Leveraged borrowers cannot live by mezz alone

As the leveraged loan market struggles to get back on its feet after last summer’s near knock-out, few are willing to give it a hand. One quiet ally is the cash-rich mezzanine funds, which are eager to put money into new deals at higher spreads and lower leverage. But arranging banks must remember: mezzanine demand can only go so far in supporting a deal — they will still have to haul in the senior lenders.