High-Yield Market Still Cool As Subprime Worries Persist, Says Report
The high-yield market succumbed to heightened instability in August, as credit market conditions deteriorated from fears over subprime exposure and accentuated hedge-fund liquidations in related areas, according to an article published today by Standard & Poor’s.
The report, titled “U.S. High-Yield Prospects: Winter In August Sends Chill,” states that the new issue market for speculative-grade bonds has been frozen; few deals being done since the end of June.
“The red-hot leveraged-loan market has cooled, leaving many deals still on the forward calendar or abandoned altogether. Investors, however, have clamored for high-grade paper, as inverse inquiries have helped prompt $51 billion in bonds rated by Standard & Poor’s to come to market in August,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Group. “With risk appetite diminished, we expect that riskier speculative-grade firms will have trouble accessing credit markets until investors warm back up to risk. However, outlandish leverage levels are likely to receive much greater scrutiny even after the market stabilizes.” Americas Customer Service: (1) 212-438-7280
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