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It is uncertain at this time what other areas of the leveraged loan market will be focused on, when the inquiry will conclude or whether a formal report will be issued.
The Financial Stability Board (FSB), an international body
composed of representatives from governments, financial
institutions, and international standard-setting, regulatory and
central bank bodies that monitors and makes recommendations about
the global financial system, is launching a formal examination of
the global leveraged loan market.
One area of focus in the inquiry will be collateralized loan
obligations (CLOs). Randal Quarles, Chairman of the FSB, has
indicated that the FSB wants to identify the holders of CLOs around
the world and assess the risks CLOs might pose during a severe
downturn.
“From a financial stability risk [point of view], we need
to know more about that than we do, and we have set up a process at
the FSB to understand that,” Mr. Quarles said in a March 8
interview with the Financial Times.
It is uncertain at this time what other areas of the leveraged
loan market will be focused on, when the inquiry will conclude or
whether a formal report will be issued.
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