NEW YORK, March 11 (Reuters) – U.S. regulators’ attempts to
reign in risky lending are proving successful as leverage levels
on the biggest buyout loans have fallen to a two-year low,
according to Thomson Reuters LPC data.
Total leverage for large buyouts announced in the first
quarter of 2015 to date averaged 5.91 times earnings before
interest, tax, depreciation and amortization (Ebitda), below the
six times levels that regulators are trying to get banks to
NEW YORK (Reuters) – Retail investors are returning to bank loan mutual funds following seven straight months of outflows, with the Federal Reserve more clearly signaling an interest rate hike and higher secondary loan market prices starting to attract momentum buyers, investors and strategists said.
The first weekly inflows of $130 million broke a 31-week streak of outflows in the week ending February 18. Although net flows turned negative again with $118 million withdrawn in the week ending February 25, they have moderated and are seen turning positive with Fed rate hikes nearer, these sources said.
NEW YORK (Reuters) – Lenders scaled back on underwriting large debt-laden buyouts for low-rated companies in the fourth quarter, signaling that U.S. warnings to regulated banks against these highly leveraged transactions are gaining traction.
Loans testing regulatory guidelines keep getting done, but banks appear to be more judicious, based on new Thomson Reuters LPC data, even as uncertainties about compliance linger.
NEW YORK, Dec 17 (Reuters) – Lenders scaled back on
underwriting large debt-laden buyouts for low-rated companies in
the fourth quarter, signaling that U.S. warnings to regulated
banks against these highly leveraged transactions are gaining
Loans testing regulatory guidelines keep getting done, but
banks appear to be more judicious, based on new Thomson Reuters
LPC data, even as uncertainties about compliance linger.
NEW YORK (Reuters) – Regulators’ attempts to clarify U.S. leveraged lending guidelines have answered some questions raised by banks, but also added fresh layers of complexity into loan underwriting decisions, banking sources said.
Banks have been trying to stick to U.S. leveraged lending guidelines since March 2013, using a process of trial and error that erred on the side of lenience and attracted regulators’ ire and closer scrutiny.
(Reuters) – Federal regulators said on Friday that their 2014 review of U.S. bank loans showed the proportion of risky leveraged loans was the same as it was the year before, but they warned banks that they will carry out more reviews as risky loans continue to rise in absolute terms.
Making junk-rated loans to companies that are often owned by private equity firms is a lucrative, high-margin business for major Wall Street banks. But regulators are worried that the underwriting guidance they issued last year is not being heeded.
NEW YORK (Reuters) – Limits on loans that regulated banks handle for companies with high amounts of junk-rated debt are not set in stone, an official from the Office of the Comptroller of the Currency said Thursday.
A debt-to-Ebitda leverage ratio of 6.0 times, which U.S. regulators have determined would raise concern, is not a hard line when considering compliance with federal leveraged lending guidance, Darrin Benhart, deputy comptroller for Credit and Market Risk at the OCC, said Thursday at the Loan Syndications and Trading Association’s annual conference in New York.
NEW YORK (Reuters) – U.S. regulators including the Federal Deposit Insurance Deposit Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) are mandating that collateralized loan obligation (CLO) managers hold a stake of each deal on their books.
Final risk retention rules require CLO managers to retain capital equal to 5 percent of any new deal done starting two years from the rules’ effective date. CLO managers now have no such restriction.
LONDON, Oct 14 (Reuters) – Outflows from loan mutual funds
have hit $17 billion since April when the threat of US interest
rate rises receded, and will extend through year end and
possibly until mid 2015, bankers and analysts said.
This exodus of retail investors is expected to continue
until they see evidence that the Federal Reserve is set to raise
interest rates and Treasury yields finally climb.
LONDON (Reuters) – Private equity-owned companies face difficulties refinancing billions of dollars of existing buyout loans and raising extra debt for acquisitions as U.S. regulators tighten the screws on banks making highly leveraged loans, investors and bankers said.
Banks may be unwilling or unable to lend more money or extend revolving credits to existing borrowers that were put in place during the bull market which may now contravene US leveraged lending guidelines issued in March 2013.