With much of the financial industry's higher-rated bank loans already securitized, smaller, lower-rated loans to middle market companies are making up larger concentrations of balance-sheet CLOs, according to recent research by Bank of America Securities.

Though hesitant to call it a trend (as the deal sampling is still too small), ratings analysts confirm that there are several outstanding proposals that include larger portions of lower-rated bank loans, and agree that banks have already mitigated much of their significant risk exposures, which tend to be larger loans to larger, rated entities.

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