Morgan Stanley and Bank of America were among the banks on the Belk loan and Bank of America was the lead arranging bank on the Cowlitz financing.
Both banks declined to comment, but Colm Kelleher, head of institutional securities at Morgan Stanley, said earlier this week that the overall market for leveraged lending was in a much better condition than during the financial crisis.
"We are seeing selectively one or two deals that are having problems clearing here. I think they're of an idiosyncratic nature, but I'm on very high alert for that," he told an investor conference.
Post-crisis rules on how much risk banks can take on mean they are also more reluctant to back new deals with big debt and some are selling loans at a discount.
"The banks went into the volatility of August and September with a decent amount of exposure. They have had fairly awful third quarters. The outlook for the fourth quarter does not look much better, M&A looks great but the fixed income division has had a very hard time," said Oliver Wriedt, co-president of CIFC asset management.
"We expect them to be continue to be in de-risking mode from here to year end," he added.
Investors Gain Upper Hand
After a binge on credit in the aftermath of the financial crisis, investors are becoming more picky about debt financing as the U.S. Federal Reserve looks set to raise interest rates for the first time in nearly a decade next month. On top of that, the recent sharp drop in prices of riskier debt has left some nursing losses.
That is a worrying sign for mergers and acquisitions, which has hit record high volumes this year, in part fueled by cheap loans. In certain sectors, however, those loans are proving more difficult to sell.
“You’re seeing a bifurcation of the market. Cyclical sectors like retail and other aggressively levered transactions are struggling, while non-cyclical sectors like cable or semiconductors are steady," said Dan Whalen, BNP Paribas head of loan syndication. "But the pendulum has absolutely swung in favor of the buy-side right now."