It seems as if warning bells have been ringing in the sub-investment grade debt market forever. However, as commentators perpetually wail about covenant erosion and evaporating returns, all that happens is that the market gets bigger and bigger and bigger.
There are now $1.1 trillion leveraged loans outstanding in the US, according to S&P. The BIS quarterly review at the end of September asked if the rise of leveraged loans was a “risky resurgence”.
Chorus of concern
Even the IMF is concerned.
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