WASHINGTON - The American Bankers Association last week joined a growing chorus of bankers and regulators warning of risk in the syndicated loan market.
The trade group issued a briefing paper from the office of its chief economist noting a surge in lending volume coupled with a decline in price in 1994 that has "led to an increase in the level of risk per dollar for many new syndicated loans."
The paper noted that last year's record volume of $665 billion included $81 billion in merger-related financing. That compared with only $28 billion in 1993.
Though yields on syndicated loans are nearing historic lows, the ABA concluded that the risk-return profile is better than at the end of the 1980s.