The secured bond market - a new trend?

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As the joint loans move maturities, companies hit been refinancing them by supply bonds (some $60 billion of HY issuance has been utilised to pay down loans this year). With demand for fixed income continuing to surprise 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 entice investors. As the confirmatory committed for loans got free 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 hit limited confirmatory committed against them. Nearly 40% of past stick issuance has been in secured bonds.

The chart beneath shows that much bonds were mostly utilised as a refinancing tool (instead of capital investments or acquisitions.)



source: Thomson Reuters


The discourse ease remains 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 demand for leveraged loans also continues to be high, especially as whatever existing inventory is effort paid down. If the give syndication mart recovers, secured bonds haw embellish a temporary phenomenon.


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