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Junk Buyers Desperate for Debt Are Pressing Companies to Borrow

  • With demand exceeding supply it’s hard to buy new deals
  • Investors that spur offerings can get allocated more
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Source: Getty Images

Money managers are having such a tough time getting their hands on debt in the $2.8 trillion market for junk bonds and leveraged loans that they’re calling up companies and pressing them to borrow, instead of waiting for bankers to bring new deals to them.

Investors have driven billions of dollars of these kinds of debt sales this year, including $550 million of bonds from Rackspace Technology Inc. this week, according to people with knowledge of the matter. PetSmart Inc. tried to borrow $4.65 billion in October and failed, but after the junk bond market rallied further after the U.S. election, the retailer found investors beating down its door. It was able to sell bonds and loans in January. Fund managers also pushed US LBM Holdings, a building supply company, to sell notes last month.