U.S. Loan Funds Post Record $1.5 Billion-Plus Inflow, BofA Says

Investors poured more than $1.5 billion into U.S. loan funds this week, setting a new weekly record, according to Bank of America Corp. (BAC)

Assets under management have increased by 23.5 percent, or $18 billion this year, more than the total deposits of $11.5 billion in floating-rate debt funds in all of 2012, the Charlotte, North Carolina bank said yesterday in a report.

This marks 43 consecutive weeks of positive flows into the asset class as comes as loan prices climbed to 98.4 cents on the dollar yesterday, the highest since July 20, 2007, according to the Standard & Poor’s LSTA U.S. Leveraged Loan 100 Index.

Inflows to junk bonds totaled $62 million last week. U.S. high-yield funds “remain out of favor,” Bank of America strategist Chris Hays wrote in the report. The Bank of America Merrill Lynch High Yield Master II Index gained 3.64 percent so far this year, compared with 4.67 percent in the comparable 2012 period.

High-yield, or junk, debt is ranked below Baa3 by Moody’s Investors Service and less than BBB- by S&P.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

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

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