Companies Not Shying From Hard-To-Sell Junk Debt
BDCs and other alternative asset managers that lend to small and mid-sized companies are filling a role traditionally dominated by banks, J.P. Morgan Asset Management's Shanahan said in a telephone interview. Holding smaller, less-traded securities can boost investor returns while maintaining a higher level of credit quality, he said.
"Credit is good and likely to be good over the horizon," he said. "People become less concerned about liquidity as you're less likely to need it in the near term."
Elsewhere in credit markets, the cost to protect against losses on U.S. and European corporate bonds jumped to the highest in five weeks. La Banque Postale SA is turning to the covered bond market to fund its mortgage business that has grown by about 50 percent over the past four years and can no longer be financed solely by customer deposits.