High Yield Debt Still Rolling Out

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It's a borrowers market out in high-yield world. Banks and hedge funds continue to pour money into companies with poor-credit ratings, giving the borrowers leverage to negotiate away a lot of traditional covenant restrictions, the Wall Street Journal reported today.
Judging from today's Goldman conference call, this seems likely to continue. Most of the discussion of corporate debt was focused on the corporate appetite to take on more debt, rather than on the availability of lenders to supply the debt. From the tone of both the hosts and the participants, we'd say there's clearly plenty of money out there to do more deals.
One thing the Journal doesn't make clear is that it's not just the amount of money available for lending that is altering the negotiations for junk bonds and high yield bank debt. A lot of hedge funds are getting involved earlier and earlier in the deal process and many do not have the appetite for closely negotiating covenants that some traditional lenders might. Borrowers, however, remain highly focused on getting covenants as loose as possible, creating a negotiating disequilibrium.
By the way, calling these things "junk bonds" is a bit ridiculous. Can't we just put that label into the ashbin of history?

High-Risk Debt Still Has Allure For Buyout Deals
[Wall Street Journal]

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