US federal agencies open door to more aggressive buyout loans
By Kristen Haunss
US government agencies have opened the door to bigger, more highly leveraged loans backing private equity buyouts after clarifying that supervisory guidance is not a rule in mid-September. The US loan market has treated leveraged lending guidance as a rule since it was updated in 2013 as regulators tried to curb systemic risk. Many banks received warnings about deals that the agencies viewed as non-compliant. …“One or another bank may be more aggressive than it has been willing to before, but I don’t view this as lifting a gate and a lot of banks will come barreling in and mud wrestle the non-banks for a huge amount of leveraged lending volume,” said Karen Petrou, a co-founder of consulting firm Federal Financial Analytics. “I just don’t think that’s going to happen.”