High Yield Corporate Bond Sales Bigger in 1 Day Than in All of July

As fears of a recession diminish and yields fall, companies are once again looking to issue bonds — and not just investment-grade bonds. Bloomberg noted that on Thursday, August 4, just two companies managed to sell a total of $2 billion of high yield bonds that day, which was more than was sold in the entire month of July. These huge sales indicate that there’s enough demand for such offerings.

As borrowing costs have dropped over the last month, sales of corporate junk bonds have risen. At the end of Thursday, the average yield for a high yield corporate bond reached 7.55%, the lowest in weeks. Leveraged loan prices are at the highest level since mid-June.

Investor sentiment has become more bullish after unemployment fell to 3.5% in July, the lowest in 50 years. The probability of a U.S. recession has dropped to 40% from 50%, according to a report from JPMorgan Chase & Co.

In May, BondBloxx Investment Management launched three high yield corporate bond ETFs which track ratings-specific sub-indexes of the ICE BofA US Cash Pay High Yield Constrained Index: the BondBloxx BB Rated USD High Yield Corporate Bond ETF (NYSE Arca: XBB), which seeks to invest in bonds rated BB1 through BB3; the BondBloxx B Rated USD High Yield Corporate Bond ETF (NYSE Arca: XB), which seeks to invest in bonds rated B1 through B3; and the BondBloxx CCC Rated USD High Yield Corporate Bond ETF (NYSE Arca: XCCC), which seeks to invest in bonds rated CCC1 through CCC3.

Launched in October of 2021 to provide precision ETF exposure for fixed income investors, BondBloxx was co-founded by ETF industry leaders Leland Clemons, Joanna Gallegos, Tony Kelly, Mark Miller, Brian O’Donnell, and Elya Schwartzman. The team has collectively built and launched over 350 ETFs at firms including BlackRock, JPMorgan, State Street, Northern Trust, and HSBC.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said Kelly. “Our initial product suites aim to create a full toolkit for high yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

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