Investors Add $1.5 Billion to Leveraged-Loan Funds, BofA Says

Investors added $1.5 billion this week into funds that purchase leveraged loans in the U.S., according to Bank of America Corp.

The deposits have added 60 percent in terms of assets this year, according to a research report published yesterday by the Charlotte, North Carolina-based bank.

“Loans continue to be in investor favor,” credit strategist Neha Khoda wrote in the document.

U.S. speculative-grade bond funds declined about 3 percent in assets, recording an outflow of about $420 million this week that was mostly caused by flows out of high-yield exchange-traded funds, according to the report.

Prices of leveraged loans fell to 97.97 cents on the dollar yesterday, down from a May 9 high of 98.88 cents, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index.

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. Investors have made deposits into loan mutual funds every week over the last year, Bank of America data show.

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