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High yield issuers including JetBlue led a rebound in primary market activity this week as credit markets bounced back from last week’s macro volatility. But new issue volumes are winding down after last month’s deal frenzy, which means that the LevFin community might finally get a chance to have a summer break.

That said, this week’s volume and execution has been encouraging, said one leveraged finance syndicate banker.

“Deals getting pulled last week just shows timing is everything from an execution perspective,” said the banker. “We’ve seen a bounce-back across all markets and the receptivity to deals this week has been strong, which should set us up well for September.”

This week’s inflation data, confidence in a Fed rate cut in September, increasing M&A activity, and the amount of capital sitting on the sidelines are all encouraging, said analysts at Bank of America on Friday. Strong retail sales data on Friday supports the “Goldilocks narrative” of economic growth without inflation, said JP Morgan credit analysts in a research note.

These signs have helped high-yield bond spreads rally to 369bp, inside last week’s wide of 424bp, according to JPM’s data, while average yields (7.65%) are 35bp below last week’s high — reaching a low since August 2022.

Average loan prices meanwhile have recovered to $96.83, JP Morgan said, recovering $0.48 off last week’s two-year 2yr low, though prices are down $0.23 in August.

“We’re off the levels we were at in July, but at least we’re not where we were last Monday. But I still don’t expect supply to pick up particularly as we get into the last two weeks of August,” said a buysider.

On the other hand, consumer spending is thinning in some segments, with airlines (more on that below), home improvement and automakers seeing softer demand.

But Bank of America said the sign of weakness that is “perhaps the least acknowledged by the market” is the tepid, “low single-digit” percentage growth of corporate credit markets in the past three months, despite improving M&A activity.

“A healthy US economy requires a healthy growth in credit outstanding, and this is not what we are seeing in numbers here,” they said.

This is backed up by feedback from syndicate desks, who note robust appetite for deals being pre-marketed for a post-Labor Day launch.

“We’re tracking some 20-25 new LBO and M&A situations that should launch in September and October, but from a technical perspective there’s not a whole lot behind that,” said the banker.

Against that backdrop, JetBlue’s $3bn debt package, which is backed by its loyalty program, received strong demandfrom investors when it launched on Monday; we also covered the deal when bankers led by Goldman Sachs and Barclays were premarketing with investors earlier this month.

But this also comes as the airlines industry is taking a hit from shrinking consumer spending — JetBlue’s SSNs due 2031, which priced on Tuesday at 99.36 to yield 9.875%, traded at 97.5 on Friday morning.

That could also impact Hawaiian Airlines and Alaska Air Group, which announced a third extension on the Department of Justice’s review period for its proposed merger to 20 August. Earlier on Wednesday, Hawaiian’s 2026 bonds traded up by a point from 95.4 after the review period was extended by one day to 16 August, suggesting a merger could happen.

Even though last week’s volatility has cooled the momentum for loan repricings, TKC Holdings succeeded at slashing off 50bps on an existing $497.25m TLB due May 2028 via Jefferies this week. Investor attitudes towards the company was decidedly different compared to the last time it raised debt in 2022. We unpacked the shift in perception towards businesses servicing private prisons and TKC’s improved financial performance here.

Not all transactions managed to gain traction in the broadly syndicated market — 9fin reported that M2S and its bankers at Jefferies have turned to private credit after an attempt to raise a $870m loan in the BSL market did not generate sufficient buyside interest.

The energy sector continues to drive a decent amount of debt refinancing activity.

South Field, a natural gas-fired energy facility in Ohio, added to the increasing volume of debt supply coming from producers on the PJM Interconnection network. The company tightened the pricing on its $796m term loan facility to 375bps and a 99.5 OID, in from earlier talk of 400bps and 99. As we pointed out last week, energy producers tied to the PJM network will benefit from record high pricing in a recent auction.

Another facility in that network, the Invenergy-owned Lackawanna plant, finalized tighter terms on its $458m term loan repricing on Friday.

Surge Energy priced a $750m senior unsecured note due 2031 at par to yield 8.25%. The proceeds will refinance existing debt, which should save the company around $25m of annual interest expenses, according to the company. For more 9fin coverage, see our Credit QuickTake and Legal QuickTake.

Cleveland-Cliffs meanwhile printed a $600m tap (upsized from $500m) of its 7% senior guaranteed notes due 2032at 99.25, in connection with its planned $2.912bn acquisition of steel producer Stelco. See our relative value analysis and cap table on the company here.

UBS beats expectations with $1.1bn net profit in second quarter (FT)

E2P co-founder resigns in wake of criminal charges (WSJ)

Schumer works crypto for Kamala Harris, with help from Mark Cuban (Axios)

Golub is building out a trading desk for private credit loans (Bloomberg)

How $70bn Elliott has evolved to be a more ‘rigid’ hedge fund behemoth (Business Insider)

It was a hot real estate trade. Now investors are worried (New York Times)

Barclays planned to shun Israeli bond sale under activist pressure (FT)

In Mars megadeal, Big Food wants to get bigger (WSJ)

BofA snubbed by Louisiana’s GOP Treasurer in ESG culture wars (Bloomberg)

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