Yahoo Finance Funds Linked to Morgan Stanley, Blue Owl Join Bond Sales Blitz
(Bloomberg) -- Business development companies, which invest in small and mid-sized firms typically too small or risky for banks to lend to, are getting in on a borrowing spree in the booming US investment-grade market.
Most Read from Bloomberg
Trump Vows ‘Day One’ Executive Order Targeting Offshore Wind
Biden Accuses China of ‘Cheating’ on Trade, Imposes New Tariffs
Flood of China Used Cooking Oil Spurs Call to Hike US Levies
S&P 500 Gets Close to All-Time High Before Key CPI: Markets Wrap
Morgan Stanley Direct Lending Fund which manages over $3 billion in assets, according to a filing, is looking to borrow $350 million to repay debt and for general corporate purposes, according to people with knowledge of the matter. Blue Owl Credit Income Corp., with close to $20 billion in assets, is raising $500 million through a long five-year bond to repay debt, said a separate person, who asked not to be identified as they are not authorized to speak about it.
Known as BDCs, the firms are seizing on the rally in credit markets to bolster liquidity, fund existing maturities and build out their credit curves while reducing bank revolver use, according to Bloomberg Intelligence analyst David Havens.
“The debt capital markets are open and receptive to BDCs,” said Havens. “BDCs are taking advantage of unusually placid debt markets to issue bonds on advantageous terms.”
That’s a change from the first part of 2023, when the companies were absent in the first five months of that year.
BDCs, whose roots go back to the Small Business Investment Incentive Act, passed by Congress in 1980 to give a boost to middle-market companies, generally trade wider compared to debt rated BBB from the financial sector. But BDCs have narrowed that gap to just 40 basis points from 120 basis points in May 2023, said Havens.
The BDCs are among six issuers selling debt in the US high-grade market on Tuesday. The sales come after Johnson & Johnson led 11 firms in pricing $11.35 billion on Monday.
Last week, 42 borrowers sold about $53 billion over a three-day stretch, the busiest such period since September 2021. Companies are rushing to sell bonds ahead of a key consumer price index reading on Wednesday after issuing over $700 billion of new debt so far this year, 34% higher than the same time in 2023.
Most Read from Bloomberg Businessweek
How the ‘Harvard of Trading’ Ruined Thousands of Young People’s Lives
US East Coast Ports Are Spending Billions to Profit From Asia’s Shifting Exports
Cheap Prison Labor Is Keeping People Locked Up Longer, Suit Alleges
‘The Caitlin Clark Effect Is Real,’ and It’s Already Changing the WNBA
©2024 Bloomberg L.P.
