Leveraged-Loan Funds Record $1.1 Billion Weekly Gain, BofA Says

U.S. loan funds recorded $1.1 billion of inflows this week, extending their position as the best-performing asset class of 2013, according to Bank of America Corp. (BAC)

Investors added to record-setting deposits into funds that purchase floating-rate debt in January and February, the Charlotte, North Carolina-based bank said in a report yesterday. The holdings have seen assets expand by 14 percent this year, more than twice the increase in the next-best performing group, according to the report.

The price of leveraged loans climbed to 97.85 cents on the dollar yesterday, the most since July 2007, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index. The average yield of 5.93 percent on loans has dropped 22 basis points since the start of the year, JPMorgan Chase & Co. (JPM) data show. A basis point is 0.01 percentage point.

Leveraged loans are a form of high-risk debt that carry ratings of less than Baa3 by Moody’s Investors Service and below BBB- at Standard & Poor’s.

U.S. high-yield funds posted gains for the first time in six weeks, adding $780 million, according to the Bank of America report. Emerging-market bond funds have gained 5 percent in assets this year, second after U.S. loan funds, the bank said.

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

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