Loose Change

GLOBALCAPITAL INTERNATIONAL LIMITED, a company

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Loose Change

Last week's plummeting Nasdaq sparked debate over whether the bank debt market will spiral downward as well. One bank dealer said the market will be more resilient, using the analogy of a mortgage to prove his point. He compared a company to a house and bank debt to a mortgage. "If the market value of a house falls below 20%, the mortgage will recover full value, but the equity gets wiped out. The same is true for a company," he noted. Another dealer put it this way: "They don't call it senior secured for nothing."

 

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