Fueled by a robust mergers-and-acquisitions scene, the syndicated lending market roared back to life in the second quarter, generating a record $320 billion in volume.

That is a whopping 69% jump from the previous quarter. And the loans were generally a more profitable type than in the first quarter.

While the first period was marked by large, investment-grade credits, the latest quarter got most of its wind from leveraged loans. These loans, used mostly to finance acquisitions, provide higher spreads and fees for syndicating banks and higher yields for investors.

"The real news in the second quarter was not the record volume level, but the fact that it was characterized by financings for M&A activity and other transactions using debt-financed cash," said Peter Gleysteen, managing director and group head of global syndicated finance at Chase Manhattan Corp.

Chase again topped both the agent-only and agent/co-agent rankings, with $141 billion in loans for 201 transactions, according to Loan Pricing Corp. It ended the quarter with 22% of the market-double that of its closest competitor, J.P. Morgan & Co.

The syndications market ended the half with $509 billion in volume, a 28% increase from last year's record-setting pace. But it was the performance of the leveraged-loan market that had bankers most excited.

Loans in this category, which are priced at least 150 basis points over the London interbank offered rate, totaled $41.7 billion for the quarter. That makes it the sector's second busiest quarter behind the third period of last year, which saw $42.3 billion in leveraged volume, according to Loan Pricing.

Bankers have financial sponsors to thank for that. Kohlberg Kravis Roberts & Co., for example, financed its acquisition of cable manufacturer Amphenol Corp. with a $1 billion loan led by Bank of New York Corp.

And more leveraged loans are on the horizon. A $1.475 billion loan backing the leveraged buyout of health care company Multicare Cos. is expected to close this quarter. Its leaders are Citicorp, First Union Corp., Mellon Corp., and NationsBank Corp.

Historically, leveraged loans have been smaller than $500 million. But to offset a drop in profits brought on by multibank-led leveraged loans, the loans have been getting bigger.

"We're all running faster, given fee and spread compression, to do more volume," said Bruce A. Ofenloch, a managing director at NationsBanc Capital Markets Inc., Charlotte, N.C.

Another trend bankers noted was the popularity of loan structures designed specifically to appeal to institutional investors. These include such bond-like characteristics as 10-year bullet maturities and call protection.

Notable "hybrid" credits, such as Bankers Trust's $100 million loan for Huntsman Speciality Chemicals and Donaldson Lufkin & Jenrette's $100 million loan for Pioneer Americas Co., blurred the line between high-yield bonds and leveraged loans, bankers said.

Bankers predicted that this quarter would also be a healthy one for syndications.

"We see continued, strong broad-based activity, across a number of industries and across the credit spectrum," said James N. Tryforos, head of corporate finance and syndications at Bank of Nova Scotia, which ranked 11th for the quarter.

On the agent-only league table, Chase was followed by J.P. Morgan, which displaced BankAmerica Corp. Morgan led 76 loans for a total of $71.9 billion.

No. 3-ranked BankAmerica finished the quarter with 112 loans for $62.6 billion.

Also swapping rankings were Citicorp and NationsBank, with Citicorp moving up one spot to fourth and NationsBank dropping back to fifth.

"It was a very good quarter for Citicorp, and frankly, it's going to be a very good third quarter as well," said William L. Hartmann, head of global loan syndications at Citicorp.

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