Nowhere is the convergence of bond and loan markets more obvious than in the business of lending to less creditworthy companies. Over the past three years, Europe has gained a reasonable-sized high-yield bond market. But another high-yield market has also grown rapidly in that time - leveraged loans. In 1999 just over $22 billion-worth of high-yield, or leveraged loans were extended, with nearly $17 billion lent in the First half of 2000. By comparison, high-yield bond volumes in 1999 were just under $21 billion, with a further $10 billion or so raised up to June 2000.
Leveraged loans typically Finance leveraged buyouts and other acquisitions. Since LBOs are also the classic source of high-yield bond issuance, it makes a lot of sense to run these two products together in a business some Firms call leveraged Finance, others high yield and some refer to as acquisition Finance.