question archive Credit Spreads, Leveraged loans Summary: Financial pain is spreading in the junk-loan market, showing how interest-rate increases are hurting debt-laden companies and worrying investors that a credit crunch looms as the economy slows
Credit Spreads, Leveraged loans Summary: Financial pain is spreading in the junk-loan market, showing how interest-rate increases are hurting debt-laden companies and worrying investors that a credit crunch looms as the economy slows
Subject:EconomicsPrice: Bought3
Credit Spreads, Leveraged loans Summary: Financial pain is spreading in the junk-loan market, showing how interest-rate increases are hurting debt-laden companies and worrying investors that a credit crunch looms as the economy slows. Defaults on so-called leveraged loans hit $6 billion in August, the highest monthly total since October 2020, when pandemic shutdowns hobbled the U.S. economy, according to Fitch Ratings.
Questions: According to the article, why might leveraged loans be "the canary in the coal mine" with respect to the broader market environment? In what way is the slowdown in economic growth negatively impacting Wall Street banks? Why were investors originally attracted to leveraged loans last year in advance of the Fed's interest rate increases? How did regulators seek to mitigate the risks of leveraged loans and, based on the article, what has been the impact?
