Capital Markets

Money Finally Flows into Junk-bond Funds

It's becoming easier for corporate issuers to sell high-yield paper into the market.
Stephen TaubJune 9, 2006

At long last, companies thinking about raising money in the junk-bond market have reason for optimism. High-yield bond funds enjoyed $40.8 million of net inflows in the most recent week, according to Dow Jones.

The inflow came after eight straight weeks of net outflows from the risky asset class, according to the report, which was based on findings by AMG Data Services. Further, in the previous week, nearly $250 million was removed from junk-bond funds.

But the picture has brightened considerably since then. During the most recent week, 217 funds reported inflows, up from 127 the previous week, while 168 funds reported outflows, down from 250 the previous week, according to the news service.

Perhaps the reason for the upturn in net inflows is that investors have noticed that junk-bond funds have been outperforming most other fixed-income classes, according to the wire service.

Whatever the reason, the more money that flows back into junk-bond funds, the easier it becomes for companies to sell new paper into the market.