Market Eyes Should Be On Leveraged Finance Markets

In this environment of high inflation and uncertainty about the banking sector’s financial health, market participants should scrutinize U.S. leveraged finance markets carefully. This asset class, comprised of leveraged loans and high-yield bonds, is very sensitive to rising interest rates and current uncertainty about the direction of the banking sector. In 2022, leveraged loan issuance declined and default rates rose given rising interest rate pressures. Recent bank turmoil influenced leveraged loan underwriting volume to be at it lowest level since 2016.

U.S. Leveraged Markets Have Grown Significantly