Prisoners stand at the western fence of a Willacy County prison in Raymondville, Texas. An investor who paid $7,650 for $100,000 worth of Willacy County prison bonds that changed hands at a deep discount in December could make an almost $60,000 profit by selling them now, based on trades tracked Friday by the Municipal Securities Rulemaking Board. PHOTO: DAVID PIKE/VALLEY MORNING STAR/ASSOCIATED PRESS

President Donald Trump’s immigration crackdown is making the bonds of some deserted prisons valuable again.

Homeland Security Secretary John Kelly last week directed federal immigration and customs officials to “take all necessary action and allocate all available resources to expand their detention capabilities and capacities at or near the border with Mexico.”

The directive could be a boon to investors in mothballed prison facilities in Texas and Arizona: in its aftermath, their thinly traded, deeply depressed bonds have soared. Holders of defaulted prison debt have a much better shot at repayment now that President Trump’s tough stance on illegal immigration appears to have intensified interest among potential purchasers of the facilities.

An investor who paid $7,650 for $100,000 worth of Willacy County, Texas, prison bonds that changed hands at a deep discount in December could make an almost $60,000 profit by selling them now, based on trades tracked Friday by the Municipal Securities Rulemaking Board.

“The prison junk bond sector of the municipal market was more or less left for dead and now appears to have new life,” said Jon Barasch, a director at ICE Data Services.

There is about $1.1 billion in outstanding high-yield jail or prison bond debt, sold by 28 municipal issuers, according to the firm. The bonds represent a tiny corner of the $3.8 trillion municipal market.

Three Texas facilities in Jones, Maverick and Willacy counties that have attracted interest from prospective buyers and operators together represent about $140 million in outstanding bonds. Some trade only a handful of times a year.

Bonds issued to build the Jones County prison jumped to nearly 60 cents on the dollar last week from about 12 cents in December, according to MSRB data. Bonds issued to refinance the Willacy County prison jumped to more than 65 cents on the dollar from less than eight cents at the end of last year. Prices on the Maverick prison bonds remain largely unchanged.

A trustee for bondholders in a prison in Jones County that defaulted on its bonds in 2011 said this month that it had received an offer to buy the facility for $30 million. On Friday, a private company that until 2015 ran an immigrant detention center in a local prison in Willacy County confirmed that it is working with the county to try to use the facility for that purpose again. And a trustee for bondholders in the Maverick County detention center, which defaulted in 2014, disclosed Thursday that it is working to close a takeover offer from an operator of immigrant detention facilities.

Debt connected to two other defaulted prisons in Texas and Arizona also traded higher Friday. Some bonds issued to open a Dickens County, Texas, detention center traded at nine cents on the dollar after trading at between one and two cents for much of last year. Bonds issued to refinance a detention center near Yuma, Ariz., jumped to nearly 60 cents after trading at 40 cents on the dollar in December.

The bond rally is only the latest good news for prison investors. On Thursday, Attorney General Jeff Sessions revoked an Obama administration directive to phase out contracts with for-profit prison operators. Stocks in private prison companies extended a rally that began with Mr. Trump’s November election.

Since election day, shares in CoreCivic Inc. have climbed 140% and those in GEO Group Inc. have doubled.

“There’s material opportunity for private prisons to expand their capacity,” said analyst Michael Kodesch of Canaccord Genuity.

That expansion could benefit municipal issuers struggling to pay back construction costs for empty prisons. As in the case of Willacy, the federal Bureau of Prisons sometimes contracts to use those facilities as privately operated immigrant detention centers.

Just six months ago, S&P Global Ratings predicted near-certain default for the Willacy prison, after a 2015 prisoner revolt seriously damaged the facility, prompting federal officials to cancel the contract and relocate the inmates.

The Jones County prison defaulted in 2011 after the state of Texas in 2010 canceled a plan to house inmates there, according to documents filed with the Municipal Securities Rulemaking Board.

Prison operator Management & Training Corp., the private company that ran the Willacy facility until 2015, said unused local prisons are often among the options it considers for operation as immigrant detention centers. About 65% of immigrants detained by the Immigration and Customs Enforcement agency are housed in facilities operated by private, for-profit contractors, according to a December report by the Homeland Security Advisory Council.

A takeover of a defaulted prison could allow the trustee to cancel the bonds and at least partially reimburse bondholders. The offer disclosed by Maverick County detention center will pave the way for the trustee to distribute more than $19 million to bondholders, the disclosure said.

Even before Mr. Trump took office, the U.S. was running out of space to hold detained immigrants. Homeland Security officials have been struggling to find free beds since October, when the number of people detained by the Immigration and Customs Enforcement agency hit 40,000.

S&P Global Ratings Managing Director Horacio Aldrete said both jail operations contracts and presidential administrations are far shorter than the multidecade life of a municipal bond. The sector “will continue to be vulnerable,” Mr. Aldrete said.

—Beth Reinhard contributed to this article.