arbiter
JournalsPricingAccount

Leveraged loans: is high leverage risk priced in

David Newton et al.

International Journal of Banking, Accounting and Finance2025https://doi.org/10.1504/ijbaaf.2025.146550article
AJG 2ABDC C
Weight
0.50

What the paper says

We investigate the impact of the 2014 Interagency Clarification on the leverage risk premium for bank- and non-bank-originated loans. Using a novel dataset from 2011 to 2019, we show that leveraged loan spreads have declined rapidly for non-bank facilities relative to bank facilities since the introduction of the 2014 Interagency Clarification. The decline in leveraged loan spreads is significant for highly leveraged borrowers, especially when term loans are involved. We further demonstrate that a higher degree of information asymmetry, driven by an increase in covenant-lite loan issuance and weaker investor protection, is strongly associated with a narrower leverage risk premium.

Open paper page →

Cite this paper

https://doi.org/https://doi.org/10.1504/ijbaaf.2025.146550

Or copy a formatted citation

@article{david2025,
  title        = {{Leveraged loans: is high leverage risk priced in}},
  author       = {David Newton et al.},
  journal      = {International Journal of Banking, Accounting and Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1504/ijbaaf.2025.146550},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Leveraged loans: is high leverage risk priced in

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.