Banks taking risks in lean market
Borrower-friendly deals have surged and liquidity from quantitative easing has fuelled deal making, but the taps are about to close
Deal-hungry lenders are taking riskier bets in a competitive market with few bankable corporate credit assets, say loan market participants. This is despite the fact that cheap funding from the quantitative easing programmes of central banks may soon dry up. "Lenders are walking to the edge of a cliff globally, though no deals have blown up at scale," Sean Tai, head of Debtdomain syndicated loans at Ipreo, said on Wednesday. He was among delegates at the Loan Market Association’s sub-Saharan Africa syndicated loans conference. Excess liquidity was driven by easy money flowing from the quantitative easing programmes of global central banks, he said. Emerging markets have been big beneficiaries of this liquidity, raising questions as to what disruption the expected unwinding of central bank bond-buying programmes might cause. Bloomberg reported on Wednesday that market participants were bracing themselves for a reversal of asset purchases by the US Federal Reserve, European Central Ba...
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