Hi Guys
I’ve heard conflicting things about bank loans.
- In the CFA 2011 Mock exam they stated "bank loans are an attractive part of a capital structure. Bank Loans can enhance recovery values because they are senior in capital structure and generally secured by a lien on the firm’s assets, providing priority over other debt holders.
However in a schweser question:
- High yield (speculative/junk ratings) issuers commonly rely on bank financing rather than capital markets (bonds). If a company has less bank debt it is more inclined that its debt is investment grade.
Whats the go? are bank loans good or not?