Leveraged loans hit turbulence, but will avert crisis

摘要

The leveraged finance market is not set to repeat the credit crisis of 2007-2008 despite severe dislocation in the credit markets at year-end after a slump in crude oil prices and a rout in the high-yield bond market, industry leaders said. Although market conditions could be painful for banks trying to work through a multibillion-dollar backlog of leveraged loans in early 2016 after a US$5.5bn buyout financing for software maker veritas was pulled in November, the banking system is better capitalised and capable of dealing with problems. "This is not the start of an 2007-2008 nightmare where banks are stuck with a bunch of bad loans, but there could still be some painful deals in the market where they'll have to take a hard mark to market," said Highland Capital chief investment officer Mark Okada, noting that banks have plenty of capital and the banking system is healthy.