Direct lending and Drop-lock bond: Difference between pages

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Direct lending is when a non-bank lender (usually an insurance company or an investment firm) lends directly to ultimate borrowing companies rather than doing so via a bank or a hedge fund.  
''Bond pricing.''


Funds dedicated to direct lending have increased as this type of lending has often been looked down upon by banks.  
A bond or similar instrument which initially bears interest at a variable rate as if it were a floating rate obligation, but which will change to bear interest at a predetermined fixed rate in the event that a defined market rate falls to a stated level.  


For example, Lawrence Delevingne writing for Reuters<ref>[https://www.reuters.com/article/us-usa-funds-lending/direct-lending-funds-fading-all-weather-appeal-idUSKBN1A90CJ] ''www.reuters.com''</ref> (24 July 2017) says "direct lenders make high-interest rate loans, usually to fledgling or struggling businesses passed over by banks".


However, as banks struggled to lend to smaller companies following new capital requirements following the global financial crisis starting in 2007/8 and the eurozone crisis starting in 2009, direct lending has grown and some banks themselves started conducting some of their corporate lending via direct-lending funds.
== See also ==
* [[Bond]]
* [[Fixed rate]]
* [[Floating rate]]
* [[Market rate]]


 
[[Category:Financial_products_and_markets]]
== See also==
* [[Bank Facility]]
* [[Facility]]
 
 
==Other links==
 
[https://www.ft.com/content/ca61614a-aecc-11e7-beba-5521c713abf4 US direct lending fund raises $4.5bn (FT October 12 2017]
 
[https://www.ft.com/content/7432311a-add6-11e7-aab9-abaa44b1e130 Gillian Tett on growth of direct lending and its implications (FT October 12 2017)]
 
==References==
 
<references/>
 
[[Category:The_business_context]]
[[Category:Long_term_funding]]

Latest revision as of 21:01, 29 June 2022

Bond pricing.

A bond or similar instrument which initially bears interest at a variable rate as if it were a floating rate obligation, but which will change to bear interest at a predetermined fixed rate in the event that a defined market rate falls to a stated level.


See also