Daily News: May 10, 2019

Leveraged Loan Risk Continues to Trouble Regulators


According to Reuters, the leveraged loan market has only grown more aggressive in the last six months, with almost 75% of broadly syndicated loans arranged in Q1/2019 covenant-lite compared to 58.9% of such loans arranged in the same period in 2013.

Reuters reports this has led to alarm among both current and former regulators, including Senator Elizabeth Warren, former Federal Reserve Chair Janet Yellen and Mark Carney, Governor of the Bank of England.

Reuters adds that while the Securities and Exchange Commission has also been keeping a closer eye on the collateralized loan obligation, loan and high-yield debt markets since the middle of 2018, its ability to regulate the origination of the underlying leveraged loans is severely limited.