Leveraged Loan Margins Sink to Junk-Floor Level Over Summer

Call it the summer of 175.

A hefty number of leveraged loans have priced at rock-bottom levels lately, a sign of growing froth in the market. Investors typically consider 1.75 percentage points over the benchmark as the floor for participation, but some even priced a bit lower.

About 16 loans priced at this tight level from June 1 through Aug. 12, more than double the amount seen during the prior-year period, according to data compiled by Bloomberg. United Rentals managed to price its loan even below that, benefiting from an investment grade rating of Baa3. At 1.50 percentage points, the ...