Macroeconomic Headwinds Slowing Down U.S. Leveraged Lending Market

Is the next big wave of defaults about to begin?

“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffet

This quote by famous billionaire Warren Buffet is quite apt for the leveraged lending market. On one hand, the market is going through a period of uncertainty and, on the other, is providing attractive opportunities to yield-hungry investors as it offers the highest yields in a decade.

Despite the high yields, investors should carefully consider their risk tolerance as the leveraged lending asset class is extremely risky, and with global economies potentially heading into a recession in the second half of 2023, defaults are expected to increase in the near-to-medium term. 

Taylor Pellerin

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