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Redefining the leveraged landscape

December 2017

An increased regulatory environment has reduced systemic risk in the banking sector, opening up greater choice and flexibility for leveraged borrowers.

In what was considered an overheated market, we saw a tightening of the regulatory environment post the 2008 financial crisis, focused on risk management of leveraged lending activities.

The US Federal Reserve and, more recently, The European Central Bank (ECB) have issued guidelines to assist financial institutions in their lending decisions. Since 2013, banks have become more cautious, managing their risk more closely, and this has allowed new entrants, such as non-bank lenders to come into the market.

Looking ahead, it is likely that non-bank lenders will play an increasingly important role in leveraged lending, with banks focusing on maintaining and building long term relationships, providing working capital and supporting operational needs of businesses.

Our article explores the changing landscape for leveraged lending and what the current opportunities are for corporate borrowers considering a more leveraged capital structure.