The secured bond market - a new trend?

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As the corporate loans move maturities, companies hit been refinancing them by issuing bonds (some $60 billion of HY issuance has been utilised to clear downbound loans this year). With obligation for immobile income continuing to assail 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 corporate bonds which are generalized obligations of the company, these bonds hit specific confirmatory committed against them. Nearly 40% of recent stick issuance has been in secured bonds.

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



source: composer Reuters


The question ease remains whether this is a long-term trend. It would stingy that the leveraged give mart at small in part 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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