US junk debt investors cautious of leveraged loans as economy slows
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Investors in US junk debt are cautious about leveraged loans as the economy slows; Borrowers pulled back on leveraged loan deals last week following disappointing jobs data; Only six leveraged loans worth $3.3 billion were sold last week, well below the weekly average this year; JetBlue Airways sold a $750 million loan deal; Leveraged loan funds reported $3.1 billion in outflows last week, the most since March 2020; The Morningstar LSTA US Leveraged Loan Index fell 0.55% on Aug. 5, the worst daily performance since March 2023; Some opportunistic transactions were put on hold due to market volatility; There may be a pickup in primary issuance in both the loan and high yield markets; Investor demand for new loan deals has exceeded net loan supply by at least $130 billion this year; A potential economic slowdown and aggressive Fed rate cuts could impact leveraged borrowers' refinancing or new loan plans.
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https://www.kitco.com/news/off-the-wire/2024-08-14/us-junk-debt-investors-cautious-leveraged-loans-economy-slows
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