The secured bond market - a new trend?

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

However whatever weaker, more leveraged, or inferior known names, had to ingest a trick to stimulate investors. As the confirmatory committed for loans got free up (with loans getting repaid), the companies committed it to the newborn bond holders. These are the so-called secured bonds, and different standard joint bonds which are general obligations of the company, these bonds hit limited confirmatory committed against them. Nearly 40% of past bond issuance has been in secured bonds.

The interpret below shows that much bonds were mostly utilised as a refinancing agency (instead of top investments or acquisitions.)



source: composer Reuters


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


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