The systemic risk of leveraged and covenant-lite loan syndications
Sina A. Billio M. Dufour A. Rocciolo F. Varotto S.
January 2025Elsevier Inc.
International Review of Financial Analysis
2025#97
By modelling the whole U.S. syndicated loan market as a financial network from 2000 to 2022, we find that highly connected institutions hold significant shares of leveraged and covenant-lite loans. Our analysis indicates that the size of leveraged and covenant-lite syndicated loan portfolios increases financial institutions systemic risk, particularly during recession periods. Although banks commonly sell syndicated loans shortly after origination, our results suggest that they remain vulnerable to pipeline risk. Our study has significant implications for policymakers and regulators, as it can aid in identifying banks exposed to systemic risk associated with leveraged and covenant-lite loans and in ranking systemically important financial institutions accordingly.
Covenant-lite loans , Financial networks , Leveraged loans , Loan syndication , Systemic risk
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University of Reading, ICMA Centre, Henley Business School, Reading, RG6 6BA, United Kingdom
Ca’ Foscari University, Department of Economics, Fondamenta San Giobbe 873, Venice, 30100, Italy
Nazarbayev University, Graduate School of Business, Qabanbay Batyr Ave 53, Astana, Kazakhstan
University of Reading
Ca’ Foscari University
Nazarbayev University
10 лет помогаем публиковать статьи Международный издатель
Книга Публикация научной статьи Волощук 2026 Book Publication of a scientific article 2026