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High Yield Bond Prices Sink in Trading to Lowest Point Since July

The average bid of LCD’s flow-name high-yield bonds fell 27 bps in today’s reading, to 98.06% of par, yielding 7.15%, from 98.33, also yielding 7.15%, on Nov. 1. Within the 15-bond sample, there were 10 decliners, three gainers, and two unchanged constituents.

This is the fourth consecutive drop for the average bid, which is read twice each week, and it follows Tuesday’s dramatic plunge of 204 bps, which put the sample below par for the first time since Sept. 27. The current reading is the sample’s lowest level since 97.10 on July 7.

The biggest decliner was NRG Energy 6.625% notes due 2027, which fell three points, to 91.25. Frontier Communications, MGM Resorts, Sprint Corp., Dish Network, and Charter Communications were all down a point or more since Tuesday.

The Valeant Pharmaceuticals International 5.875% notes due 2023 jumped 3.75 points, to 81, in today’s reading, topping the short list of gainers, as investors were pacified by the company’s plans to sell its stomach-drug business for a hefty $10 billion. In Tuesday’s reading, the notes were the largest decliner following reports that its ex-CFO and ex-CEO are the focus of a criminal probe. The Community Health Systems 6.875% notes due 2022 also posted a hefty gain of 2.25 points, to 75.75.

Today’s result puts the average down 349 bps from two weeks ago and 319 bps from four weeks ago.

The average yield to worst was unchanged at 7.15% in today’s reading. The average option-adjusted spread to worst rose 11 bps, to T+564. The average yield and spread remain wider when compared to high-yield’s broader market averages. The S&P Dow Jones U.S. Issued High Yield Corporate Bond Index closed on Wednesday, Nov. 2 with a yield to worst of 6.21% and an option-adjusted spread to worst of T+504.

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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