The Corner


Putting the K in June


Companies shoring up cash to survive the global pandemic raised funds in the U.S. high-yield market at the fastest monthly pace ever.

Junk issuers have already sold $46.7 billion of bonds in June, surpassing the prior monthly record of $46.4 billion in September 2013, according to data compiled by Bloomberg. [Tuesday’s] $500 million deal from Navios Logistics pushed the year-to-date volume to $199 billion, up about 66.5% on the same period a year ago, the data show.

Companies have rushed to build cash war chests to see them through the disruption amid the economic slump caused by the pandemic, which triggered a slew of bankruptcies. The Federal Reserve plans to purchase some types of high-yield bonds to boost liquidity spurred by record demand from investors….

Strong demand and low absolute borrowing costs encourage issuers to tap the high-yield market despite challenging economic data and renewed virus flare-ups. Risk sentiment has shifted toward an “optimistic recovery path,” according to Steven Oh, global head of credit and fixed-income at PineBridge Investments, which manages about $100 billion in assets.

From the issuers’ point of view, this makes sense, and it’s easy to understand why investors, desperate for yield in an era of yield-suppression, would pile in, but I wouldn’t lose sight of that nasty little phrase “challenging economic data,” three words in which there is no ‘V’.


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