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.
LONDON, Oct 9 (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.
NEW YORK, Aug 8 (Reuters) – GE Energy Financial Services
(EFS), General Electric’s energy investing business, expects to
close Friday on the third in a growing stream of financings it
has led for new gas-fired plants as U.S. environmental
regulations steer power generation away from coal.
EFS, through GE Capital Markets, led 14 other lenders
providing $550 million in senior secured credit facilities
backing construction of a natural gas-fired plant in Maryland
for Competitive Power Ventures and its partners Marubeni Power
and Toyota Tsusho.
NEW YORK, July 29 (Reuters) – Sankaty Advisors swooped in to
buy $1.3 billion of loans and other securities from J.P. Morgan
in its biggest portfolio takeover yet, and sees opportunity to
soak up more from European banks shedding assets to meet
J.P. Morgan’s global special opportunities group unloaded
mezzanine loans from companies in North America and Europe, as
well as loans and related special situations investments in
Australia and across Asia. The sale was part of a broader effort
to get rid of non-core holdings, including its physical
commodities business, sources familiar with the transaction
NEW YORK (Reuters) – Scrutiny by U.S. regulators is reshaping the leveraged loan market as bankers complain that the Office of the Comptroller of the Currency enforces leveraged lending guidance more stringently than the Federal Reserve.
U.S. commercial banks, which are under tougher OCC scrutiny, have slipped in the underwriting ranks in the second quarter versus a year earlier whereas investment and foreign banks, regulated by a seemingly more lenient Federal Reserve, have climbed in the standings.