Those of us who have participated in-or in our case observed-the leveraged loan market over the past several years have witnessed one of the ironies that characterizes the growth of most financial markets. When in their infancy, markets offer substantial premiums to those intrepid investors willing to provide capital. Over time, this illiquidity premium is recognized, and the market begins to draw more and more professional investors. Ultimately, the growing investor base drives out some or all of this premium that helped to make the market attractive in the first place.

In recent years, the leveraged loan market has developed from a closed, virtually bank-only market to a thriving segment of the capital markets. This evolution has been driven by the rapid growth of the institutional loan investor base - which stood at over 60 at yearend-and the secondary loan trading market.

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