Leveraged-Loan Fund Weekly Inflows Climb to Record, BofA Says

U.S. loan funds recorded their highest weekly inflow as their streak of gains increased to eight months, according to Bank of America Corp.

Investors this week added $1.3 billion into funds that purchase floating-rate debt, the Charlotte, North Carolina-based bank said in a report yesterday, surpassing the $930 million record set in the prior week. It marked the 34th straight week of growth in the asset class, which has resulted in more than $12 billion of deposits.

The inflows have enabled the busiest start in loans made to the neediest U.S. companies. The average yield of 6.1 percent on loans was 9 basis points less than those on U.S. speculative- grade bonds, after having yielded more than junk debt through January, JPMorgan Chase & Co. data show.

Private-equity firms from Carlyle Group LP to Bain Capital Partners LLC obtained $26.7 billion of the debt last month from non-bank lenders to support takeovers and refinance borrowings, according to JPMorgan. That’s the most for any January since 2007, when $32 billion of the loans were made.

Leveraged loans are a form of high-risk debt that carries ratings of less than Baa3 by Moody’s Investors Service and below BBB- by Standard & Poor’s. Outflows from U.S. high yield funds accelerated to $1.3 billion, the most in three months, according to the Bank of America report.

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net