Actionable Ideas for Companies and Sponsors

Lower Rated High Yield Issuances

The high yield market remains resilient despite recent pressure on long-term Treasury yields. In fact, the High Yield Broad Market index remains at all-time lows, yielding 4.3%. The low rate environment has resulted in investors hunting for yield wherever they can find it, which has opened the door for lower rated issuers to come to market and successfully place new issuances. B-rated bonds have dominated the high yield new issue market, recently representing 45.5% of February 2021 issuance, the most for a single month since October 2019. For YTD March 26th, 2021, high yield volume totaled $143.2 billion, representing the largest Q1 total on record. During the same time period, the average yield was 5.4%, 32bps lower than 2020’s record low Q1 average yield.

In January 2021, Jefferies led an upsized offering of eight-year unsecured notes for Truck Hero, a manufacturer and marketer of branded functional accessories for trucks and Jeeps. The $600 million unsecured notes offering was rated CCC/Caa2 and priced at 6.25%. The increased bond proceeds were used to reduce the equity check from an L Catterton-led consortium.