Market Extra: The leveraged loan ‘downgrade wave’ is starting as era of cheap debt fades

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A credit downgrade wave has begun to hit the highflying $1.4 trillion U.S. leveraged loan market as the Federal Reserve’s rapid pace of interest rate hikes threatens companies hooked on cheap debt.

Companies that don’t qualify as investment-grade, perhaps because of a large debt load or poor credit history, rushed to take out leveraged loans in the past decade, causing the sector to mushroom to a record size from its post-2008 low of about $480 billion in 2011, according to Refinitiv data.

Now,…

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