BOE Is Scrutinizing Leveraged Finance After US Firms’ Collapse

The Bank of England is “closely monitoring” standards in leveraged finance markets and watching out for signs of forced selling by investors after the high-profile collapse of two US companies, according to an executive at the bank.

Officials want to see what the fallout from Tricolor Holdings and First Brands Group says about “underwriting standards in practice, where the risk has been distributed within the financial system, the ability of those who ultimately hold the risk to be able to withstand this shock and behaviorally what might they do in response,” Martin Arrowsmith, co-head of the central bank’s Market Based Finance Division, said at a conference Wednesday.