Move over, Coca-Cola.

Make room for the next American import likely to make it big on foreign shores-leveraged loans and high-yield bonds.

"Eighteen months from now you're going to see an explosion in high- yield" overseas, said Kevin Burke, a managing director at Bankers Trust Corp.

A combination of forces is expected to push overseas companies and banks, with the exception of those in Latin America, to embrace higher-risk financing packages.

Though U.S. institutional investors continue to deal almost exclusively in U.S. dollar-denominated debt, they are expected to look abroad to quench their insatiable appetite for higher-yielding investments.

"As the high-yield and leveraged loan market boom happens overseas, we'll create new funds" to invest in them, said Raphael Scolari, president of Sterling Asset Management.

Banks here and abroad are also looking to higher-yielding markets to boost returns of their loan portfolios. Many U.S. banks participate in but do not lead a high volume of investment-grade transactions.

For these banks, buying into more leveraged credits is attractive.

"Today, commercial banks either want to lead transactions or if they are just participating they look at it from a portfolio basis," said Nazan Clohesy, a vice president at Salomon Smith Barney Inc.

The first region investors might look to is Europe, where the euro is expected to spur competition among underwriters and lenders who will be forced to compete across borders.

That, coupled with the need for better returns in bank portfolios, could jump-start the European leveraged debt markets.

"The same things that are happening here are happening" there, said W. Jefferson Stuart, managing director of loan syndication for Deutsche Bank. European lenders and investors are becoming "competitive" in their pursuit of high-yield loans, he said.

U.S. leveraged lending has nearly doubled in the last year, to $152 billion through the first half of 1998, compared with $86 billion a year earlier, according to Securities Data Co.

Mr. Stuart said he believes the market created by the European Union will eventually rival the U.S. market in volume. The continent is emerging much like the U.S. debt markets did in the 1980s, he added.

In the high-yield bond market, Europe issued $1.8 billion in 1997, but Mr. Stuart said it could issue more than $10 billion this year.

The growth, he said, is driven by increased leveraged buyout activity that is only expected to increase in the near term.

Contrast Europe with Japan, where the syndicated loan market "has all but vanished," said Tim Ryan, a vice president at Bank of Tokyo-Mitsubishi Ltd. Japanese banks have been selling loan paper as they try to offset deepening losses on loans in their region. That's kept pressure on U.S. loans.

"Their dumping of these assets has depressed prices in the secondary" market, Mr. Ryan said.

"I think that's been good news for everybody" buying and syndicating loans in the U.S. market.

Japanese banks still may lend, Mr. Ryan said, but not to investment- grade companies where spreads are tight.

He said bankers should expect "the first high-yield bond issuances and syndicated loans in the near future."

He added that U.S. investors-among them Merrill Lynch & Co. and GE Capital Corp.-have identified Japan and Asian emerging markets as targets for investment.

Through the Asian economic crisis, existing loans and bonds are carrying prices considered leveraged or highly leveraged in the secondary market.

The only exception to the global boom in high-yield securities might be Latin America, said Meredith Coffey, director of public data analysis for Loan Pricing Corp.

That's partly because lenders and underwriters in those countries view lending as a relationship-driven business and do not emphasize individual loans' returns.

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