Pension Funds Hunting Yield Return to Bonds Tied to Risky Loans
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Pension funds seeking higher returns as global central banks suppress interest rates have stepped up their purchases of securities that bundle high-risk corporate loans.
The funds acquired about 8 percent of the top-rated U.S. collateralized loan obligation notes issued in the first half of this year and 7 percent of the riskier mezzanine slices of the deals, according to Citigroup Inc. data. That compares with “minimal” amounts a few years ago.