A $1 Billion Junk Bond Down 38% in Less Than a Year Shows Just How Much the Market Has Changed

If you liked it at 7.5%, you’ll love it at 18%?

Payday lender Curo Group Holdings Corp. sold $750 million of junk bonds about a year ago, offering investors a juicy yield of 7.5% in return for the risk of taking on exposure to a wide variety of consumer lending. It then sold another $250 million of the securities in November at slightly above face value. The bonds — now rated CCC+ by S&P Global Ratings — yield a whopping 17.9% and are trading at just 62 cents on the dollar.

It’s quite a change from last year, when both the first deal and the reopening were increased in size thanks to rampant demand from investors for the debt.

Of course, a rapid rise in interest rates has pushed prices down for a wide range of government and corporate debt, with sales of even investment-grade bonds that carry higher credit ratings drying up in recent weeks. But the sizable yields on offer from the Curo debt maturing in 2028 suggest that duration risk, or sensitivity to interest rates, is less of a factor here.