Funds that invest in leveraged loans have begun attracting insurance companies, pension funds, foundations, endowments and family offices. Because leveraged loans are extended to companies that already have a lot of debt, and are considered riskier, they cost more than other types of borrowing and deliver higher returns to those who invest in them.

Part of the appeal is that in today's competitive lending environment, which is flooded with debt capital and low on places to put it, many lenders have had to come down on interest rates and become more flexible with loan terms in order to score a deal, and in turn, investors have not always seen strong returns.

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.