The syndicated loan market has been variously described as dead, dormant, in migration, in hibernation or in transition. Some observers suggest it is virtually closed; others say it remains active. Some say banks have cash at their disposal; others say they are hugely constrained.
But there is one undisputed fact: the market has changed dramatically since last year. Beforehand, the biggest challenge lenders faced was gaining access to loans. Collateralised loan obligations and other funds were buying into a vast number of deals and many banks found it almost impossible to get in on the action, at least in the quantities they wanted. The talk was all about excess liquidity; borrowers were in the ascendant and ‘negative flex’ was a common occurrence where the terms of a loan became tighter during syndication because demand was so strong.
