Bank Loans Primer, per the NAIC Capital Markets Bureau
by Jennifer Johnson of the NAIC's Capital Markets Bureau
"Leveraged bank loans are lent to companies with high-yield credit quality (rated below investment grade) by a group of lenders. Within a company’s capital structure, leveraged bank loans rank the highest in terms of payment priorityand are considered senior secured credit. Pricing leveraged bank loans is typically set as a spread based off a reference rate, such as prime or the London Interbank Offer Rate (LIBOR)."