Pro-rata loans make a come-back, says Barclays Capital

Pro-rata loans, the revolver and term loan A tranches that have traditionally been bought by banks, have been making a strong come-back in the US leveraged loan market, according to research by Barclays Capital. In its most recent US Credit Alpha report, the bank comments that the volume of term loans A being issued, at $7.1 billion over the past three months, are at their highest level since the Lehman Brothers bankruptcy. Year-to-date, A tranches make up only 5% of single B and weaker credits, but are much more used by double B borrowers, where they make up 20% of loan volumes.