Page 25 - September October 2018 Disruption Report Flip Book
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MONETARY POLICY
SEJPATN.U-AORCYT.20210818
“The global leveraged loan market is larger than—and growing as quickly as—the US subprime mortgage market was in 2006,” said the Bank of England’s Financial Policy Committee in the statement from its latest meeting. The combined US and EU “leveraged loan” market exceeds $1.3 trillion, up from $50 billion in 2000.
Moreover, the committee is “concerned by the rapid growth of leveraged lending.” For example, over £38 billion ($50 billion) of these loans were issued in the UK in 2017 — more double the amount in 2016 — and a further £30 billion ($39 billion) has already been issued in 2018. In the UK, the proportion of leveraged loans with maintenance covenants has plunged from close to 100% in 2010 to around 20% currently. In other words, approximately 80% of the leveraged loans are covenant light and a similar scenario is playing out in the US. (Wolfstreet.com, DonQuijones, 10/10/18)
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