Do loans trump bonds for yield-seeking investors?

Inflows to European loans have never been stronger, but some investors have been deterred by loose credit standards and terms skewed in the issuer's favour. Lyxor Asset Management UK's Thierry de Vergnes investigates the pros and cons.

There have been record fund flows into European high yield bond and loan markets this year, as investors’ hunt for yield leads them in to pockets of credit markets.  At the same time both listed and private equity-backed companies have flocked to the market to take advantage of liquidity and lock in cheap long-term funding.  Issuance terms The good news for investors is that this rapidly growing market is increasing in depth and diversity, a plus for building well-balanced and diverse portfolios.  However, supply still lags demand, which empowers issuers to skew terms in their f...