{"id":62059,"date":"2023-09-17T08:26:08","date_gmt":"2023-09-17T12:26:08","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/us-junk-debt-issuers-use-window-to-extend-liabilities-but-at-higher-costs-morgan-stanley\/"},"modified":"2023-09-17T08:26:11","modified_gmt":"2023-09-17T12:26:11","slug":"us-junk-debt-issuers-use-window-to-extend-liabilities-but-at-higher-costs-morgan-stanley","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=62059","title":{"rendered":"US junk debt issuers use window to extend liabilities but at higher costs -Morgan Stanley"},"content":{"rendered":"
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\u00a9 Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS\/Lee Jae-Won\/File Photo<\/span>
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By Matt Tracy<\/p>\n

(Reuters) – U.S. junk-rated companies are using a more favorable debt issuance window this year to extend billions of dollars of short-term liabilities. But they were doing so at a high cost which will weigh on their margins and interest coverage ratios over the coming quarters, said a report by Morgan Stanley.<\/p>\n

The amount of junk-rated bonds and loans due in 2024 has roughly halved over the course of 2023 by $70 billion, with the overall debt load due by year-end 2025 down nearly 35% compared to year-end 2022 levels, the report said.<\/p>\n

Junk bond issuance has spiked in recent months on the back of strong demand after a broad rally in risk assets and increasing optimism on growth.<\/p>\n

Twelve high-yield issuers have raised $9.6 billion this week, making it the busiest week since November 2021, according to JPMorgan.<\/p>\n

Through August-end, 129 junk-rated borrowers raised $111 billion issuing new bonds. Ninety of these borrowers used the money raised to refinance, the report noted.<\/p>\n

“Despite the progress in addressing very near-term maturities, the proportion of debt due within 3 years remains elevated vs. history,” the report said.<\/p>\n

Refinancing is also coming at a higher cost. Junk bond issuers are now paying roughly 100 to 300 basis points more in coupons on new refinanced debt relative to in-place coupons, according to the report. Leveraged loan issuers are paying 60 to 250 basis points more when they refinance their loans.<\/p>\n

But the opportunity to refinance is not open to all junk-rated issuers. <\/p>\n

“We think defaults should inch above long-term averages given the lack of sponsorship for the weakest names, and downgrades from B- to CCC should remain elevated,” it said.<\/p>\n

The riskiest leveraged loan issuers – particularly those rated B3\/B- or lower by Moody’s (NYSE:) and S&P – make up a major share of the debt due next year. <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS\/Lee Jae-Won\/File Photo By Matt Tracy (Reuters) – U.S. junk-rated companies are using a more favorable debt issuance window this year to extend billions of dollars of short-term liabilities. But they were doing so […]<\/p>\n","protected":false},"author":1,"featured_media":21348,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-62059","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nUS junk debt issuers use window to extend liabilities but at higher costs -Morgan Stanley | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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