The secured bond market - a new trend?

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As the joint loans approach maturities, companies have been refinancing them by supply bonds (some $60 1000000000 of HY issuance has been used to clear down loans this year). With obligation for fixed income continuing to assail on the upside, newborn stick issuance has been quite strong.

However whatever weaker, more leveraged, or inferior known names, had to ingest a gimmick to entice investors. As the confirmatory 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 different accepted joint bonds which are general obligations of the company, these bonds have limited confirmatory committed against them. Nearly 40% of past stick issuance has been in secured bonds.

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



source: Thomson Reuters


The question ease relic whether this is a long-term trend. It would mean 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 inventory is effort paying down. If the give syndication mart recovers, secured bonds may become a temporary phenomenon.


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