(Bloomberg) -- As fears of a severe US recession recede, investors flush with cash are looking to put money to work in junk assets. Companies with upcoming maturities are rushing to take advantage. Most Read from BloombergUS Consumers Near Day of Reckoning as Pandemic Cash Stash ShrinksVietnam Tycoon Loses $18 Billion After EV Maker’s Shares SinkBiden’s Top Lawyer to Depart White House as Probes Ramp UpCohn and Summers Talk Trump, China and Machismo by a Hamptons PoolBama Rush Has Students Showc
Anemic issuance means demand far exceeds supply in high-yield markets. That’s paved the way for borrowers to create a little more wiggle room via refinancing and amend-and-extend transactions ahead of a wall of more than $1.6 trillion of junk corporate debt that’s due for repayment through 2029.
“Credit spreads are now trading through our bull case in US investment grade and high yield, while approaching those levels in loans,” the strategists, including Vishwas Patkar, wrote in a note to clients. “While credit has lagged” the US rally in Europe, “overall valuations are also approaching our previous bull case targets.”
Concern around that higher-for-longer scenario has caused risk appetite to soften in recent days after minutes of the last Federal Reserve meeting further implied that the central bank was not done with raising interest rates. Some executives have warned of the implications for credit if interest rates remain high.
Country Garden Holdings Co. is seeking to extend a maturing bond for the first time ever and halted trading in local notes, leading to greater skepticism of the efficacy of China’s property policy help. Trucking firm Estes Express Lines struck a $1.3 billion deal to acquire all of Yellow Corp.’s terminals out of bankruptcy.
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