Leveraged Loans Are Next to Face Higher-for-Longer Test (1)

The US leveraged loan market, as yet unruffled by the shift to a higher-for-longer view on interest rates, may soon join in the pain being felt in other asset classes.

The floating-rate investments, which typically lag behind other assets, have delivered returns of 2.69% so far this year. But some borrowers in the market, often highly leveraged companies owned by private equity firms, are likely to see a cooling in demand as forecasts for a Federal Reserve rate cut are pushed further into the future.

That reality was reaffirmed again Thursday when New York Federal Reserve President John Williams said ...