Investment banks can handle levloan downturn, says Moody’s

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By Owen Sanderson
02 May 2019

Global investment banks should be able to withstand stress in the leveraged finance market, according to a Moody’s report published on Tuesday, thanks to lower pipeline limits and smaller deal sizes than pre-crisis. This was borne out during the fourth quarter of last year, when few banks were caught offside despite a slump in loan prices.

“The global investment bank peer group as a whole is resilient to a hypothetical very severe stress of its leveraged lending exposures, with most banks’ stress losses amounting to less than half of firm-wide pretax earnings in the scenarios we tested,” said the rating agency.

It did, however, ...

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