U.S. CREDIT WEEK AHEAD: Corporate debt holds up amid volatility

Corporate bond sales have held up despite recent market volatility, and high-quality issues are expected to be busy next week with a potential jumbo offer in the works.

May’s volume is currently around two-thirds of the $ 150 billion expected for the month, reported Bloomberg’s Michael Gambale. The coming week appears to be active, but will likely be less than the $ 50 billion needed to match estimates. Meanwhile, high yield credit measures have weakened recently, although sentiment persists bullish on primary markets.

“Credit markets felt softer this week as risky assets generally struggled until Thursday ”, Barclays Plc strategists Bradley Rogoff and Shobhit Gupta wrote in a note on Friday. “This softness could emerge after months of tightening, but in the big scheme, it was very modest, ”they said.

High efficiency

DT Midstream markets a sale of debt and holds investor meetings until May 25. He intends to use the proceeds of his $ 2.1 billion two-part offering to make a payment to DTE Energy. Even though investors withdrew $ 1.7 billion from retail funds during the week ended May 19, according to Refinitiv Lipper, borrowers on Thursday saw most of their transactions come priced at the end of talks with healthy orders.

There are at least 12 leveraged loan commitments due next week, including a $ 1.9 billion term loan Carnival Corp., which seeks to reduce interest payments on leveraged loans it took out in the depths of the pandemic. Investors have an increasingly sunny view of the travel industry as the US economy continues to move forward with reopenings and as more people get vaccinated.

The outlook for the travel industry in parts of Asia is not so optimistic, however. Oyo hotels in India offer one of the the highest margins on leveraged loans in the United States this year. $ 600 million sale underway offered at a spread of 8.5 percentage points from the benchmark London interbank offered rate and at a discount of between 96 cents and 97 cents on the dollar. The company is looking to shore up its finances with cases of Covid-19 in the country decimating travel demand. This places the overall return between 10.3% and 10%, according to Bloomberg’s calculations.

In a situation of over-indebtedness, Sinclair Broadcast Group is in active talks with the creditors of its Diamond Sports unit who have started signing nondisclosure agreements in recent days, Bloomberg reported.

In bankruptcy court, opioid makers Mallinckrodt Plc and Purdue Pharma LP are both scheduled to seek court approval of their disclosure statements on May 26. Purdue said he may need to delay the hearing while she negotiates with creditors.

– With the help of Michael Gambale, Gowri Gurumurthy, Katherine Doherty, Jeremy Hill and Lara Wieczezynski

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