Cash managers purchased billions of {dollars} of leveraged loans within the US and Europe earlier this 12 months, anticipating to package deal them into bonds. Now the worth of the debt has dropped, and companies are struggling to search out methods to dump it with out taking massive losses.

Their hassle is vital for Wall Road. These fund managers, the most important purchasers of leveraged loans, need to bundle their present holdings into bonds generally known as collateralized mortgage obligations. If they will’t promote the CLOs over the following 12 months or so, their loans could also be liquidated, inflicting a possible flood of promoting that would …