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Article: 2nd Liens: Distressed's Future Fulcrum'?
- Article from:
- Bank Loan Report
- Article date:
- August 1, 2005
- Author:
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There's a new player in the debt markets that has yet to be tested in a full credit cycle, one that is notoriously aggressive and unpredictable. This player is the second lien loan. By one estimate, hedge funds now make up perhaps 70% of the second lien loan market in deals up to $250 million - a market that has been on fire of late, as volume for all second liens has vaulted to about $10 billion so far in 2005 compared with $12 billion for all of 2004 (and only $3 billion in 2003), according to Standard & Poor's Leveraged Commentary & Data (LCD). With default rates currently at extremely low levels, so far everybody has been winning - Wall Street, the senior lenders, the ...