Banks Exposed to Possible Loan Market Tumult, BIS Says

Banks may be exposed to a shakeout in the $1.3 trillion leveraged-loan market even though they mostly own the safest portions of debt, according to the Bank for International Settlements.

Lenders could be vulnerable if they’ve extended credit lines to leveraged borrowers, rely on fees from collateralized loan obligation managers or struggled to rebuild capital reserves since the last crisis, analysts at Basel-based BIS said in a report published on Sunday.