LSTA Data and Analysis: Secondary Trading & Settlement 2016 Executive Summary

January 27, 2017 - Clearly there is a substantive difference in Trade and Settlement Liquidity in the loan market, and not just by definition but also in measurement certainty.  Trade Liquidity is often defined as the ability, or speed to which an asset can be bought or sold at a fair price (with little or no price movement).  On the other hand, Settlement Liquidity is defined as the ability to turn that asset into cash “on hand”.  There are several loan attributes that can determine trade liquidity, which will generally remain constant through the life of the loan – the mostly widely accepted being facility size which dictates the number of lenders in the name as well as the number of trading desks making active markets.  On the other hand, establishing a loan’s settlement liquidity is not as easy and does not always remain constant (turns out size doesn’t matter). 

LSTA Full and Associate Members can access the full Summary, here.  For more information, please contact Ted Basta.

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