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Sat12162017

Last updateSat, 29 Jul 2017 12am

Back You are here: Home Market Market Update News Significant New Wave of High Yield Issuance Coming

Significant New Wave of High Yield Issuance Coming

“We expect a significant wave of new issuance in late 2016 and 2017, as companies begin to address their upcoming maturities,” said Tiina Siilaberg, a Moody’s senior analyst. “However, a range of macroeconomic factors will make it more difficult for lower-rated companies to tap the debt capital markets in order to refinance their debt obligations.”

Those factors include rising interest rates, the widening of spreads over Treasurys, the slowdown in China and oil-price volatility. At the same time, a stricter set of rules on leveraged lending that caps debt levels will also weigh on lower-rated companies.

A record $947 billion of U.S. high-yield, or “junk,” debt, is scheduled to mature in the next five years, and some issuers may struggle to refinance it, Moody’s Investors Service warned on 2016-02-16.

Of that total, $400 billion is set to come due in 2020, the highest amount of rated debt to mature in a single year in the history of credit markets, Moody’s said in a new report.

Reference:

  1. MarketWatch, Ciara Linnane, 2016-02-16, "Junk-bond Market Facing Record Refinancing Cliff:  Moody's"