The secured bond market - a new trend?

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As the corporate loans approach maturities, companies hit been refinancing them by supply bonds (some $60 billion of HY issuance has been utilised to pay downbound loans this year). With obligation for immobile income continuing to surprise on the upside, newborn stick issuance has been quite strong.

However whatever weaker, more leveraged, or less known names, had to ingest a trick to stimulate investors. As the confirmatory pledged for loans got free up (with loans effort repaid), the companies pledged it to the newborn stick holders. These are the so-called secured bonds, and unlike standard corporate bonds which are general obligations of the company, these bonds hit limited confirmatory pledged against them. Nearly 40% of past stick issuance has been in secured bonds.

The interpret below shows that much bonds were mostly utilised as a refinancing agency (instead of top investments or acquisitions.)



source: composer Reuters


The question still relic 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 paid down. If the give syndication mart recovers, secured bonds may become a temporary phenomenon.


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