The HY market seems to be adapting to the current economic conditions pretty quickly. New bond issuance has decreased from $13Bn on April 2021 to roughly $1Bn today, using a 6 week moving average. On one hand, higher interest rates and tighter monetary policy are slowing down the demand side, which are demanding higher coupons for taking credit risk at this point of the conomic cycle. On the other, CFOs from potential issuers, may not be able to square their balance sheets and income statements with investors demands. For those that need to rollover maturing debt, liquidity issues will arise, as the credit cycle continues its cleansing path.
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Source: BoA Global research.
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