Saudi Arabia has shut down half of its oil production after drones attacked the world's largest oil processing facility in the kingdom.Marketsread more
Yemen's Houthi rebels have claimed responsibility for the attacks, which created a huge fire at a processor essential to global energy supplies.Politicsread more
Oil prices are expected to jump as much as $10 per barrel after a coordinated drone strike hit Saudi Arabia's largest oil field, forcing the kingdom to cut its oil output in...Marketsread more
Trusii's hydrogen water machines were supposed to help users with their health problems, but customers claim the company is involved in a giant scam.Technologyread more
The decoupling of the world's two weightiest economies seems as inescapable as its extent and global impact remains incalculable.Politicsread more
The trucking industry is worth hundreds of billions of dollars per year. Uber is going after this market with Uber Freight, an online platform that matches truckers with...Technologyread more
BlackBerry has reinvented itself to become a leader in securing mobile communications and in embedded communications. Next year it plans to roll out new products. CEO John...Evolveread more
Trailers have become a cult phenomenon. Even short teasers that reveal little about the plot of the upcoming film are headline-worthy. Blogs and forums have become devoted...Entertainmentread more
Thanks to the performance of Beyond Meat, investors who focus on venture-backed tech IPOs have done well this year despite some notable disappointments.Technologyread more
Software company Intuit, maker of tax helper TurboTax, is in its eleventh year of stock gains and up 36% this year.Investingread more
CNBC did a deep dive through the most recent Wall Street research to find stocks with upside potential.Marketsread more
Leveraged loans, which helped cause the last financial crisis and have drawn fear that they could be a spark in the next one, are showing further signs of cracking as investors flock from the market and volumes dry up.
Mutual funds that track the debt issued traditionally to companies with weak balance sheets and poor credit have seen $18 billion in outflows over the past 10 weeks, including $949 million for the period ended Jan. 23, according to data Refinitiv's LPC team released Tuesday.
For perspective, the funds have total assets now of $148 billion. The funds have seen investors pull 16 percent of assets since the space peaked in September at $175 billion.
Performance of corporate debt actually has been decent: As a group, bank loans have managed to eke out a 2.2 percent return so far in 2019, according to Morningstar. The returns are positive though well below the performance of most other fund categories.
However, investors appear to be getting edgy after some high-profile warnings about potential danger spots.
Former Federal Reserve Chair Janet Yellen, for instance, said in December that the leveraged loan industry, which now boasts around $1.3 trillion in assets, is one area where risk-taking could exacerbate an economic downturn. Moody's Investors Service, which rates the debt, said covenant quality, or the protection banks and investors get for the loans, has reached historic lows.
As the warnings were being issued, both investors and companies looking for funding left the market.
Mutual fund outflows in December alone hit $15.4 billion, according to Refinitiv. The firm's LPC group surveyed market participants and found they expect issuance to be weak this year, with most looking for it to be in a range of $90 billion to $110 billion. That would be a massive drop-off from 2018, which saw $274 billion in issuance during the first half alone, according to LeveragedLoan.com.
The key risk point for the industry is securitization, or the bundling of the loans into offerings such as collateralized loan obligations.
Yellen mentioned that danger specifically, saying the CLO industry for leveraged loans looked a lot like the subprime mortgage offerings that led up to the financial crisis. Wall Street sells CLOs to investors looking for yield; during the crisis, the securities became so opaque that investors had a hard time deciphering what they even held. The issues over securitization helped spark a lack of confidence that led to liquidity drying up in financial markets.
Refinitiv said CLO issuance hit a record $128 billion last year, though December saw the market sink to a two-year low.
One final issue hitting the industry has been the Federal Reserve.
Higher interest rates make the products more attractive, but central bank officials in recent days have become more tepid about the pace of increases. The possibility that the Fed may enact any hikes this year is another problem for the industry, Refinitiv LPC said.
The firm said the appetite for issuance to Athenahealth and Dun & Bradstreet, which launched earlier this week, will provide signals for this year's market.