In 2020, the Government Accountability Office (“GAO”) published an extensive report on Financial Stability and leveraged loans, noting that “[a]lthough regulators monitoring the effects of the pandemic remain cautious, as of September 2020, they had not found that leveraged lending presented significant threats to financial stability.” Notwithstanding the GAO’s findings and the leveraged loan default...
A recent internet meme posits that the U.S. banking system is on the precipice of collapse. Today’s catalyst,the Collateralized Loan Obligation or CLO, the theory goes, bears a resemblance to the similarly named CDO, which played a role in the 2008 financial crisis....
1 Credit Cycles & Systemic Risks Measuring Risk in the Loan Market 3 Comparing 2007 and 2019 The 2007 and 2019 leveraged loan markets are very different Credit Trend: In the tenth year of a recovery, most markets, including loans, have grown State: Leverage has climbed, interest coverage is solid, covenants...
Are There Real Systemic Risks for CLO Investors? 2 What Regulators Really Think About Loans and CLOs Source: S&P/LCD As reported by MarketWatch, May 7, 2019, in a speech at Yale University, Randal Quarles, Vice Chairman of Supervision, Federal Reserve Board observed… • The media has been overplaying and oversimplifying the story in such a...
1 The U.S. Syndicated Loan Market 2007 vs. 2018 The LSTA is a trade association for the syndicated loan market with more than 450 corporate members, including banks, loan managers and investors, law firms, accounting firms, service providers and more. The LSTA promotes a fair, orderly, efficient, and growing corporate loan market and provides leadership...
