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Claudiu Moldovan

24 May 2017
FINANCIAL STABILITY REVIEW - ARTICLE
Financial Stability Review Issue 1, 2017
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Abstract
Large stocks of non-performing loans (NPLs) on euro area bank balance sheets continue to present risks to financial stability. Significant legal and administrative reforms have been undertaken over recent years in countries with high levels of NPLs to streamline insolvency proceedings and maximise NPL recovery values. Yet, the market continues to provide low NPL valuations that result in wide bid-ask spreads, thus impeding large-scale NPL sales. This special feature highlights the potential role and benefits of co-investment strategies (between the private sector and the state) for addressing NPLs. These co-investment strategies may reduce information asymmetries between buyers and sellers, thereby enabling transactions that might otherwise not occur, or facilitate sales at higher prices. Moreover, the proposed schemes are priced at market levels and may, therefore, be free of state aid.
JEL Code
G00 : Financial Economics→General→General
24 May 2018
FINANCIAL STABILITY REVIEW - BOX
Financial Stability Review Issue 1, 2018
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Abstract
The market for leveraged loans is significant and recent developments may be generating financial stability risks.25 In both Europe and the United States, the markets for leveraged loans issued by non-financial corporates are about five times larger than high-yield bond markets. In 2017 US leveraged loan issuance rose well above its pre-crisis levels, with gross issuance, depending on methodology and data source, estimated at between €500 billion and €1 trillion, while EU issuance, estimated at between €120 billion and €320 billion, is around the previous highs recorded in 2007 and 2014.
29 May 2019
FINANCIAL STABILITY REVIEW - BOX
Financial Stability Review Issue 1, 2019
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Abstract
Collateralised loan obligations (CLOs) – structured finance vehicles which repackage the credit risk of assets – hold around a third of the outstanding leveraged loans in Europe and the US. In parallel to the growth of leveraged loans, CLOs have almost doubled in size in the last five years. Most of the CLO tranches outstanding have been issued since 2016, when the underlying credit quality had already deteriorated through increased leverage and lower investor protection. In addition, CLO exposures tend to be relatively more concentrated in lower-rated leveraged loans. Amid recent developments in leveraged loan markets, this box focuses on financial stability risks deriving from CLOs.
26 May 2020
FINANCIAL STABILITY REVIEW - BOX
Financial Stability Review Issue 1, 2020
Details
Abstract
Private equity (PE) funding, and buyout funds in particular, have grown rapidly as a form of corporate financing in recent years, as the search for yield intensified. The outstanding amount of PE managed by global funds amounted to close to USD 8 trillion in December 2019, of which buyout funds accounted for around a third. Buyout funds have grown faster than any other PE strategy over recent years, even as their managers have diversified their activities. Institutional investors’ demand for access to PE buyout funds has been reflected in increasing rates of oversubscription of buyout funds in the primary market (see Chart A, left panel). This box provides an overview of the main developments in the PE buyout market and assesses potential financial stability risks to both investors in PE funds and the overall financial system.