U.S. Firms Pay Penalties to Refinance as Inflation Fears Loom

U.S. companies including hotel chain Hilton Worldwide Holdings Inc. are so anxious to lock in low borrowing costs now, before inflation fears push yields even higher or close the market altogether, that they’re paying millions of dollars in penalties to refinance debt early.

The corporations, which also include car renter Avis Budget Group Inc. and financial index company MSCI Inc., are selling new bonds and using the money they raise to buy back existing notes. But those repurchases come at a cost: high fees they have to pony up to buy back securities early. Usually those fees, known as call premiums, would be lower or even zero if the company waited anywhere from a few months to a year.