Systemic Risk

Leveraged Loans and Systemic Risk (Last of a Series)

If nothing else, the history of leveraged lending since the credit crisis shows both regulators and regulated entities have worked to shift loans off bank balance sheets. The object of Leveraged Lending Guidance, in turn, was not to eliminate credit risk, but limit the most aggressive bank lending practices – for example, leverage over six times

Leveraged Loans and Systemic Risk (Second of a Series)

According to a Harvard study, middle-aged men who did 40 pushups have a 96% lower risk of cardiovascular disease than those who did 10 or fewer. Not since eighth grade gym class has anyone ordered us to “drop and give me twenty.” But surely in all those formative years we comfortably amassed 40 pushups. To

Leveraged Loans and Systemic Risk (First of a Series)

“It is difficult for us to envision a scenario in which the leveraged loan market causes the next financial crisis.” – Beth MacLean, loan portfolio manager, PIMCO. We aren’t often torn between which notable Quotes of the Week to feature. This issue, however, presented us with outstanding insights from two long-time credit practitioners. Let’s go

Search and Recovery (Last of a series)

As we conclude our special series on leveraged loan recoveries, let’s take a look at one structure that is testing the way credit managers think about loan value. Unitranche financings are so much a part of the middle market buyout landscape today, that it’s hard to imagine a time without them. Yet on the evolutionary

Search and Recovery (Fourth of a series)

For those of you who sensed last Friday was a special day, but couldn’t put your finger on why, we offer this explanation: On November 16, the annual General Conference on Weights and Measures in Paris voted unanimously to redefine the kilogram. For decades metrologists have been in a tizzy since Le Grand K, the

Search and Recovery (Third of a series)

Continuing with our special series on leveraged loan recoveries, let’s turn to one of the most pondered questions on the subject; namely, how will covenant-lite loans fare in the next downturn? At a recent loan market conference, senior S&P analyst Ruth Yang reviewed the lite environment. She reminded attendees that broadly syndicated leveraged loans without

Search and Recovery (Second of a series)

News reached us from Harvard’s Astrophysics Center of an interstellar object of unknown origin spotted passing through our solar system. Named Oumuamua (Hawaiian for “scout”), the cigar-shaped “stadium-size” UFO demonstrated “excess acceleration” on its trek past the Sun and back out into space. Given the unusual trajectory, scientists theorized it could be “a fully operational

Search and Recovery (First of a series)

You know we’re at some kind of inflection point when two former chairs of the Federal Reserve come out in the same week with warnings about risks in financial markets. First, in an interview with the Financial Times, Paul Volcker spoke about systemic risks: “There’s a lot of leverage going on now, a lot of