The riskiest U.S. companies are stepping up their borrowing in the market for leveraged loans, with the amount of financings completed this year already exceeding what they raised in all of 2012.
Borrowers from HJ Heinz Co. to Valeant Pharmaceuticals International Inc. have tapped non-bank lenders for $298.4 billion in 2013, more than the $295.3 billion obtained last year, according to Standard & Poor’s Capital IQ Leveraged Commentary and Data. At the current pace, the record of $386.6 billion set in 2007 will be eclipsed before year-end.
Top-ranked 10-year securities linked to U.S. properties are being marketed by JPMorgan and Barclays Plc to yield as much as 108 basis points more than the benchmark swap rate, a person with knowledge of the transaction said. Goldman Sachs Group Inc. and Citigroup Inc. sold similar notes on July 18 at a spread of 113 basis points.
The 12-month trailing global speculative-grade default rate fell to 2.8 percent at the end of the second quarter, from 3.1 percent in the same period last year, Moody’s said July 11. The ratings firm expects the rate to rise to 3.2 percent by year-end, before falling to 2.7 percent by the end of the second quarter of 2014.