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

However some weaker, more leveraged, or less known names, had to ingest a trick 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 different standard 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 below shows that much bonds were generally utilised as a refinancing tool (instead of top investments or acquisitions.)



source: composer Reuters


The question ease relic whether this is a long-term trend. It would mean that the leveraged give mart at least in part is effort replaced with secured bonds. But obligation for leveraged loans also continues to be high, especially as some existing listing is effort paying down. If the give syndication mart recovers, secured bonds may become a temporary phenomenon.


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