ECB rules could push LBOs underground

摘要

Proposed leveraged lending guidelines from the European Central Bank could force riskier lending into unregulated channels and create unintended opportunities for arbitrage as well as breed market distortion. In an attempt to curb banks from underwriting riskier LBOs, the European banking watchdog has put forward a red line of six times leverage in its draft guidance on "leveraged transactions", closely mirroring guidelines introduced by US regulators in 2013.