As well, Prime rate fund
, insurance company and hedge fund investment in leveraged loans has grown dramatically.
One factor driving the overall market is the surge of new lenders, such as collateralized loan obligation (CLO) and prime rate funds
, vehicles that have a big appetite for buying corporate debt and packaging it into securities for sale to institutional and individual investors.
Moreover, new credit-related activities like asset-backed commercial paper and prime rate funds
have provided business with additional alternatives.
Borrowing rates on high-yield bonds skyrocketed during the quarter, leading institutional investors -- Prime rate funds
and insurance companies that carefully weigh investments in loans and bonds -- often to opt for high- yield bonds, and their now hefty yield.
Banks and loan investors, such as prime rate funds
and insurance companies, already have shown enthusiastic responses to a number of deals late last year and so far in 1999.