Journal Article

What's Driving Leveraged Loan Spreads?


Abstract: Syndicated loan spreads have declined since the financial crisis, reducing the cost of credit for corporate borrowers. However, the combination of aggressive loan pricing and weaker credit protections has concerned market observers. We find that syndicated loan spreads have declined across loan and borrower types since the crisis. We also find the decline has been more pronounced for highly leveraged borrowers and has accelerated since 2016, especially for term loans.

Keywords: Corporate borrowers; Syndicated loans;

JEL Classification: A1;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Macro Bulletin

Publication Date: 2019-02-27

Issue: February 27, 2019

Pages: 1-5