The breaking wave

Hedge funds and other non-bank credit investors have become the largest players in the leveraged loan market in Europe, surpassing banks for the first time. What implications does this have for regulation of the sector, underwriting standards and the quality of CLO collateral? Alexander Campbell reports


The world is awash with leveraged debt. By the middle of last year, European issuance of leveraged loans had smashed the records set in the late 1990s and was still growing. Total transaction volume hit EUR200 billion at the end of 2006 and is forecast to be even higher this year. The story is similar in the US, where 2006 volume was up 62% on the year before at $480 billion - also a new record. Initial reports for 2007 show that growth is not yet slowing - the first three months saw a record

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