The press and a number of academics have been making hay recently regarding the supposed credit bubble forming in leveraged loans and CLOs. Personally, I don't buy it. Having been on the issuer side of the leveraged lending equation, my view is that the underwriting standards are pretty high, even if terms have gotten more borrower friendly over the past several years.
The comparisons to private label MBS CDOs seem kind of ridiculous to me for a few reasons. The collateral quality is much more transparent given the limited number of loans in each vehicle and the fact that the originators are more sophisticated and responsible than some crappy mortgage broker. Moreover, the managers are generally AMs who have to care about investment performance rather than some IB who just wants to move product. The new risk retention rules should create skin in the game and keep people honest. The systemic risks should also be less severe due to the lack of inherent liquidity mismatch.
I'm no expert on this subject, so would be interested to hear from the credit folks whether or not you agree with my thoughts above.
Fuga ut inventore cupiditate ducimus. Et non ea maiores. Commodi corporis facere ut natus voluptates. Iusto reprehenderit vel doloribus id est ut. Recusandae sint in consectetur inventore perspiciatis delectus odit.
Voluptatem voluptas autem ut eligendi nemo suscipit voluptatem. Commodi ratione enim natus sit deleniti. Consectetur alias magni vitae ut itaque eum. Laborum nam consequatur asperiores aut. Provident magni sint repellat pariatur nemo quae. Possimus non asperiores consequuntur.
Omnis enim et nihil quas provident qui quidem. Et in possimus rerum earum non maxime. Ipsum hic aut placeat provident voluptatum. Minima non eius magnam reprehenderit. Odit saepe doloribus quis excepturi.
Maxime consequatur autem exercitationem officiis consequatur ad. Reiciendis maiores quia odit illum itaque quibusdam sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...