[ad_1]
The agency said that greedy investors of return were willing to tolerate more flexible protections to the point of becoming weaker than they were before the financial crisis even erupted. 2008. Much of this money comes from institutions. Exchange-traded funds that track the lending market hold badets of more than $ 8 billion, although Invesco Preferred Loan Fund, with a capital of $ 5.3 billion, has bought back about 30 billion dollars. % of badets in the last year.
"The magnitude and depth of this weakness pose risks never previously encountered by leveraged loan investors, and results under these extreme conditions have never been fully tested during the past year. a complete market cycle, "said Gluckman.
Yellen is not the only one to warn of the dangers.
Seth Klarman, the billionaire hedge fund manager of the Baupost Group, told clients in his latest letter to investors that heavily indebted companies would be a significant threat in the event of a slowing economy.
"Higher interest rates will weigh heavily on today's issuers, and the challenges will be even more severe when the next economic downturn is announced," wrote Klarman, who is considered by many as the heritage of Warren Buffett's power.
Regarding the specific threats related to the absence of restrictive covenants, Moody's mentions the control of guarantees, guarantees and priority privileges as the main problems. The agency said that some lenders have benefited from weak protections to take even greater risks.
Source link
