There’s been much talk in today’s U.S. leveraged loan market about how borrower-friendly deal structures and creative accounting by issuers are introducing increased levels of risk.
While that might be the case – loan market pros debate to what level credit is deteriorating – one metric is clear: There are more lower-rated borrowers in market now than at any time ever, including the height of the last credit cycle, in 2007-08.
Specifically, so far in 2018, 59% of outstanding leveraged loans are from issuers rated B+ or lower, according to the S&P/LSTA Loan Index. That’s up from 55% in 2017 and from just 37% in 2008, before the onset of the Financial Crisis.
With U.S. leveraged loan outstandings at $1.01 trillion at the end of September, that means the B+ or lower share of the asset class stands at roughly $600 billion. – Staff reports
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