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 $4.126 trillion to just $4.077 trillion year-to-date.
- Although the overall market value of the index has declined by 1.2%, certain issuers within the index have increased their weight.
- Names such as Medtronics and 21st Century Fox both are up by +0.4% in weight, while recent issuers of large deals such as Verizon (+0.3%), Microsoft (+0.26%) and Apple(+0.15%) also have added to their weight within the index.
- For April the index had returned -0.73% MTD and 1.36% YTD.
High yield as measured by the S&P U.S. Issued High Yield Corporate Bond Index has increased by 3.4%, from its December 31st, 2014 value of $1.169 trillion to the current $1.209 trillion.
- Issuers who have been in the index since the beginning of the year and have increased their weight are represented by names such as Navient (+0.41%), GM (+0.33%), Scientific Games (+0.26%), Murray Energy (+0.23%).
- Household names like Heinz (+0.18%), Rite Aid (+0.15%), Netflix (+0.13%) and Sprint (+0.11%) are also included.
- The index has returned 1.13% for April and 3.75% YTD.
The S&P/LSTA U.S. Leveraged Loan 100 Indexcontinues to yield around 4.75% as the index returned 0.73% MTD and 2.59% YTD. Repricing activity has intensified. PetSmart, which recently had agreed to a large loan in March, has returned to the market for lower rates. Additional issuers 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 basis points wider at a 2.11% as yields rose going into the end of April and May 1st added 7 bps to the total. The index’s rise in yield over the whole month of April was 11 basis points wider, tightening in the first and third week helped offset some of the month end rise in yield which closed at a 2.04% on April 30, 2015. For April the return of the index was -0.80% MTD while the YTD return was 2.24%.
Source: S&P Dow Jones Indices, data as of April 30, 2015
This article was written by Kevin Horan, director, fixed income indices, S&P Dow Jones Indices.
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