PineBridge Warns of Credit Risks Rising as Demand Exceeds Supply

Soaring demand for a dwindling amount of junk-debt issuance is increasing the risk of credit market mishaps, says PineBridge Investments.

Investors keen to lock in historically high yields before interest rates fall have piled into debt from risky companies. While US corporates have steadily tapped bond and loan markets this year, they’ve done so mostly to refinance their obligations, leaving investors with less supply and more cash to buy debt.

With that dynamic in play, there’s a risk of investors making bad credit decisions, Jeremy Burton, the firm’s portfolio manager for US high yield and leveraged loans, said ...