NEW YORK (Reuters) - Investor demand for the riskiest U.S. corporate credit rose on Monday and Tuesday after the Federal Reserve last week expanded its bond-buying program to include some so-called junk bonds, and pledged to buy shares in exchange-traded funds which track the junk-rated market.
In the primary market, where new debt is sold, issuers in sectors hard-hit by the coronavirus like energy and retail came to market with high-yield bonds. Burlington Coat Factory (BCF.UL) came to market with a $300 million bond that priced at the low end of the expected range on Monday, signaling investor demand. Ferrellgas Partners
Prices on existing junk bonds also jumped and the spread of yields over safer Treasuries narrowed as demand picked up. High-yield exchange-traded funds have risen, like the iShares iBoxx High Yield Corporate Bond Fund (P:HYG) which is up 6% since the market close on Wednesday, before the Fed's announcement.
The spread of the ICE/BofA high-yield index <.MERH0A0> has narrowed by 111 basis points over safer Treasury yields since Wednesday.