Investor interest in junk bonds continues to wane, according to a piece in The Wall Street Journal. And that could spell trouble for heavily indebted companies such as Sprint (NYSE:S).
Sprint and others with a lot of red ink on the books are likely to face stingier investors and much higher costs when they need to refinance, the Journal notes, citing a report from Standard & Poor's. Roughly $120 billion in junk-rated debt will come due this year, and that figure will grow to $430 billion in 2020.
Sprint, meanwhile, hasn't posted a profit since 2006, and an analyst cited in the report estimates the carrier has 18 to 24 months to reverse course or run out of funding. Sprint has a deep-pocketed parent in Softbank, of course, and it is cutting costs dramatically and it may yet find innovative ways to drum up new revenues. But the fate of the smallest tier-one U.S. carrier has never looked so uncertain, and the flagging junk bond market isn't helping things. Article