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Structured credit risk premium at narrowest level since crisis 

June 1, 2017

Joe Rennison, Financial Times

Strong demand for floating-rate assets has pushed borrowing costs for managers of bonds backed by leveraged loans to their lowest level since the 2008 financial crisis.

The premium investors demand to hold the highest rated slice of collateralised loan obligations — bundles of leveraged loans carved into tranches and sold on — has fallen to 1.1 percentage points above the three-month London interbank offered rate, or Libor. 

According to Citigroup, the premium is below a post-crisis low in early 2013 and down from the 2016 peak when the spread against the Libor benchmark was 1.9 percentage points."

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