Shadow US banks cool on riskier leveraged loans

Lowest-quality syndicated loans held by non-banks fall, though they remain well above pre-pandemic levels

Shadow US lenders jettisoned riskier syndicated loans in 2021, though subprime exposures continued to retain a far higher book share than before the pandemic, data from federal agencies shows.

As of end-September, non-bank lenders – including hedge funds, pension funds, insurers and securitisation pools – held $308 billion of US syndicated loans tagged by supervisors as ‘non-pass’, meaning they had subpar risk characteristics or were unlikely to be repaid in full.

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The figure was

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