The secured bond market - a new trend?

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As the joint loans move maturities, companies hit been refinancing them by issuing bonds (some $60 1000000000 of HY issuance has been utilised to pay downbound loans this year). With demand for immobile income continuing to surprise on the upside, new stick issuance has been quite strong.

However whatever weaker, more leveraged, or less 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 new stick holders. These are the so-called secured bonds, and different accepted joint bonds which are generalized obligations of the company, these bonds hit limited confirmatory pledged against them. Nearly 40% of recent stick issuance has been in secured bonds.

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



source: Thomson Reuters


The question still relic whether this is a long-term trend. It would mean that the leveraged loan market at least in conception is effort replaced with secured bonds. But demand for leveraged loans also continues to be high, especially as whatever existing listing is effort paying down. If the loan syndication market recovers, secured bonds may embellish a temporary phenomenon.


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