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 utilised to pay downbound loans this year). With obligation for fixed income continuing to surprise on the upside, newborn stick issuance has been quite strong.

However whatever weaker, more leveraged, or inferior known names, had to use a trick to stimulate investors. As the confirmatory pledged for loans got freed up (with loans effort repaid), the companies pledged it to the newborn stick holders. These are the so-called secured bonds, and different accepted joint bonds which are generalized obligations of the company, these bonds hit specific confirmatory pledged against them. Nearly 40% of recent stick issuance has been in secured bonds.

The chart below shows that such bonds were generally utilised as a refinancing agency (instead of capital investments or acquisitions.)



source: Thomson Reuters


The discourse ease remains whether this is a long-term trend. It would mean that the leveraged give market at small 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 paying down. If the give syndication market recovers, secured bonds haw become a temporary phenomenon.


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