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Loan sales to remain stable in 2012, despite Euro crisis

Jan 07, 2012 Philip Burgess

Leveraged loan sales in the U.S. are expected to pick up dramatically over the next year, according to a report released Thursday by the Loan Syndications and Trading Association. The data suggest organizations will have greater access to credit to refinance debt. More than one-third of surveyed bankers and money managers expect the sale of institutional loans to reach somewhere between $250 billion and $299 billion. Institutional loans are defined as debt that is bought or consumed by collateralized loan obligations, mutual funds and hedge funds. "People expected institutional issuance to climb," Meredith Coffey, executive vice president for research and analysis at the LSTA, told Bloomberg. "[This] could suggest that a lot of the activity taking place next year will continue to be refinancing activity." Nearly three-quarters of respondents - 73 percent - say the crisis in Europe poses the biggest risk to institutional lending and collateralized debt purchases. However, analysts expect the U.S. leveraged loan market to remain stable. Over the long-term, lenders are expected to loosen their credit decisions when it comes to small businesses, offering greater financing opportunities to entrepreneurs and startup ventures.