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ARTICLE · 04 JULY 2016

LSTA Distressed vs. Par/Near Par Secondary Trading Documents—A Review And Analysis

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The secondary trading of syndicated bank loans in the United States is approximately a $600 billion market, with the vast majority of these loans trading on documents published by the LSTA.

United StatesFinance and Banking
Michael Greenblatt
Michael Greenblatt
Stephen Rutenberg
Stephen Rutenberg
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Introduction to the US Secondary Loan Trading Market

The secondary trading of syndicated bank loans in the United States is approximately a $600 billion market,1 with the vast majority of these loans trading on documents published by the Loan Syndications Trading Association (LSTA).2 LSTA loan trades are transacted with either "par/near par" or "distressed" treatment. Of the $597 billion loans that traded on LSTA documentation over the course of 2015, approximately 94 percent traded as par/near par with only six percent traded distressed. The LSTA publishes separate sets of documents and related settlement protocols to facilitate each of par and distressed trading. The LSTA also assists the secondary trading market in helping determine the calendar date on which a loan has flipped from trading par/near par to trading distressed.3

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