Author profile
Luke Coha
Years in the bond markets: 22
Specialist subjects: Corporate credit analysis, U.S. High Yield bonds
Likes: Burgundy, wilderness travel, Marvel Comics, Croatia
Heroes: Thomas Jefferson, Lou Gehrig, Captain Steve Rodgers
“High” Yield yields hit a low
The dramatic rally in US high yield bonds since the end of September saw yields reach lows of 4.6% earlier this month, the US high yield index’s lowest level since 2000. Yields have risen modestly since then but remain very tight: 4.9% at the time of this writing. The US high yield bond spread over risk-free government bonds has narrowed close to its pre-Covid level (see chart below), a tren…
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Is a telecom acquisition spree set to kick off in the U.S.?
Last week, the U.S. Federal Communication Commission (FCC) announced the results of the latest $20 billion, 600Mhz spectrum auction. Communication companies were bidding for spectrum over which they provide wireless services to their customers. The largest bids came from wireless mobile operator, T-Mobile USA, which spent $8 billion, and U.S. satellite TV provider DISH Network, which spent $6….
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The election result impact on US high yield markets and the healthcare sector
As James mentioned this morning the European high yield markets’ response to the Trump election victory has been fairly benign. The U.S. high yield market, as one would expect, has been a bit more pronounced, although not as severe as European equities or S&P futures. The U.S. CDX Index, a CDS index of U.S. high yield issuers much like Europe’s Itraxx Crossover, initially dropped nearly two poi…
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Volatility for U.S. hospital bonds ahead
As the rhetoric of the U.S. presidential race heats up over the summer campaigning months, one topic we are likely to hear much on is health care. Health care in the U.S. is always a highly charged political subject, and now even more so with extra scrutiny on prescription drug prices and continued debates over the Affordable Care Act (ACA) or Obamacare. Obamacare is deeply unpopular with the…
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Beware of the pitfalls in US high yield retailers
The fact that commodity-related sectors, like metals & mining and energy, are the highest-yielding and worst performing sub-sectors this year in the broader high yield Index is no surprise. There is a high degree of distressed credits in these sectors suffering on the back of the current low commodity price environment. S&P recently released its summary of sectors with the highest distressed ra…
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How bond investors should assess the opportunities in the US high yield energy sector
U.S. high yield energy bonds have sold off recently, virtually reversing their Q1/Q2 rally. The main culprit is, again, oil prices. The recent re-re pricing in oil has led to energy bonds trading at levels worse than the last time oil sold-off at the beginning of 2015. In fact, the BAML U.S. high yield energy index this week reached its widest levels (in terms of spreads) since April 2009 at …
Read the articleBanks oiling the wheels with liquidity
An overriding theme for U.S. high yield energy companies in the current oil price environment is having sufficient financial liquidity (cash, bank credit, etc.) to cover their obligations as earnings come under pressure due to low oil prices. Maintaining liquidity until oil prices recover will be paramount for energy companies to survive, even for those names that aren’t especially levered. It …
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