CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were -$0.8 billion and year to date flows stand at -$9.0 billion. New issuance for the week was $15.2 billion and year to date HY is at $188 billion.

(Bloomberg) Saudi Arabia Says It’s Open to Another OPEC Cuts Extension

• Saudi Arabian Energy Minister Khalid Al-Falih agreed with his Venezuelan, Kazakh and U.A.E. counterparts to keep all options open in their push to re-balance world oil markets, including the possible extension of output cuts beyond next March.
• Al-Falih agreed in separate talks with the ministers in the Kazakh capital Astana that steps taken by OPEC and other major crude producers such as Kazakhstan have contributed to better market stability, according to three emailed statements from the Saudi energy ministry.
• Saudi Arabia and Venezuela, both members of the Organization of Petroleum Exporting Countries, agreed to consider prolonging production cuts “beyond the first quarter of 2018, if needed,” the Saudi ministry said in one of the statements. The kingdom and Kazakhstan said such an extension “would be considered in due course as market fundamentals may dictate,” according to a separate Saudi statement.
• OPEC and other producers including Russia pledged to reduce output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices. The producers are seeking to strengthen compliance with the cuts accord they reached last year.

(Broadcasting and Cable) CenturyLink Extends Level 3 Deal Closure Date

• CenturyLink said it expects its deal to buy Level 3 Communications will close by mid-to-late October, which will require approval by the FCC and Justice as well as remaining state sign-offs.
• That is actually a slight delay in the original projected closing, which had been the end of this month. California won’t vote on its state approval until Oct. 12, but CenturyLink pointed out that a California ALJ has deemed the deal in the public interest and recommended the California PUC approve it at that Oct. 12 meeting.
• CenturyLink CEO Glen Post said the company views the “slight delay” as manageable and is ready to begin integrating Level 3 into the fold as soon as the deal is closed.
• He also said that the company wanted to give the regulators time to complete their review. The company will have to, since the deal cannot close until and if the FCC and DOJ approve it, though the company is working with regulators throughout to provide info and input, so the announcement is a good sign the deal will not be blocked.

(Real Deal) Despite rising demand, multifamily construction is slowing down

• Construction of multifamily buildings is slowing down across the country, even though there’s rising demand for rental units.
• More than half of metro areas across the country are expected to see more multifamily housing built this year than what was seen between 1980 and 2016, the Wall Street Journal reported, citing Trulia data. However, that construction — the driver of the last construction boom — is on the cusp of slowing down. If the construction of single-family homes doesn’t increase to fill its place, according to the newspaper, the country’s economy could be adversely affected.
• According to Commerce Department data released on Wednesday, overall U.S. housing starts dropped for the fourth time in five months in July. For single-family construction, starts decreased by 0.5 percent. However, they dropped a massive 17 percent for construction on buildings with five or more units.
• “I’m optimistic that single-family will catch up,” Ralph McLaughlin, the chief economist at Trulia. “It’s not going to happen this year and it’s probably not going to happen next year.”
• Apartment construction is slowing because of the massive increase in apartment inventory. In New York City, excess supply has led to landlords offering concession to renters and brokers. In July, concessions at residential rental buildings in Brooklyn were the highest they have been in the seven years that they’ve been tracked.

(Kansas City Business Journal) AMC completes $130M sale-leaseback deal

• AMC Entertainment Holdings Inc. is making progress with monetizing assets and announced it completed the sale-leaseback of seven U.S theaters. The $130-million deal involves an unnamed U.S. buyer and will lead to about $128 million in cash after closing costs and a deferred gain on sale of about $80 million.
• “AMC’s $130 million sale leaseback transaction is the second action step we have consummated since the announcement last month to realize monies from assets which were not vital for us to own,” AMC CEO Adam Aron said in a release. “Combined with the sale of our 50 percent interest in Open Road Films, which was sold last month with an $18 million pre-tax gain, AMC has generated more than $140 million of cash. This is beneficial in enabling AMC to pursue our plan to strengthen our balance sheet even as we pursue dynamic growth.”
• The announcement is part of AMC’s effort to sell $400 million in assets to strengthen its overall liquidity position and help finance buying back AMC shares and paying down debt.