The headline above is slightly – but only slightly – tongue in cheek. With all the noise around leveraged loans (and general silence around high yield bonds), one might think that i) loans suddenly have migrated down the capital structure and ii) loan documentation is far worse than bond documentation. In fact, neither is true.
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.
Become a Member
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.