STEPHEN J. ANTCZAK, CFA*
FRANK J. FABOZZI, PH.D., CFA, CPAProfessor of FinanceEDHEC Business School
A leveraged loan is a loan made to a company whose credit rating is speculative grade. That is, the borrower has a below investment-grade rating (below BBB–/Baa3). When a reference is made to “loans” by market participants, typically it means (1) loans that are broadly syndicated (to 10 or more bank and nonbank investors), (2) senior secured loans that are at the top-most rank in the borrower’s capital structure, and (3) large loans to large companies. In terms of total par amount outstanding, the leveraged loan market was comparably very small back in 1996 (under $15 billion of leveraged ...