Corporate issuers have started to tiptoe back into the syndicated loan market to seek funding, especially for buyouts and mergers, despite concerns over international economic growth and a continued debt crisis in Europe.
Riskier bank loans have lost at least 10% of their value in the last month, as broader global economic concerns have pushed financial institutions to scale back their appetite for risk.
This is a turnaround from just a couple of months ago, when banks were eager to add higher-yielding assets to their balance sheets despite the risk. Companies have borrowed more than $2.55 trillion through syndicated loans so far this year, nearly 42% ahead of 2010 levels, according to Dealogic data.
Syndicated loans can be any type of credit facility - including conventional term loans - provided by a group of bankers. The borrowing can carry various levels of risk depending on the company and the loan's purpose. Once banks complete a deal, they can hold the loans themselves or sell them to investors.
