Almost overnight, a $693-million loan Clover took to the market five years ago lost about a third of its value. It immediately became a real-life example of the perils of investing these days in the $1.3-trillion market for leveraged loans, where a global chase for yield has allowed an explosion in borrowing and lax underwriting. Using the leveraged loan market as a wallet, the company took loans that funded dividend payments totaling at least $278 million — $100 million in 2013 and $178 million in 2014. There has been little trouble finding buyers for collateralized loan obligations in recent years. Still, with the exception of a sell-off two years ago, the loan largely held its value in the secondary market.

Source: Los Angeles Times July 16, 2019 16:46 UTC