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Much Maligned Bank Loans Deserve a Closer Look
Key Insights
- The bank loan market appears to offer attractive relative value despite a deterioration in the underlying protections for loan investors as well as the potential for the Federal Reserve’s pause in rate hikes to weigh on investor demand for floating rate instruments.
- We believe that the current environment of relatively slow but steady economic growth coupled with low inflation is ideal for bank loans, and borrower fundamentals are generally solid.
- Relatively low levels of new supply and strong demand from collateralized loan obligations are supporting the bank loan market.
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