Secondary loan trading has traditionally been seen as rather a dirty business by European financial institutions. Until recently, many banks wouldn’t sell any of their loans at all for fear of irritating LBO sponsors who like to know who owns their debt in case they need to reschedule interest payments or change their covenant requirements.
As a result, the number of committed loan traders has been quite small. “Very few banks allocate capital specifically for leveraged loan trading,” says Ross Williams, a loan trader at Bear Stearns in London.
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