High-Risk Loans Return as Recession Risk Fades
- Investors willing to take more risk as recession fears ebb
- Secondary leveraged loan prices near highest level in months
Workers enter Citigroup headquarters in New York.
Photographer: Juan Cristobal Cobo/BloombergThis article is for subscribers only.
It’s hard to pass up a good rally in US leveraged finance markets, particularly if you’re a bank with a bunch of debt that’s been stuck on the balance sheet for months.
As the risk of a severe recession lessens while the supply of new debt has stayed relatively low, money managers are hunting for opportunities to put dollars to work. That’s pushed secondary leveraged loan prices near highs not seen in months as investors flush with cash seek out supply, leading borrowers to stream into both loan and junk bond markets with opportunistic deals in recent weeks.