1. Introduction

What’s in this chapter:

• What the market is

• How companies become part of the leveraged finance market

• Unique aspects of leveraged finance credit analysis

• The two starting points of credit analysis

The high-yield leveraged bond and loan market is over $2.3 trillion in North America, about € 650 billion in Europe, and $600 billion in emerging markets—and it’s still growing. Perhaps you want to manage money in this sector, sell, trade, work as a banker, be a credit analyst, work in capital markets or credit default swaps, or work as an advisor. Or maybe you work in the finance department of a company that issues this debt. Whatever the case, the basic skills of credit analysis are key to being able to operate effectively.

This skill set is also exceptionally valuable for those operating in the equity markets, especially if you ever have to focus on distressed or leveraged equities.