Add-backs take leverage levels above 2007 — BoE

By Owen Sanderson
11 Jul 2019

The Bank of England said that the proportion of new highly leveraged loans would swell from 18% of the market to 28%, once add-backs and subsequent borrowing were included, taking overall leverage levels in the market above those prevailing in 2007.

The Bank, writing in its Financial Stability Report said that “there has been growing use of adjustments (add-backs) to how earnings are calculated at the point a loan is made, which could further understate leverage”.

It said that once add-backs and subsequent borrowing were included, the share of new ...

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