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.