NWL - Leveraged Loans: A Ticking Time Bomb How Investor Can Take Advantage Of This?
Leveraged loan market
The leveraged loan market is now worth $1.4 trillion, 75% higher than 2008 highs and that’s larger than the junk bond market- $1.2 trillion. Essentially, leveraged loans are borrowed by firms that are less creditworthy and below investment grade. As the Fed held rates at lower levels for a very long time, demand for leveraged loans has skyrocketed from yield-chasing investors. Companies took advantage of this and managed to issue covenant-lite loans, which will not help to improve transparency or any other underlying issues with the borrowers, thus, reducing protection.
The graph