Investors added $1.8 billion this week into funds that purchase leveraged loans in the U.S., an all-time high, according to Bank of America Corp.
The increase brought deposits this year to about $38 billion, almost a 50 percent rise in assets, the Charlotte, North Carolina-based bank said in a report yesterday. U.S. speculative-grade bond funds reported an inflow of $2.8 billion, the most since October 2011.
Funds that invest in senior-ranking bank debt have gained every single week this year, returning 3.1 percent, Standard & Poor’s/LSTA index data show. Prices on the largest, first lien floating-rate borrowings rose to 98.26 cents on the dollar, the most since May 31.
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 S&P.
Speculative-grade bond yields, which had climbed to a one-year high last month, dropped to 6.13 percent yesterday, according to the average yield-to-worst measure on the Bloomberg USD High Yield Corporate Bond Index. Junk-bond gains have increased to 3.24 percent, the index data show.