New York
SOME of the biggest buyers of company loans are scaling back, and it is hurting the market for buyout debt.
Money managers that buy loans and repackage them into bonds have cut back on their activity. Sales of the rebundled loans, known as collateralised loan obligations (CLOs), dropped 25 per cent in the first half of December from the same period last year, after falling 10 per cent in November.
The firms that issue CLOs buy about half the loans made to junk-rated companies. As demand from these money managers has waned, not to mention buying from retail investors, prices for leveraged loans have reached their lowest levels in more than two years.
The recent slowdown in CLO issuance -...
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