The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Loan trading gathers pace

Secondary loan trading has traditionally been seen as rather a dirty business by European financial institutions.

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. CIBC, Bear Stearns, Deutsche Bank and CSFB are said to have been the most active traders this year. But over the past 18 months, more and more banks have begun to set up loan trading desks. "It can be a very profitable business," says a loan trader, estimating that a two-man trading team can make $10 million in a good year.

The main reason for this is that lenders are much more nervous about holding loans on their balance sheet than they were in previous years and therefore much keener to sell their loans shortly after syndication. According to one loan trader, more than a quarter of Messer Griesheim's loans - $400 million worth of paper - was being traded in the secondary market within 48 hours of the deal being closed.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree