Banks are considering underwriting second-lien deals again after the market virtually shut down in late 2015, creating a trend that has been described as BYOJ, or "bring your own junior debt" for sponsors. Second-lien debt is considered riskier than first-lien leveraged loans as it is subordinate to first-lien debt and was the first area of the loan market to feel the pain of volatility. The return of second-lien debt to the syndicated market would help boost lagging fee earnings at banks and provide more opportunity for sponsor-backed mergers and acquisitions, bankers said. "I think we're in transition mode," a senior banker said. "We're probably at that pivotal point in the market where underwriting second-lien debt starts to become a reality again."
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