The secured bond market - a new trend?

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As the joint loans approach maturities, companies hit been refinancing them by supply bonds (some $60 billion of HY issuance has been used to pay downbound loans this year). With obligation for immobile income continuing to assail on the upside, newborn stick issuance has been quite strong.

However whatever weaker, more leveraged, or less famous names, had to use a gimmick to stimulate investors. As the collateral committed for loans got freed up (with loans effort repaid), the companies committed it to the newborn stick holders. These are the so-called secured bonds, and unlike accepted joint bonds which are general obligations of the company, these bonds hit limited collateral committed against them. Nearly 40% of recent stick issuance has been in secured bonds.

The interpret beneath shows that much bonds were mostly used as a refinancing tool (instead of top investments or acquisitions.)



source: Thomson Reuters


The question ease relic whether this is a long-term trend. It would stingy that the leveraged give mart at least in conception is effort replaced with secured bonds. But obligation for leveraged loans also continues to be high, especially as whatever existing listing is effort paid down. If the give syndication mart recovers, secured bonds may become a temporary phenomenon.


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