The secured bond market - a new trend?

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As the joint loans move maturities, companies hit been refinancing them by supply bonds (some $60 billion of HY issuance has been used to clear downbound loans this year). With demand for fixed income continuing to assail on the upside, new stick issuance has been quite strong.

However whatever weaker, more leveraged, or less famous names, had to ingest a gimmick to stimulate investors. As the collateral 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 unlike accepted joint bonds which are general obligations of the company, these bonds hit specific collateral committed against them. Nearly 40% of recent stick issuance has been in secured bonds.

The interpret beneath shows that much bonds were generally used 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 mean that the leveraged give mart at small in conception is effort replaced with secured bonds. But demand 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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