credit high yield Markets

Leveraged Loan ‘Bubble’ Warnings Are A Thing Again And Goldman Is ‘Concerned’

"Fragile".

In Q4 of 2018, there was no shortage of dire-sounding commentary around leveraged loans. The warnings emanated from all corners of the financial universe including a veritable laundry list of “name brand” entities and individuals, who pretty much universally insisted that the market was a screeching tea kettle just waiting to explode By late December, the benchmark had plunged, the Invesco Senior Loan ETF (the retail product on the frontlines of what, at the time, was a burgeoning blowup) was hemorrhaging cash and many market participants came to believe the clock struck midnight on the leveraged loan Cinderella story sometime in November. Relive the drama The apocalypse never really panned out, but recently, cracks have started to form anew, prompting the usual questions from skeptical market participants. "The possibility of continued rate cuts by the Fed has made floating-rate deals less attractive, and companies vulnerable to trade wars have had to promise higher yields", Bloomberg wrote in August. "CLOs are the biggest holders of loans to junk-rated companies [and] concerns are mounting about how the structures owning so much of corporate America’s debt will react
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