Broadly syndicated loans to non-investment grade U.S. Corporations are widely misunderstood outside of the loan industry. A number of commentators imply that leveraged loans are shadowy corporate equivalents to pre-crisis sub-prime mortgages. This is clearly not true and, to respond to such conflations, the LSTA recently published this white paper addressing these views.
This week we cover 1H19 Review…Primary, Secondary & Sustainable Finance (and Bonus Litigation Finance)
In the past year, one might have noticed a certain alarmist tone in the press’s coverage of leveraged lending. Commentators have pointed to potential overheating, overleveraging (or, at least, overgrowth) of the loan market. We’ll acknowledge that leverage is higher and documents are looser. But we’d also gently recommend that commentators consider i) a data-based analysis of 2019 versus 2018 and ii) an apples-to-apples comparison to bonds. The real story is – as it often is – a bit more nuanced.
This week we cover Leveraged Lending Regs & Stats; Japanese Risk Retention; Green Loans; & LIBOR Nags
The past week has brought two notable research pieces on the state of credit. First, last Friday, saw the release of the Shared National Credit (SNC) Review, which discusses risks in the syndicated loan market. Second, this week, Covenant Review compared the credit stats of the largest LBOs of 2007, 2017 and 2018. We dissect both reports below.
Reports continue to appear about regulators opining on the leveraged loan market. And so, we once again go to the original sources to see what they are saying. We began this process in December, when we recapped views from the OCC Semi-Annual Risk Assessment and the Federal Reserve’s Financial Stability Report, as well as speeches and comments from Fed Chairman Powell, Vice-Chairman Quarles and Comptroller Otting.
There have been a flurry of news stories recently on the regulators’ views on leveraged lending and systemic risk. Being curious (and determined) folk, instead of simply reading the news, we went to the original sources; we drilled into the actual speeches and the supporting documents to see exactly what the regulators said about credit risk (the risk of default and loss) and systemic risk (the risk that the financial system suffers a shock and freezes). Their views are rather more nuanced than the headlines.
Since the Comptroller of the Currency spoke at Las Vegas in February, rumors have been flying that Leveraged Lending Guidance is dead. In fact, it is not. Below, we discuss what the Comptroller said in his speech as well as recap what we’ve heard – from very good sources – about the future of the Guidance.
Presentation done by Randy Schwimmer of Churchill
A presentation done by Meredith Coffey of the LSTA and Randy Schwimmer of Churchill at the RMA conference on March 14, 2018
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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.