Weekly Market Summary

Extra Credit^*

• High-yield bond issuance of $94.4 billion so far this year (as of 7/14/23) remains ahead of the $68.3 billion priced for the same period in 2022, though those two totals were, by far, the lowest for any comparable period since the Global Financial Crisis ($72.7 billion for the corresponding span in 2009, and $47.2 billion in 2008). For further context, comparable year-to-date totals were $292 billion in 2021 and $221 billion in 2020, both well ahead of the cumulative $197 billion of total issuance over the 18-plus months since the start of 2022.
• Year-to-date net flows for high-yield bond ETFs and mutual funds stand at -$9.86 billion (outflows of $5.7 billion from ETFs and $4.16 billion from mutual funds as of July 14, 2023). Outflows were much heavier over the same year-to-date span last year when investors pulled $34.5 billion from the asset class ($15.66 billion from ETFs and $18.86 billion from mutual funds). Nevertheless, 2023 is tracking toward a third straight annual net outflow, following on full-year net outflows of $29.7 billion last year and $4 billion in 2021.
• After cooling in May, leveraged loan amend-and-extend volume heated up in June, courtesy of 17 transactions, resulting in $13.1 billion of facilities extended. Moreover, with a half-year still to go, year-to-date volume at $88.3 billion is only about $20 billion away from topping the high-water annual marks of 2019, 2021 and 2022. This year has already surpassed the annual total in 2020 and the totals of years spanning 2014-2018. 
• The trailing 12-month default rates for bank loans and high-yield bonds, excluding distressed exchanges, finished the month at 2.41% and 1.64%, respectively, up from 2.41% and 1.49% from May. The long-term historical default rate for loans and high-yield bonds is 3.1% and 3.2%, respectively.

Sources: Bloomberg and JP Morgan as of 7/17/23.