Market Sees Slowest Issuance Pace Since 2002
August 21, 2008
As summer nears its end and market participants look to fall with hope (if not conviction) that the leveraged finance markets will pick up, here is some sobering news for the year so far:
There have been only $1.7 billion of new high yield debt issues since the end of June, which is the slowest issuance pace since 2002, according to Standard & Poor’s Leveraged Commentary & Data.
High yield issuance is down 47% for the year, falling to $55.2 billion from $103.3 billion a year earlier, meaning that the primary market is running at roughly a 61% deficit from last year, according to S&P's LCD.
Thomson Reuters measures issuance somewhat differently, reporting that the number of U.S. junk debt offerings are down 64%. Investment banks have earned only $490 million in fees on $35 billion in high yield offerings this year, compared to $1.5 billion from $98 billion in issuance last year, according to Thomson Reuters.
Meanwhile, familiar names continue to haunt the pipeline of high yield deals, including the majority of the $3.5 billion of bonds attached to last year’s buyout of Home Depot’s HD Supply arm; $11.3 billion of debt for Canadian telecommunications operator BCE; $4.3 billion for credit-card processor First Data; $4 billion for satellite operator Intelsat Bermuda; $2.3 billion for broadcaster Clear Channel Communications; and $1.8 billion for casino operator Harrah’s Entertainment.
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