Growing pains of leveraged finance

Nowhere is the convergence of bond and loan markets more obvious than in the business of lending to less creditworthy companies. Over the past three years, Europe has gained a reasonable-sized high-yield bond market. But another high-yield market has also grown rapidly in that time – leveraged loans. In 1999 just over $22 billion-worth of high-yield, or leveraged loans were extended, with nearly $17 billion lent in the First half of 2000. By comparison, high-yield bond volumes in 1999 were just under $21 billion, with a further $10 billion or so raised up to June 2000.

Leveraged loans typically Finance leveraged buyouts and other acquisitions.