Leveraged loans

Over 75% of loans reported mark-to-market declines in prices in the secondary market – or 4.7 loans for every loan price that advanced, according to the LSTA.

Lenders including Barclays and Deutsche Bank have been left holding at least $1.5 billion of leveraged loans that they've struggled to sell over the past several months, according to people with knowledge of the matter.

No investor wants to touch the riskiest high-yield debt. The bank’s asset manager says it’s cheap enough that there are opportunities.

S&P's review of leveraged-loan deals across multiple sectors found only 17% of lenders have provisions that would disallow borrowers from transferring collateral assets to unrestricted subsidiaries outside lender reach.

The $5 billion financing package may also include around $1 billion of secured debt that would be sold to investors, as well as about $1.7 billion in letters of credit that would be split among participating banks

Barely noticed in a corner of the financial markets, leveraged loans originally worth about $40 billion are staging their own private meltdown.

Members of the House Financial Services Committee cited leveraged lending, cybersecurity and the switch to a new interest rate benchmark among potential systemic risks that keep them up at night.

The increases are mostly at the junior debt levels of deals, according to the Refinitiv research unit.

Fresh data from the Fed, FDIC and Bank of England shows that, directly or indirectly, banks are taking on more leveraged loans. But whether this puts their loan and securities portfolios at risk remains open for debate.

“Rating agencies have been complacent and allowed debt/Ebitda and debt/equity ratios to deteriorate without a corresponding reduction in credit ratings,” Einhorn said in the July 25 letter.