Larger banks have unseated regulators as the bogeyman standing in the way of small banks' survival. Such pressure is prompting more bankers to talk about the need to gain scale most likely through consolidation to compete.
With another reshuffling of assets among its subsidiaries, few are coming to praise Caesars Entertainment Corp., though none are ready to bury it either. The casino operators latest move has intensified speculation about a distressed exchange.
Loan participations are poised for a comeback as community banks look at ways to keep the business of clients. Small banks have plenty of challenges as they try to book loans, including artificially low interest rates and deleveraging by some borrowers.
Overall issuance of high yield bonds may be down slightly this year, but mergers and acquisitions are likely to play a much bigger role. And financial sponsors may not have as much flexibility to lever up to make acquisitions, yielding to strategic acquirers.
For buyers, such bankruptcy auctions, known as 363 sales, are tricky but attractive. If successful, the buyers get a bank that is still under considerable stress but free from things like the holding companys trust-preferred securities debt.
The strong growth in U.S. CLO issuance last year didnt do much to shake up manager league tables, in part because so many deals came from new entrants. But there was some churn in the top ranks.
The $5.4 billion merger of International Lease Finance Corp. (ILFC) and AerCap will bring some welcome supply to the high yield debt markets and put to rest uncertainty about the disposition of one of the largest aircraft leasing businesses.
More corporate borrowers are negotiating for stronger controls over loan participations and syndications being worked out by arrangers. One feature growing more common in loan agreements today is the inclusion lists of disqualified institutions.
After coming to a near-halt after the final version of the Volcker Rule was released in mid-December, the primary CLO market has shifted cautiously into low gear, despite the fact that the rules of the road remain unclear.
KKR is shuttering two funds aimed at individual investors and dedicated to investing in high yield, emerging markets and distressed credit. The move raises questions about the buyout firms plans for individual investors as well as the appeal of these assets.
Despite $122 billion in volume in the fourth quarter, secondary trading activity for leveraged loans for 2013 fell just short of matching the all-time high volume set in 2007, according to the Loan Syndications and Trading Association.
The quality of high yield bond covenants will likely improve over the course of this year, but dont expect a sea change in protections for bondholders.
Smaller banks have long touted their ability to outperform bigger competitors when it comes to serving small businesses. That sentiment may no longer be true, some industry observers say. Technology is slowly eroding any advantage smaller banks once held.
The sell-off in emerging markets over the past couple of weeks is no reason to hit the panic button, according to U.S. credit market participants. Observers say were unlikely to see a repeat of the last emerging markets and credit investors may be better off weathering the storm.
Banks that want to keep their holdings of collateralized loan obligations will likely face an uphill battle getting these investments in compliance with the Volcker Rule, according to Wells Fargo.