29th Annual Review of Developments in Business Financing Current Trends in the Corporate Credit Markets


The 2011 credit markets are reminiscent of the pre-2008 financial crisis – investors have poured record amounts of money into the leveraged loan market and “junk bond” markets, searching for higher yields. Bonds with PIK toggle features, bonds to finance dividend payments, “covenant-lite” loan structures and creativity in structures have made a comeback.

However, this resurgence has not been without set backs and the markets are unpredictable. For example, at the end of March, at the same time as the drop in the stock market, approximately 50% of scheduled new loan and bond issuances were pulled from the market.

This is the Year of the Rabbit. Thus it appears appropriate to consider the words of the feng shui master at a Hong Kong based brokerage firm, given in an interview to The Financial Times: consider the characteristics of the average bunny rabbit – energetic, active, alert, unpredictable and at times cowardly, but most of all, hypersensitive. In summary, expect high levels of volatility.

Presented at the American Bar Association Section of Business Law Spring Meeting, April 2011. To read the full paper, click on the PDF linked below.

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