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Speculative-Grade Loans Attracting Record Cash

Investors are funneling funds into leveraged loans, raising risks by increasing incentives for borrowers to refinance.

By Sridhar Natarajan, Bloomberg | Updated on January 22, 2014

More speculative-grade U.S. loans are trading above par than at any time since May, exposing investors who are funneling record amounts of cash into the debt to greater risks as rising prices encourage borrowers to refinance at lower interest rates.

Spanish-language broadcaster Univision Communications Inc. and KKR & Co.-controlled First Data Corp. are among at least 30 companies seeking to reduce rates on $31 billion of bank debt as more than 80 percent of leveraged-loan prices exceed 100 cents on the dollar, according to JPMorgan Chase & Co. That’s up from 40 percent at the beginning of October, according to a report from the New York-based lender last week.

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