
Loan-heavy borrowers may spell trouble for investors
US high-yield borrowers that relied wholly on loans are now vulnerable to rising rates

A decade of loose monetary policy has led risky US companies to borrow at rock-bottom rates in the loan market. Now analysts are warning that borrowers with loan-only balance sheets are more vulnerable to downgrades and defaults as higher interest rates bite. And investors are pulling back from certain sectors.
The percentage of loan-only issuers in the Morningstar LSTA US Leveraged Loan Index stood at 58% at year-end 2022, according to Barclays, up from 38% a decade earlier. Loan-only
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Investing
‘Spectacular’ vol disconnect ‘ominous’ for risk assets
Historic divergence has caught the eye of Boaz Weinstein and others
Investors zero in on short-dated options to trade US inflation prints
But critics say 0DTE products are increasing volatility around CPI announcements
Leveraged loan investors brace for lower recoveries
Buy-siders expect to recoup up to 30 percentage points less if borrowers default
The future of capital raising in Asia: inside Crédit Agricole CIB’s client-centric solution offerings
Asia’s fixed income markets represent a pool of prospects in which investors can allocate capital to markets that are relatively isolated from global macroeconomic trends
Smart beta pioneer looks to shake up cap-weighted indexes
Rob Arnott says investors can easily avoid hidden costs of traditional indexes
Still Trussed up: UK pensions confront fallout from LDI crisis
Trustees and consultants are making risky trade-offs as interim guidance increases the cost of hedging
BNP Paribas quants ‘industrialise’ portfolio construction
Firm says tech, five years in development, takes two hours to do jobs that previously took two days
Central banks grapple with market backstop design
BoE’s Hauser and Fed’s Logan discuss pros and cons of repos vs asset purchases