German Insurers Buy Junk Corporate Loans to Overcome Low Rates

German insurers, which came through the subprime mortgage crisis largely unscathed, are seeking to boost investment returns by buying junk loans to corporate borrowers.

Senior secured loans, which are repaid first in a default, are originated by banks for borrowers considered high yield or high risk as they usually have a significant level of debt relative to equity. The loans are then are sold on to investors.