Deals
A Leveraged Loan Collapses and Reveals Key Risk in Credit Market
- Clover Technologies loan tumbled 30 cents in about 48 hours
- Global chase for yield allowed explosion in risky borrowing
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Operating out of a Chicago suburb, in a low-slung, red-brick building wedged between a Hyatt and a Radisson, Clover Technologies is in the mundane business of recycling everything from inkjet cartridges to mobile phones.
But in the past week it abruptly -- and alarmingly -- caught the attention of Wall Street. Almost overnight, a $693 million loan Clover took to the market five years ago lost about a third of its value. The startling nosedive stung even sophisticated investors, people who deal in the arcane business of trading corporate loans.