Leveraged Lending
Introduction
Overview
Leveraged Lending Defined
Leveraged Lending and the Syndicated Loan Market
Distributions and Bridge Financing
Risks Associated with Leveraged Lending
Credit Risk
Price Risk
Liquidity Risk
Compliance Risk
Reputation Risk
Strategic Risk
Risk Management Guidelines and Controls
Loan Policy
Underwriting Standards
Policies and Procedures on Loan Acquisition and Distribution
Setting Concentration Limits
Credit Analysis
Risk Identification System
Problem Loan Management
Reports on Leveraged Finance Transactions
Internal Reviews on Leveraged Credits
Allowance for Loan and Lease Losses
Policies on Purchasing Participations in Leveraged Loans
Evaluating the Borrower in a Leveraged Loan Transaction
Understanding Enterprise Value
Risk-Rating Guidelines for Troubled Leveraged Loans
Cash Flow/Debt Service Coverage
Using Enterprise Value
The Role of Deal Sponsors
Conflicts Of Interest
Examination Procedures
Quantity of Risk
Quality of Risk Management
Conclusions
Appendix A: Appendix A
Adverse Risk Rating Examples
Appendix B: Appendix B
Appendix C: Appendix C
Accounting for Leveraged Lending
References
Leveraged Lending