Meandering
Elite Member
- Joined
- Feb 26, 2006
- Professional Status
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- State
- Pennsylvania
Fitch Ratings said Monday that loans to companies with low credit ratings -- known as leveraged loans -- climbed to $1.22 trillion outstanding in May. That figure, up 20% from a year earlier, outstripped the junk-bond market, which slid by 1% to $1.21 trillion in May from the year earlier. More loans are going to small, first-time borrowers whose credit quality is untested, and credit ratings are decreasing, even within the spectrum of the already subinvestment-grade junk category, according to the analysts.
The leveraged loan market, which can bring banks and investors higher yields but also a higher risk of default, has doubled in size in the past five years, triggering warnings from the International Monetary Fund and other observers that an economic downturn could bring big losses, even as rising U.S. interest rates are projected to hurt companies' ability to afford payments on the typically floating-rate debt.
According to analysts at Bank of America, underwriting quality has declined as the market accelerated, partly due to the increasing prevalence of "covenant-lite" loans that give fewer protections to lenders or the investors who buy them. Some 80% of loans now are considered "covenant lite," up from 10% in 2010, according to Bank of America.
https://www.thestreet.com/markets/j...ket-as-investors-chase-higher-yields-14618217
Naw, nobody writes high priced mortgages anymore.
Only the names change, the game remains the same.
And in 1994
Junk Loans, Not Bonds, Are Hot on Wall Street
As the underwriting of junk bonds has begun to cool this year, some Wall Street firms are aggressively moving into a business that until now has been the preserve of commercial banks. Call it junk loans.
In recent months, Merrill Lynch & Company, Lehman Brothers Inc., CS First Boston and Goldman, Sachs & Company have raided the ranks of the commercial banks, hiring away executives experienced in the art of putting together corporate loan packages and assembling groups of banks to put up the cash.
This month, Lehman Brothers arranged a $50 million loan for Acme Metals Inc., a steel producer in Riverdale, Ill. Merrill Lynch is about to complete its first loan deal, a $126 million credit for the Best Buy Company, an electronics retailer based in Minneapolis.
https://www.nytimes.com/1994/08/31/business/junk-loans-not-bonds-are-hot-on-wall-street.html
Don't worry,
Short term memory loss will get us out of it this time.
.
The leveraged loan market, which can bring banks and investors higher yields but also a higher risk of default, has doubled in size in the past five years, triggering warnings from the International Monetary Fund and other observers that an economic downturn could bring big losses, even as rising U.S. interest rates are projected to hurt companies' ability to afford payments on the typically floating-rate debt.
According to analysts at Bank of America, underwriting quality has declined as the market accelerated, partly due to the increasing prevalence of "covenant-lite" loans that give fewer protections to lenders or the investors who buy them. Some 80% of loans now are considered "covenant lite," up from 10% in 2010, according to Bank of America.
https://www.thestreet.com/markets/j...ket-as-investors-chase-higher-yields-14618217
Naw, nobody writes high priced mortgages anymore.
Only the names change, the game remains the same.
And in 1994
Junk Loans, Not Bonds, Are Hot on Wall Street
As the underwriting of junk bonds has begun to cool this year, some Wall Street firms are aggressively moving into a business that until now has been the preserve of commercial banks. Call it junk loans.
In recent months, Merrill Lynch & Company, Lehman Brothers Inc., CS First Boston and Goldman, Sachs & Company have raided the ranks of the commercial banks, hiring away executives experienced in the art of putting together corporate loan packages and assembling groups of banks to put up the cash.
This month, Lehman Brothers arranged a $50 million loan for Acme Metals Inc., a steel producer in Riverdale, Ill. Merrill Lynch is about to complete its first loan deal, a $126 million credit for the Best Buy Company, an electronics retailer based in Minneapolis.
https://www.nytimes.com/1994/08/31/business/junk-loans-not-bonds-are-hot-on-wall-street.html
Don't worry,
Short term memory loss will get us out of it this time.
.
