For the first time in history, the U.S. leveraged finance market, a combination of leveraged loans and high yield (below investment grade) bonds, is over $3 trillion. Leveraged loans have grown almost 130% since the financial crisis, more than twice the rate of gross domestic product which increased 57% in the same time period. High yield bond issuance also grew significantly, over 90%. These levels of leveraged finance growth far surpass the growth of regular corporate bonds and loan issuance.

A growing economy since the financial crisis and a very low interest rate environment have encouraged investors to chase yield; in turn, this demand for riskier assets…

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