US junk bond buyers take big risk as private deals become the norm

New York

THE riskiest corporate borrowers are selling more debt than ever in the darkest corner of the bond market.

For the first time, a majority of US speculative-grade debt issued this year was done through private offerings, accounting for a record 60 per cent of all sales in 2015, up from 40 per cent last year, according to Xtract Research LLC. The sales exempt borrowers from US securities laws requiring minimum financial disclosure and investor protections. Such debt allowed Murray Energy Corp to raise US$1.3 billion to become the third-largest coal producer in America and gave Citgo Petroleum Corp US$1.5 billion to fund a dividend to its Venezuelan parent.