High Yield Market Weekly Minutes: Reality Bites Back As $13bn Week Turns Into $3bn Whimper (June 16, 2025)
High Yield Issuance Craters While Secondary Markets Hold Steady
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Talk about a reality check.
That’s the only way to describe what just happened to the high yield primary market. After last week’s historic $13 billion bonanza, issuance collapsed to $3 billion from four borrowers as tariff uncertainty and Middle East tensions sent issuers scrambling for cover. Israel’s attack on Iran’s nuclear facilities sent oil spiking 13%, yet somehow high yield held its ground with a +0.15% return to end the week.
The inflation data delivered the week’s biggest surprise. Both CPI and PPI came in lighter than expected, with core goods prices actually falling 0.04% month-over-month despite all the tariff hysteria. Where’s that inflation surge everyone was predicting? So far, it’s been more fairy tale than reality. Meanwhile, the Fed’s preferred measure is tracking toward a target-consistent pace around 0.15% monthly.
But here’s what really matters: fund flows stayed relentlessly positive with another $1+ billion pouring in, marking the seventh consecutive weekly inflow and bringing YTD ETF totals to $10+ billion. While everyone’s debating geopolitics and supply disruptions, retail money keeps showing up like clockwork. They want yield, and this market keeps delivering it.
Last week’s most telling moment? Warner Bros Discovery’s fallen angel downgrade barely registered a blip. When you can absorb a downgrade that massive without breaking stride, you’re not just showing resilience - you’re practically daring the market to test you. Primary volumes may have fallen, but demand fundamentals remain rock solid.
Something has to give between the macro chaos and market stability. The question is whether this disconnect represents genuine strength or dangerous complacency heading into summer.
Weekly Performance Recap
High yield shrugged off a week of chaos to deliver steady gains. Overall HY posted +0.15% for the week, maintaining positive momentum despite multiple headwinds:
BBs advanced +0.20%, extending their streak of defensive outperformance with solid fundamental support
Bs gained +0.17%, showing continued appetite for mid-tier credit despite rising uncertainty
CCCs posted +0.10%, finally participating after lagging in recent sessions
Spread dynamics showed modest stress but nothing approaching panic:
Overall index spreads widened 8bps to 308bps, still well within recent trading ranges and far from stressed levels
BB spreads pushed 12bps wider to 183bps, reflecting some defensive repositioning but maintaining attractive levels
B spreads expanded 8bps to 295bps, while CCCs widened 17bps to 716bps in line with quality bias trends
Yields held remarkably steady at 7.42%, down just 1bp week-over-week despite Treasury volatility and geopolitical fireworks. This stability in the face of multiple disruptions speaks to underlying technical strength that continues to surprise skeptics.
Primary Market Activity
The contrast with the prior week couldn’t be starker. 5 deals totaling $3 billion represented a significant collapse from the previous week’s record $13 billion volume. But the deals that did price showed strong underlying demand:
Global Partners delivered standout execution with $450 million of 7.125% eight-year senior notes, pricing through initial guidance fresh off a Moody’s upgrade. The fuel distributor’s bonds traded up immediately on strong fundamental improvement
Uniti rounded out the week with $600 million of 8.625% seven-year senior notes, another CCC-rated deal that cleared despite the challenging backdrop
Whirlpool dominated with a dual-tranche $1.2 billion offering despite fallen angel status and tariff concerns. Check out my recent write-up to get up to speed on the situation:
The New Home Company brought $300 million of 8.50% M&A bonds that jumped to 101 from par, proving single-B deals still find strong reception when priced appropriately with sponsor backing
What’s remarkable isn’t the volume drop - it’s that almost every deal found strong demand when issuers chose to execute.
Secondary Market Dynamics
The sector breakdown revealed clear winners and losers amid the week’s volatility:
Hudson Pacific Properties bonds soaring +12 points after announcing a $600 million equity raise dedicated entirely to debt reduction. When REITs prioritize deleveraging, bondholders celebrate
Energy showed mixed results despite oil’s 13% spike. Some oil-exposed names gained 1-4 points initially, but profit-taking emerged at higher levels as investors questioned the sustainability of geopolitical premiums. NFE dropped another 6-14 points across its complex as liquidity concerns mounted and lenders tapped advisors
Consumer discretionary saw stark divergences, with some distressed names rallying while others extended declines. The key differentiator remains leverage levels and liquidity access in an uncertain environment
Bottom performers were dominated by energy names including NOVA and NFE, highlighting that even commodity tailwinds can’t save fundamentally challenged credits. Meanwhile, top performers included multiple financials and upgraded credits benefiting from improving fundamentals.
Looking Ahead
This week brings a compressed trading schedule that could amplify volatility. With Juneteenth Thursday and an early Wednesday close ahead of the FOMC meeting, primary activity gets crammed into Monday and Tuesday. Expect modest supply if markets cooperate, but Middle East developments could derail plans quickly.
Wednesday’s FOMC meeting won’t deliver rate changes, but Powell’s commentary takes on outsized importance given recent inflation surprises and geopolitical tensions. The combination of softer CPI/PPI data and oil price spikes creates a complex backdrop for Fed messaging.
This week’s economic calendar could help shape the narrative:
Retail sales Tuesday will test consumer resilience amid ongoing uncertainty
Industrial production Tuesday will show whether manufacturing weakness is accelerating
Housing starts Wednesday will reveal if elevated mortgage rates are finally biting construction
Corporate stress stories keep multiplying despite the market’s surface calm. New Fortress Energy lenders have tapped advisors, Sunnova Energy filed Chapter 11 citing renewable subsidy elimination, and satellite sector distress continues spreading. These individual disasters are getting contained for now, but the pattern bears watching.
The fundamental disconnect between macro chaos and market stability can’t persist indefinitely. Israel’s attack on Iran created the exact type of shock that historically rattles credit markets, yet high yield absorbed it with barely a hiccup.
Summer trading traditionally brings reduced volumes and compressed spreads, but this doesn’t feel like a typical quiet season. Between geopolitical tensions, policy uncertainty, and growing corporate stress cases, volatility feels more likely than calm.
The market’s ability to digest a $30+ billion fallen angel while maintaining positive returns shows remarkable resilience. But when primary volumes craters overnight and oil spikes on war fears, maybe something fundamental has shifted.
Whether that shift represents genuine strength or borrowed time will likely be tested sooner rather than later.
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