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Credit quality of large syndicated bank loans in US improves

Credit quality of large syndicated bank loans in US improves

The federal bank regulatory agencies of the United States stated in the 2022 Shared National Credit (SNC) report that credit quality pertaining to large syndicated bank loans saw an improvement in 2022. However, the report also noted the results do not fully reflect increasing interest rates and softening economic conditions that began to impact borrowers in the second half of 2022.

Overall, the report finds that credit risks for syndicated loans—large loans originated by multiple banks—were moderate at the end of the review period. While risks to borrowers impacted by Covid have declined, they remain high for leveraged loans, as well as the entertainment, recreation, and transportation services industries.

The 2022 review, which evaluates the quality of large, syndicated loans, was conducted by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, and reflects the examination of SNC loans originated on or before June 30, 2022. Consistent with the approach taken in 2021, it focused on borrowers in five industries that were affected significantly by the pandemic: entertainment and recreation; oil and gas; commercial real estate; retail; and transportation services. The 2022 SNC portfolio included 6,214 borrowers, totaling $5.9 trillion in commitments, an increase of 13.9 percent from a year ago.

PR Newswire