A recent challenge to the legality of leverage lending guidance could have broad implications for issuers, underwriters and investors in corporate loans. But the end result could be added complexity, rather than a wholesale easing of restrictions on lending to heavily indebted companies, according to participants at an industry conference in New York.

The guidance effectively blocks banks from making loans to companies that have a debt-to-earnings ratio greater than six times, or are unable to pay down a significant portion of their debt quickly. It was promulgated four years ago, in March 2013, by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corp.

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