(Bloomberg) -- Companies sold a record volume of leveraged loans last month, taking advantage of the cash chasing credit. A glance at recovery rates for...
-- 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.Global Banks Start Targeting a New Breed of Real Estate Risk
“The market is ravenous for paper but it is still making these determinations around credit risk,” said David Saitowitz, head of US liquid credit at Intermediate Capital Group Inc., a money manager. “It’s a bifurcated market that is quick to differentiate anything out of the ordinary.
“One can reasonably conclude that this cycle is likely to show record low recovery rates for defaulted senior loans,” Bruce Richards, co-founder of Marathon Asset Management LP, wrote on LinkedIn this week. “Recovery rates will be very interesting to observe given these lower price points at time of default, representing a large potential opportunity for distressed investors.
Banking giants that once had the most ground to lose to the burgeoning world of private credit keep finding more ways — and much more money — to pump into the sector. A controversial lending structure that lets companies pay interest with more debt is getting a new spin from private credit. Private credit funds are trying to scoop up more of Japan’s ¥4.5 quadrillion of financial assets to lend globally.
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