DISTRESS WATCH: Leveraged Loans See Cracks After $1 Trillion Run

The leveraged loan market has been on a tear this year as investors piled into the floating-coupon debt when interest rates stabilized, fueling more than $1 trillion of new or repriced debt in the US alone. That, in turn shaved about $10 billion from the tally of actively traded distressed loans during the third quarter, as tracked by Bloomberg News.

The election-induced return of interest rate volatility, though, is threatening to disrupt the leveraged loan rally.

Prices for the debt recorded the first weekly drop since the end of September, according to the Bloomberg US Leveraged Loan Index. ...