There are a few things about leveraged loans that create anxiety among those less familiar with the workings of that market. One is systemic risk. The other is leverage itself (“risky loans!”). Banks underwriting loans and getting stuck holding them was a concern before the GFC. Since then, regulators have helped shift loans to private credit funds designed to hold those loans.

One popular scary topic is the loan maturity wall (a term often preceded by “looming,” and with “cliff” substituted for “wall”). One example is our Chart of the Week, representing loans coming due over the next several years. As financings approach their due dates, issuers naturally work with lenders to extend maturities out.

Depending on the levels of past issuance, the size of the columns marching to the right will be greater or lesser. Our friends at PitchBook have an excellent collection of maturity walls going back two decades. 2021 was a record year for the loan market; activity showing up in over $500 billion of loans maturing in 2028.