What Brexit Means for Loans

“Thank God for the Electoral College.” Thus the co-head of a major credit trading desk put a brave face on the US political outlook after last week’s stunning Brexit vote.

And while the wisdom of our Founding Fathers may shield us from a similar upheaval in the direct popular vote for President, there’s no guarantee that past party precedence in the electoral vote won’t end up with the same surprising turnabout.

Beyond trading and currency turmoil, there was little certainty of what other immediate financial fall-out would accompany the “Leave” outcome. Equities have taken a hit, though most selling was due to dealers reluctant to hold positions over last weekend.

High-yield bond prices, the most sensitive of credit instruments to bad economic news, traded off a few points, but otherwise shrugged off events in Europe. Same with broadly syndicated loans; prices were generally “quoted lower” as buyers searched for bargains. Sellers sought clarity amid uncertainty.