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Article: Second Lien Trading Has Evolved, But Threat Of Volatility Looms.
- Article from:
- Bank Loan Report
- Article date:
- February 6, 2006
- Author:
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As the primary market for second lien loans has taken off in the past few years, second lien trading liquidity hasn't been far behind. And while data from Markit Loans show that second lien loans have been bid at slightly higher levels than first lien loans (see chart on page 13), greater volatility could emerge when the next downturn arrives.
But for now, there continues to be strong demand for second lien loans. "Go back three years ago when second liens were less common - the depth of buyers for that paper was less than today," said Tom Finke, head of the US bank loan team for Babson Capital Management. "There are more players looking for that type of asset ...