zerohedge.com / by Tyler Durden / Sep 12, 2016 3:10 PM
Last Friday we warned that the massive ramp in PIK Toggle new issues so far in 2016 was eerily similar to a spike witnessed in 2007 which, in hindsight, was a solid indicator of the “beginning of the end” for the high-yield market. In 2007, the massive ramp in PIK Toggle new issues was driven by private equity firms rushing to take money off the table via massive, debt-funded dividend recaps. And now, 9 years later we see a similar spike in PIK Toggle issuance driven by a voracious “search for yield” by the world’s largest pension funds and insurance companies.
But while the underlying cause of the two high-yield bubbles are different we fear the ultimate outcome will be the same. In fact, we’re seeing the first signs that the 2016 edition of the high-yield, PIK Toggle bubble might be bursting with two new issues collapsing just 1 day after breaking for trading.
Luxembourg-based packaging company, Ardagh Group, issued €845mm of 6 5/8 PIK Toggle Notes of 2023 last week that crashed to below 96 in early trading today…
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