High-yield issuers continued to take advantage of firm markets in March, mostly to chip away at upcoming maturities, even as Treasury rates drifted higher amid equivocal signals from the Fed. New-issue volume was $27.6 billion, a three-year high for March issuance, according to LCD data. The $85.2 billion of issuance in the entire first quarter was a 110% increase from the first quarter of 2023.
Bond issuance ticked up slightly from February’s $26.5 billion total. In tandem, leveraged loan volume rose $4.3 billion month to month, to $40.3 billion in March.
Abetted by tightening spreads, the average new-issue yield in March dipped 12 bps from February, to a 19-month low at 7.46%. On a quarterly basis, costs eased to a seven-quarter low of 7.73%.
With that in mind, bond volume to address refinancing needs surged to more than $64 billion in the quarter, reflecting a lofty 76% share of the full-quarter volume. That share was 63% in the first quarter last year.
Indeed, in the current year, companies have successfully and aggressively tackled pressing bond maturities. The 2024 maturity wall totaled $29 billion as of March 31, down from $41 billion at year-end 2023, per S&P index data. As well, the outstanding amount of bonds due in 2025 declined to $100 billion, from $118 billion at last year’s close, and $171 billion as of year-end 2022.
In March, refi-driven prints accounted for 71% of the total, with sizable deals for USA Compression, Medline Industries, and Ryman Hospitality reflected in the carve-out. There was an increased presence for prints to support M&A/LBO transactions, at 21%, up from 7% in February. That includes deals for United Rentals, Truist Insurance, and AAR Corp.
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