than high -
yield corporate
yield corporate
debt.
It'll have an easier time rolling its
debt to newer, higher
yielding issues.
The company
issued junk
debt earlier this year at 5.35 %,
issues which still
yield more than 300 basis points more than comparable U.S. Treasuries.
The Fund may engage in active and frequent trading of portfolio securities to achieve its investment objective... the Fund will invest in a portfolio of securities including: equities,
debt, warrants, distressed, high -
yield, convertible, preferred, when -
issued... options, total return swaps, credit default swaps, credit default indexes, currency forwards, and futures... ETFs, ETNs and commodities.»
As a result, when corporations
issue bonds, they must offer higher
yields to entice investors to shoulder the risk of unsecured
debt.
Investors move towards the safety of U.S. Treasury creating additional demand and lower
yields will not have an impact on newly
issued debt as there are no auctions scheduled for this week.
Companies are
issuing various maturities of
debt at a frenzied pace to an investor base that demands as much
yield as it can get.
Higher
yields: Most of the
debt issued under this category is below investment - grade, thus the securities have higher than comparable investment grade instruments.
The U.S. Treasury
yield curve includes the three - month, two - year, five - year and 30 - year
issued U.S. Treasury
debt.
The returns and
yields on government
issued debt instruments experienced a hike although the benchmark 5 - year government
yield fell by 115 basis points.
High
Yield Bonds ETFs offer investors exposure to
debt issued by below investment grade corporations.
Thus understood, the «bubble» in high
yield energy
debt was not created by the simple
issuing of
debt by oil companies.
Over the past five years, the more worrisome government -
issued debt in Europe has made significant progress in managing the normal mechanism of higher - perceived risk equaling higher
yields.
Consider the following so - called «normal»
yield shape: U.S. treasury bills - or «T - bills» - are a form of
debt issued by the U.S. government.
Recently though, the 10 - year note
yield for many of these countries has risen above their historical average cost of
issuing debt.
If company ABC (Rating: AAA) wanted to
issue bonds at 5.00 % their competitor XYZ (Rating: AA) would have to pay a higher
yield to attract the equivalent investment because of the perceived lesser quality of their
debt.
Both markets experienced plenty of new issuance as investment grade names such as Anadarko Petroleum, Goldman Sachs and Oracle, along with the high
yield names of Ithaca Energy, Jaguar and RJS Power all
issued debt last week.
After all, the public frequently
issues bonds to fund transportation and energy infrastructure which may
yield substantial benefits that make the
debt worthwhile.
As far as the government is concerned, there is also the problem of demand for the (existing)
debt at such low
yields and that more new
debt can't be
issued at higher
yields without increasing the cost of servicing that
debt.
U.S. Dollar Falls to 15 Month Low against Basket of Major Currencies The U.S. Dollar fell to a 15 month low against a basket of currencies on Tuesday as concerns about
debt issues in Dubai subsided, leading to increased demand for higher
yielding currencies.