Investors in search of better fixed-income returns are flocking to buy the lowest-rated junk debt from companies new to the high-yield market.
Debut sales of junk bonds from companies including Michaels Stores Inc. and Square Inc. are on pace to set a 16-year record, with over $68 billion of debt sold as of Aug. 17, according to S&P Global Market Intelligence’s LCD. The firm has been tracking the data since 2005. John McClain, portfolio manager at Brandywine Global, says that investors can find opportunities for excess returns in debut bond issues because they force the market to do its homework on a company’s potential earnings. His funds have added to holdings of bonds from first-time issuers this year.
“We’ve seen record issuance [in high yield], so a lot of companies can slip through the cracks,” he said. “We think that’s an inefficiency investors should be exploiting.”overall. U.S. companies had sold over $316 billion of junk bonds through the end of July, around 32% ahead of last year’s record-breaking totals.
So people are making millions from nothing. Bc they're rich. How is this helping everyday consumers? Oh it's not. Wallstreet is just laughing at us.
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