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 clear down 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 known names, had to ingest a gimmick 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 unlike 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 interpret beneath shows that such bonds were generally utilised as a refinancing tool (instead of capital investments or acquisitions.)



source: composer Reuters


The discourse still remains whether this is a long-term trend. It would stingy that the leveraged loan 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 inventory is effort paying down. If the loan syndication mart recovers, secured bonds may become a temporary phenomenon.


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