{"id":4969,"date":"2006-09-05T00:00:00","date_gmt":"2006-09-05T00:00:00","guid":{"rendered":""},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-30T04:00:00","slug":"leveraged-loans-seek-out-hedge-funds","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/09\/2006\/leveraged-loans-seek-out-hedge-funds.html","title":{"rendered":"Leveraged Loans seek out Hedge funds"},"content":{"rendered":"
HedgeCo.Net (New York) – Close Brothers, the independant European corporate financial adviser, reported that up to half of the leveraged loans syndicated in Europe have hedge funds as their main investors. <\/p>\n

The banks that would usually finance these deals, are becoming more and more focused on distributing their loans, thus showing a much lower direct economic interest in the loans. <\/p>\n

Leveraged loans are essentially loans with a high rate of interest to reflect a higher risk posed by the borrower. A higher than normal debt implies that the funding is riskier, and therefore more costly, than normal borrowing. As a result, levered finance is commonly employed to achieve a specific, often temporary objective. <\/p>\n

In an interview with Reuters, Andrew Merrett, director in the European special situations team at Close Brothers said, \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cNot only are hedge funds here to stay, but this research shows just how influential they now are with the controlling positions they hold in the leveraged loan market,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d <\/p>\n

\u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cAlthough we see this as a positive development, the fact remains that hedge funds behave in a very different way to traditional lenders \u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u00a6 in leveraged or distressed situations, it\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s hedge funds calling the shots from the creditors\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2 camp,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d he said. <\/p>\n

The European leveraged loan market has grown in recent years, and hedge funds are known to behave more aggressively in this more volatile market, \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cWhere there is a risk of default, they are forced to sell debt into the secondary market, where it is typically bought by distressed debt traders and hedge funds,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d the Close Brothers report said, \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cThis further encourages traditional-relationship banks to sell problem loans into the secondary market rather than work them out.\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d <\/p>\n

Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net<\/a> <\/p>\n

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HedgeCo.Net (New York) – Close Brothers, the independant European corporate financial adviser, reported that up to half of the leveraged loans syndicated in Europe have hedge funds as their main investors. The banks that would usually finance these deals, are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-4969","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/4969","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=4969"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/4969\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=4969"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=4969"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=4969"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}