August 29, 2006

Leveraged Loan Market

The dearth of high return opportunities in the stagnant stock market has compelled many hedge funds to rethink their investment strategies and rebalance their portfolios. One area that has attracted numerous hedge fund investors over the last few years has been the leveraged loan market. It has delivered satisfying returns at lower risks.

In addition to private equity and hedge funds, numerous commercial financial companies and regional banks have entered the leveraged loan market. The influx of aggressive lenders and investors has fueled an unprecedented merger and acquisition boom. Although hedge funds have been short-term oriented investors, over the years they have extended their time frame for return to participate in these types of leveraged buyouts.

Read my previous post titled "Is Hedge Fund Valuation Necessary?" to know about hedge fund valuation.

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