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Slowdown in junk-rated loan market hits US corporate borrowing plans

CLOs’ appetite for debt wanes due to limits on purchases, pushing up cost of capital as economy slows
Over the past decade the market for leveraged loans has become a critical funding source both for US companies and private equity groups

Corporate America is feeling the pinch from the slowdown in Wall Street’s $1.4tn market for junk-rated loans, with a growing list of companies forced either to pay more or abandon borrowing plans.

Borrowers have been hit by shifts in the market for collateralised loan obligations, or CLOs, the investment vehicles that own roughly two-thirds of lowly rated US corporate loans.

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