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What's Driving Leveraged Loan Spreads?

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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.

Suggested Citation

  • Seung Jung Lee & W. Blake Marsh, 2019. "What's Driving Leveraged Loan Spreads?," Macro Bulletin, Federal Reserve Bank of Kansas City, issue February , pages 1-5, February.
    • Handle: RePEc:fip:fedkmb:00074
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    Cited by:

    1. Gregory J. Cohen & Jacob Dice & Melanie Friedrichs & Kamran Gupta & William Hayes & Isabel Kitschelt & Seung Jung Lee & W. Blake Marsh & Nathan Mislang & Maya Shaton & Martin Sicilian & Chris Webster, 2021. "The U.S. syndicated loan market: Matching data," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 44(4), pages 695-723, December.

    More about this item

    Keywords

    Corporate borrowers; Syndicated loans;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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