Speculative-grade companies have $1.06 trillion of debt maturing between 2017 and 2021, with the bulk of it, $933 billion, coming due after 2019, Moody's said Wednesday in a report. New issuance is likely to rise in the second half of this year to start addressing those maturities, analysts led by Tiina Siilaberg wrote.

Debt markets aren't prepared to absorb the maturities, according to Moody's. Demand for collateralized loan obligations, which bundle leveraged corporate loans into securities, has fallen from its 2014 peak, and credit ratings for both bank loans and high-yield bonds have deteriorated, according to the report.


The backdrop includes potential changes in federal rules and macroeconomic conditions by 2019 that could make high-yield bonds less attractive. Tighter monetary policy, higher volatility, elevated valuations and unfavorable changes to U.S. tax law could all contribute to pressure on spreads and underperformance in the sector, according to a separate report from Pavilion Global Markets, the Montreal-based trading and research firm.

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