Relationships trump ratings in IG loans — now it’s official
When German utility RWE launched a refinancing deal last week with a margin not linked to a ratings grid, it set another benchmark for what borrowers can do when they choose to test the structures of their deals. But ratings have never had that much value in the investment grade loan market, where deals are driven by relationships. RWE will not be the last to break the ratings link.
Margins on investment grade loans to top corporates have crept ever tighter throughout 2010. With the end of the year approaching and underlent banks desperate for business, margins have fallen below banks own cost of funding.
That the loans product is a loss leader for many universal banks should
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