UK’s Beaten-Down Assets Give Its Junk Loans an Unexpected Edge

Tax rises loom. Borrowing costs remain stubbornly high. And inflation is still way above target. But for investors in UK companies there’s at least one bright spot: sterling junk loans.

Typically an unloved, illiquid corner of corporate debt markets, leveraged loans denominated in the UK currency are having their moment in the sun — £21.2 billion ($27.9 billion) of issuance so far this year, according to data compiled by Bloomberg, an annual record with two months still to go.

Among the five £1 billion-plus deals inked this year were an amend and extend for forecourt operator Motor Fuel Group ...