Syndicated loans: How hedge funds have shaken up lending

The syndicated loans sector’s transformation from dominance by bank holders to a growing role for institutional investors has already happened – now the predominance of hedge funds is encouraging new technology.

A growing number of institutional investors are turning to the loans market for diversification and returns. “If you look at large syndicated loans, banks now comprise the smallest section of lenders,” says Neil Wessan, managing director and co-head of the private placements group at investment bank Jefferies.

“Syndicated loans are a nascent asset class that investors are turning to for attractive risk-adjusted yield, diversification, and limited correlation with other investments,” says Peter Gleysteen, former head of JPMorgan Chase’s syndicated loans business.

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