Reported 4 months ago
Companies sold a record volume of leveraged loans last month to capitalize on market demand, but recovery rates for defaults are decreasing, indicating increasing risks. Borrowers facing trouble are maneuvering creditors against each other to secure rescue funding, lowering recovery rates. While the loan default rate has risen to about 2.9%, the market remains discerning as demand persists for collateralized loan obligations, driving tight spreads and high secondary-market prices. However, there remains $87 billion of leveraged loans worldwide actively trading at distressed levels, posing challenges in the credit market.
Source: YAHOO