Deals
Riskier Leveraged Loans Are Starting to Crop Up in Asia
- Some banks loosening loan terms to win mandates: Deutsche Bank
- Barclays expects to see shift to Term Loan B product in Asia
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Banks are coming under pressure to stomach more risk in Asia Pacific leveraged loans amid steeper competition and a dearth of jumbo deals from China, raising risks of bigger losses when the credit cycle turns.
The weakening of safeguards to protect lenders in leveraged loans in the U.S. and Europe has already been attracting scrutiny from the Federal Reserve, the European Central Bank and the Bank of England. While the bank-dominated loan market in Asia Pacific is smaller and stronger in quality, there are signs some deal terms are getting stretched. Australia has been an early adopter of some of these flexible terms and other parts of Asia may see spillover.