Junk-rated companies are paying up to borrow in the loan market as investors yank more than $900 million from funds that buy the debt.

At least six companies in the last week including KKR & Co.’s TASC Inc. and TravelClick have increased yields on their loans being marketed in the U.S., according to data compiled by Bloomberg. About 20 percent of borrowers have had to offer higher interest rates or yields than initially proposed since the beginning of March, compared with fewer than 9 percent during the first two months of the year, Bloomberg data show.

Loan investors are getting more selective about what they will buy after facing three weeks of didn’t immediately provide comment on the financing, with the end of a 95-week streak of cash inflows relieving pressure on fund managers to put money to work in a market that Federal Reserve officials have said shows signs of froth. That’s sent borrowing costs higher and led issuers to offer better terms for lenders.

“They’re getting some push back in pricing in the marketplace because investors are of the view that credit had become too cheap,” Rich Farley, partner at Paul Hastings LLP’s leveraged finance group in New York, said in a telephone interview. “The window is not closing on any particular type of transaction -- it’s just going to cost you a bit more.”

Issuance Drop

New first-lien leveraged loans sold to institutional investors, such as mutual funds, paid an average yield of 4.07 percentage points more than benchmark rates in April, the highest since June and up from 3.71 percentage points in February, according to Standard & Poor’s Capital IQ Leveraged Commentary & Data.

Junk-loan mutual funds had their first outflow the week ended April 16. Investors pulled money the next two weeks, too, redeeming $664 million this past week in the biggest withdrawal since August 2011, according to Lipper.

“The market is self-correcting,” Jeff Cohen, the New York-based head of U.S. loan capital markets for Credit Suisse Group AG. “We’re in a rare patch where it’s become an investor’s market.”

Companies raised about $39 billion of U.S. leveraged loans last month from institutional investors, the least since September, according to data compiled by Bloomberg. Banks arranged a record $685.6 billion of institutional loans in 2013, the data show. Junk loans are those rated below Baa3 by Moody’s Investors Service and below BBB- at S&P.

TravelClick last week increased the rate on a $385 million loan that will finance its buyout by Thoma Bravo LLC to 4.5 percentage points more than the London interbank offered rate from a previously proposed spread of 3.75 percentage points to 4 percentage points, data compiled by Bloomberg show.

Increased Discount

The New York-based provider of technology services to the hotel industry also increased the discount on the buyout loan to 99 cents on the dollar from 99.5, the data show. Original-issue discounts reduce proceeds for the borrower and boost the yield for investors.

TASC, a U.S. government contractor owned by private-equity firms KKR and General Atlantic LLC, last week also revised terms on a $200 million second-lien term loan it’s seeking to refinance debt, data compiled by Bloomberg show.

The Chantilly, Virginia-based company offered to sell the seven-year loan to investors at 98 cents on the dollar after initially trying to issue the debt at par, the data show.

Amy Gooen, a spokeswoman for TASC, and Kristi Huller, a spokeswoman for KKR, declined to comment. Danielle DeVoren, spokeswoman for TravelClick who works at KCSA Strategic Communications, didn’t immediately provide comment on the financing. Amber Roberts, a spokeswoman for Thoma Bravo who works for Lane, declined to comment.

Paid More

“It’s a combination of deal size and the quality that’s driving the deals a little bit wider,” Beth MacLean, an investment manager at Newport Beach, California-based Pacific Investment Management Co., said in a phone interview.

Investors want to be paid more for riskier financings, and larger deals require broad demand at the same time that mutual funds are facing withdrawals, she said.

Flint Group last week increased the interest rates on U.S. dollar and euro-denominated loans the inks supplier is seeking to finance its purchase by Goldman Sachs Group Inc.’s merchant banking division and a unit of Koch Industries Inc., according to data compiled by Bloomberg.

The interest rate on the company’s planned $860 million first-lien loan was boosted 0.25 percentage point to 3.75 percentage points more than Libor, the data show.

CLO Demand

Colin Stokes, a spokesman for Flint Group, and Andrea Raphael, a spokeswoman for Goldman Sachs, declined to comment. Melissa Cohlmia, a spokeswoman for Koch Industries, didn’t immediately return phone calls seeking comment.

While mutual fund demand is waning, other buyers are still supporting the market, according to Pimco’s MacLean. Collateralized loan obligations, the biggest buyers of junk loans that fueled the 2005-2007 buyout boom, will raise as much as $90 billion in 2014, potentially the most in seven years, according to a forecast last month from Wells Fargo & Co.

“You still have strong demand from CLOs,” she said. CLOs are a type of collateralized debt obligation that buy speculative-grade loans and slice them into securities of varying risk and return.

Buying Opportunity

The CLO boom hasn’t been enough to offset the change in sentiment. Emmis Communications Corp. last week increased the rate on a loan it’s seeking for an acquisition and to refinance debt, while M/A-COM Technology Solutions Holdings Inc. offered a larger coupon on a loan it’s seeking under a refinancing deal, Bloomberg data show.

Karen Dynes, a spokeswoman for Emmis, didn’t return telephone calls seeking comment. Husrav Billimoria, a spokesperson for M/A-COM, declined to comment.

Lenders are getting “better compensation” as companies increase yields to clear the market, said Scott Baskind, who oversees about $28 billion of assets in New York as chief investment officer of the bank loan team for Invesco Ltd. “It created a great buying opportunity for investors.”