With $850 million of inflow into high-yield in the past few weeks and no new issuance, the market has tightened. This allows for issuers to sell deals with more aggressive structures, said one high-yield banker. From an issuers perspective, you can achieve a better coupon right now. Its not going to get any better than this, he added. MGM Mirages recently issued 6% of 9s had the lowest yield ever issued for a gaming credit, according to a banker at J.P. Morgan, which underwrote the deal.
The forward calendar consists mainly of deals from highly leveraged companies, notably Vanguard Health Holding, rated Caa2 by Moodys Investors Service, and Graham Packaging Company, rated Caa1 by. Despite investor demand for paper, one buyer expressed ambivalence over how the Vanguard deal will go. Its a $700 million deal led by Citigroup, and Im not sure they put triple-Cs out so well, he said, adding $700 million is very larger for a triple-C sale. Joe Christinat, spokesman for Citigroup, did not return calls by press time.