Trillion-Dollar Leveraged Loan Market Has a Low-Tech Risk

Loans to low-rated companies trade the old-fashioned way
Photograph by Getty Images

Imagine a trillion-dollar business that runs on phone calls and faxes and routinely ties up money for months while investors receive no interest. That’s how it goes in the market for leveraged loans—those made to highly indebted companies with low credit ratings. At a time when securities trading of all kinds is increasingly automated and subject to greater scrutiny by regulators, leveraged loans trade 1980s-style, in a clubby world where the biggest Wall Street banks set the rules.

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