Search This Blog

Saturday, June 1, 2024

Loan Frenzy Masks Rising Losses on Defaults: Credit Weekly

 

  • Liability management is reducing recovery rates on loans
  • Demand has sent spreads to their tighest level in two years

Companies sold a record volume of leveraged loans last month, taking advantage of the cash chasing credit. A glance at recovery rates for defaults, however, highlights a growing risk in this debt.

For newly issued first-lien debt in the US and Canada in the first quarter, investors could expect to get back less than 35% of their investment when loans sour, compared with 72% from 2018 through 2022, according to a presentation this month by S&P Global Ratings.

https://www.bloomberg.com/news/articles/2024-06-01/loan-frenzy-masks-rising-losses-on-defaults-credit-weekly

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.