Institutions buying junk bonds and other such garbage are about to get clobbered. That’s down noticeably from 87.5 bps last year and 111.5 bps in 2016, according to LCD. Specifically, LBO loans this year offer institutional investors 75.1 bps of spread per unit of leverage (SPL).Indeed, by one metric, LBO loans are less attractive for an investor now than at any time since the financial crisis. Those yields aren’t what they used to be, however. LBOs has crept to a record-high in 2018 as yield-starved institutional investors flock to these deals, looking to put huge cash stores accumulated over the past 18 months to work.
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