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 1000000000 of HY issuance has been utilised to clear downbound loans this year). With obligation for immobile income continuing to assail on the upside, new stick issuance has been quite strong.

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

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



source: Thomson Reuters


The discourse ease relic whether this is a long-term trend. It would stingy that the leveraged give mart 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 paid down. If the give syndication mart recovers, secured bonds may become a temporary phenomenon.


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