Junk jumps as stocks, oil improve; energy credits biggest gainers; funds fall $1.6 billion

By Paul Deckelman and Paul A. Harris

New York, Aug. 27 – The high-yield market was sharply and broadly higher on Thursday, given wings by big gains in stocks and oil prices.

Equities saw their second big gain in a row after second-quarter GDP figures were revised sharply higher, an indicator of better-than-expected U.S. economic growth.

Meanwhile, oil – which earlier this week fell to new six-year lows – saw its biggest one-day gain also in the last six years.

Those factors helped to push junk credits higher, particularly oil and natural gas exploration and production company names such as California Resources Corp., Sand Ridge Energy, Inc., Comstock Resources Inc., Energy XXI and Halcon Resources Corp., all of which were up by multiple points in active trading.

Statistical measures of junk market performance were better all around on Thursday after having turned mixed on Wednesday. Thursday’s advance was the second in the last three days.

Another numerical indicator –flows of investor cash in to or out of high-yield mutual funds and exchange-traded funds, considered a reliable barometer of overall junk market liquidity trends, turned negative for the fourth week out of the last five as $1.6 billion more left the funds than came into them during the latest trading week.

The high-yield new-deal sphere remained muted, as it has been for more than a week now.

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