In addition to liquidity concerns in the credit markets, the rising amounts of debt have become a topic for discussion.
The S&P U.S. Issued Investment Grade Corporate Bond Index has seen its market value actually decline from the beginning of the year’s USD 4.126 trillion to USD 4.077 trillion as of April 30, 2015.
- Although the overall market value of the index has declined by 1.2%, certain issues within the index have increased their weight.
- As of April 30, 2015, Medtronics and 21st Century Fox are both up by 0.4% in weight, while recent issuers of large deals such as Verizon (0.3%), Microsoft (0.26%), and Apple (0.15%) have also added to their weight within the index.
- For April, the index returned -0.73% MTD and 1.36% YTD.
High-yield bonds, as measured by the S&P U.S. Issued High Yield Corporate Bond Index, have increased by 3.4%. The index has gone from its Dec. 31, 2014 value of USd 1.169 trillion to USD1.209 trillion as of April 30, 2015.
- Issues that have been part of the index since the beginning of the year and have increased their weight include names such as Navient (0.41%), GM (0.33%), Scientific Games (0.26%), and Murray Energy (0.23%).
- Household names like Heinz (0.18%), Rite Aid (0.15%), Netflix (0.13%), and Sprint (0.11%) have also increased their weight in the index.
- The index returned 1.13% in April and is at 3.75% YTD.
The S&P/LSTA U.S. Leveraged Loan 100 Index continues to yield approximately 4.75%, as the index returned 0.73% MTD and is at 2.59% YTD. Repricing activity has intensified. PetSmart, which recently agreed to a large loan in March, has returned to the market with lower rates. Additional issues are expected to create loans ahead of any long-term increase in interest rates.
The yield of the U.S. Treasury 10-year as measured by the S&P/BGCantor Current 10 Year U.S. Treasury Bond Index ended the week 20 bps wider, at 2.11%, as yields rose going into the end of April and May 1, 2015 added 7 bps to the total. The index’s rise in yield over the month of April was 11 bps wider, and tightening in the first and third week helped offset some of the increase in month-end yield, which closed at 2.04% on April 30, 2015. For April, the index returned -0.80% MTD, while the YTD is 2.24%.
Exhibit-1: Market Value
Source: S&P Dow Jones Indices LLC. Data as of April 30, 2015. Past performance is no guarantee of future results. Chart is provided for illustrative purposes only.The posts on this blog are opinions, not advice. Please read our Disclaimers.