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Shadow banking collateralized loan obligations (CLOs) could be creating a large credit bubble

By Hicbd
Tue Sep 1 2020 3:53 pm

"After the crash in 2008, shadow bankers shifted their attention to business lending, using the same “securitization” process to buy and package “leveraged” loans — bank loans to big companies that were already highly indebted — into collateralized loan obligations, or CLOs...Companies have used much of this newly borrowed money to buy back their own shares, pay special dividends to private equity investors and acquire other companies, all of which have the effect of inflating stock prices."

URL:
https://www.washingtonpost.com/business/economy/the-shadow-banks-are-back-with-another-big-bad-credit-bubble/2019/05/31/a05184de-817a-11e9-95a9-e2c830afe24f_story.html
https://www.marketwatch.com/story/shadow-banking-is-growing-remains-opaque-and-carries-uncertain-risks-for-the-economy-2020-01-04
https://www.institutionalinvestor.com/article/b1gd73xw49rw1z/The-High-Octane-In-Demand-and-Worrying-World-of-Risky-Loans

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Categories:
Banks / Financial Institutions Financial Systems / Markets U.S. Securities and Exchange Commission (SEC) Corporate Governance Financial Risk Management Corporate Finance / Debt / Treasury Corporate / Business Lending / Growth Capital Shadow Banking Economic Bubbles / Recessions

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