Loans and High Yield

Rising oil prices, strong corporate performance and a supply shortage have driven US high yield bond spreads to their tightest level since the financial crisis. After several cycles of tightening and widening this year, some investors think that this time there is still more room for the rally to run.

October’s deal pipeline in the European leveraged debt markets is increasingly looking like a mismatch between supply and demand.

Fortune Choice is tapping the offshore loan market for a HK$5.2bn ($664m) fundraising to support the development of a residential building in Hong Kong.

Nep Group, a US producer of broadcast programmes, gave price talk below 400bp for all first lien loans in the financing for its buyout by Carlyle, a further sign that margins have tightened in the leveraged loan market.

Dartington Hall Trust, a charity and social enterprise in Devon in the UK, is looking to attract bondholders for a secured deal open to retail investors. It has eschewed the London Stock Exchange’s order book for retail bonds (ORB) to use NEX instead.

A number of Chinese issuers have revealed their offshore bond plans just ahead of a week-long holiday in the Mainland, as the sovereign too plots its return.

Warner Music and Playtech announced new bond offerings with a combined €730m volume on Monday, less than the latest weekly inflows for high yield retail funds. But Bilfinger pulled its deal.

Abengoa, the Spanish renewable energy group, is seeking to convince its investors to engage in yet another rescue plan, which includes debt swaps with no cash coupons and new convertible bonds.

Progress was announced this week on two drives to assess the risk of climate change to businesses. The Task Force on Climate-related Financial Disclosures (TCFD) now has 513 supporters; and Moody’s has updated its environmental risk heat map, showing that 11 sectors with $2.2tr of debt have elevated risk.

Among the host of sustainable finance-related announcements this week to coincide with the UN General Assembly session in New York, one of the most potentially significant is from the Impact Management Project.

A weak term that was built into the bonds backing Blackstone’s leveraged buyout of Refinitiv last week has also been included in a $1.625bn high yield bond being marketed this week for KKR’s buyout of Envision Healthcare.

A stream of low-rated US borrowers in euros could continue to flow this year, said market participants, consolidating these reverse Yankees as the second largest sector for euro high yield bonds.